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The Dangers of Online Business Incorporation


Because starting a business is generally expensive, many new business owners are tempted to incorporate by using an online do-it-yourself service. They believe they will save money by bypassing an attorney in favor of using the Internet. The popular television commercials make it look easy, and the price seems right. In reality, this type of “representation by search engine” contains numerous pitfalls.

It Is Not a Cost-Savings

Many of the online incorporation services advertise a deceptively low up-front rate, only to upsell or over-charge business owners for unnecessary services later on in the process. A new business owner who is unfamiliar with the laws in Arizona may not be aware of what is mandatory and what is optional. In many cases, an attorney is actually a more economical option.

Revolving Charges

If the Internet incorporation service requires the user to select the service as the user’s registered agent, the service will charge the user an ongoing annual fee. This fee might be much higher than the fee a business owner would pay by using a local attorney. These types of hidden charges are typically where Internet incorporation services make the bulk of their money.

Liability Risk

In their finished state, the forms offered by these websites have not been reviewed by licensed attorneys who practice in Arizona. Moreover, they are not even reviewed by an attorney licensed to practice in any state. The user submits information through a series of questions, which populates a pre-made form. The disclaimer page of one of the most popular form websites states that it “is not a substitute for the advice of an attorney” and “is prohibited from providing any kind of advice, explanation, opinion, or recommendation to a consumer about possible legal rights, remedies, defenses, options, selection of forms or strategies.” It goes on to state that it “can only provide self-help services at [the user’s] specific direction.” There is no guarantee that the forms provided will comply with the laws of Arizona.

© 2015 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved

This website has been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.