Tempted To Use an Online Legal Service to Form Your Business?

March 2, 2015

Tempted To Use an Online Legal Service to Form Your Business?

When you are starting your own business, every dollar counts, and so the lure of an online legal substitute website is tempting. We’ve all seen the ads: “Form your LLC for $99!” But are such legal websites really the bargain they claim to be?

I had the opportunity recently to see how these websites work first-hand. A potential client asked me what I would charge to set up an LLC for his business, and I quoted him a price for legal services plus filing fees, which would include everything necessary to form and register the LLC, plus one hour of attorney time that he could use as he wished (to review a lease, write a contract, or just consult with me). Instead he decided to try the “$99 special” from a well-known legal substitute website he saw advertised on TV.

Sure enough, they formed his LLC, but the total cost he paid them was significantly more than what I had quoted him—and that total did not include many things that he needed, including an Operating Agreement and the registration of the business for employment taxes and sales taxes, not to mention the one hour of attorney time. In fact, the client eventually had to hire me to finish up the job, bringing the total of his “bargain” LLC to over $400 MORE than he would have paid to a real attorney in the first place. (Plus a recurring $200 annual “resident agent fee” that was unnecessary in his case—and which I showed him how to get out of for free).

So the next time you hear someone mention that they are going to save money by using one of these legal websites, do them a favor and ask them to meet with me for a free consultation, to see how I can help them set up their new business in the most cost effective way possible.

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