Online Incorporation Services Review

Mark Stafford's review of online incorporation services, reprinted with permission:

Thinking about incorporating? DON'T waste your time with those online companies that claim to incorporate you. Unless of course you just have a bunch of money laying around. I am sharing this with you because of the lesson I learned the hard way.

I'll start by saying I know pretty much nothing about business when it comes down to all of the legal issues, tax, and accounting mubo jumbo and so forth. I like to just
concentrate on doing the work at hand. For example, if you mow lawns, then you should do just that. Why should you have to have a business degree, learn to be a tax whiz, and be a legal expert right? While all of these are great occupations, and their great to know about, if you mow lawns, then that would really put you out of a lot of time and energy, when you could concentrate on getting accounts and getting the work done.

I made the mistake of starting a business jumping in head first, and with the best intentions of course, but I ended up in a mess. I fell into the hype of all of those
"incorporate now" websites, and I'm not mentioning names (there are a ton of them), as they seem to all be very similar.

Most of them will ask you if you would like to incorporate, what type of corporation package would you like- as if you were ordering at a drive- thru. They are not
allowed to and won't give you any sort of legal advice, as they just sell the "package." It's really up to you to do ALL of the homework and research about the LLC's, S corps, C-corps, etc. They will in most cases be your "registered
agent," in which you will be represented in the event you are sued. And they will send you a VERY nice notebook with stock certificates and numerous other forms. In my case I got that and a nice library of five books (you would have to
be a lawyer to understand them), which if you were not already confused - you get the picture.

Ah, then the price. This can be from $600 and up. This is when I found a lawyer to be the best way in the first place, as they will know what type of corporation would best suit you. (No pun intended). In my case I had purchased the wrong type of corporation, and my lawyer had to fix it. In the end he charged me $400 to undo one corporation, and fix me up with the right corporation. AND he was also my registered agent. He also informed me that if you really wanted to put in the time, you could do the whole thing online in most cases for about $75. Wow.

Here in higher-cost California, the costs payable to state government of a properly done incorporation are a minimum of $150 - something to keep in mind when certain paralegal services on craigslist and elsewhere offer the entire package, including their 'service', for $125!

See also:

Online incorporation review article

Business Licenses and Online Incorporation Services

I recently received an email notification announcing a new service offered by a popular online incorporation and document filing service. For $75, they will email you the appropriate business license forms for you to complete and file. While this information may be helpful to some new business owners in locating the appropriate regulatory agencies and their respective forms, my flat fee full service incorporation and LLC formation packages have included this service for years (except that we complete the forms for you and when possible, file them for you on your behalf, and answer any questions you may have about the filings before and after they are made). Unforunately, it is hidden fees and add-ons like these that make online incorporation services much less of a bargain than they might initially appear to be.