Why should someone spend the money on a lawyer rather than form their own company through an online site? The answer is pretty simple. There are two main reasons to use a lawyer: a lawyer will help ensure that you pick the right entity for your situation and a lawyer should* create (with your input) and explain all the documents necessary to get your company up and running.
When someone who isn’t knowledgeable about the law goes to an online website, they may choose to set up an LLC thinking that is the best entity structure for their company and disregard forming a corporation. However, if that same person had gone to an experienced lawyer, they may have been led through a series of questions, like those we ask our clients, to determine whether an LLC is correct. A lawyer may discover that for one reason or another, a corporation is best. Or a lawyer may discover that an LLC is correct and be able to guide clients through the choice of whether to make it member-managed or manager-managed.
In addition to helping a client choose the best business entity, a lawyer will help a client prepare the documents necessary to run the business including paperwork through the state, federal, and possibly city level. For instance, when our clients walk out the door after we set up their business, we try to ensure that all their documents are done (unless it is something that they personally have to do and we cannot as their lawyers) and that they understand exactly what is in them. The last thing we want is someone to leave unsure of what their bylaws or operating agreement says. If you get a document from an online site, you don’t know if the provisions in it are what you need (for instance, the last thing you want is an "Uh-oh, I don’t have any provisions for when my partner gets divorced and now the business is facing failure because of it"). In addition, you may not understand all the provisions in it (for example, "Uh-oh, I didn’t realize that the way that clause was worded, a personal bankruptcy means a lot of problems"). When you hire a lawyer (and again, you need to find out what services your lawyer is providing – are they just writing the documents and throwing you out the door or are they going to go over the documents with you?), your lawyer will probably ask you lots of questions to see what you need in your documents and then explain them to you.
Filing online is quick and it is easy. However, if you don’t know what you are doing, it could end up costing you big time down the road. Hiring a lawyer gives you the peace of mind knowing that someone who knows the ins and outs of forming a business is taking care of you and ensuring that you know what you are doing and why.
*I say "should" because you have to check with your lawyer to find out exactly what they are doing for you. Some lawyers may only prepare the major company documents (Articles with the Secretary of State and your operating agreement or bylaws) while others may do much more to ensure that you are set up with the Secretary of State, any other state agencies, the IRS, and any other entities you need to file with. Always ask what are you doing for me and what do I need to do once I leave to make sure you don’t think you are totally set up and find out you aren’t.
If you're thinking about starting a new business this year, give us a call at 253.858.5434 to set up an appointment today. We represent clients throughout Washington and Idaho and are available to meet in person, by phone, or via video conference.