Because of the misconception that organizing a business is extremely expensive, many new business owners are tempted to incorporate by utilizing an online do-it-mostly-yourself service. The potential business owners incorrectly believe they will save money bypassing an attorney in favor of using these services on the Internet. The frequent television, radio, and social media advertisements make establishing a company online look easy, and the price seems right. In reality, this type of online representation contains numerous pitfalls that can damage the future of a company before it even begins.
It Is Not a Cost-Savings to the Business Owner
Many of the online incorporation services advertise and promote 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 scenarios, an attorney is actually a more economical option.
Recurring Charges
If the Internet incorporation service requires (or highly recommends) the user to select the service as the user’s registered statutory 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 as a basic statutory agent. These types of hidden or recurring charges are typically where Internet incorporation services make a substantial portion 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. Some of these sites only allow the review by an attorney only if the user pays additional fees.
Instead of establishing a relationship and communication with an actual licensed attorney or firm within the state of organization, the user submits information through a series of questions, which populates a pre-made form online. As a result, the process allows for potential errors to be generated throughout the legal documents. Unfortunately, these errors often need to be corrected by an attorney at a cost significantly higher than it would have been to properly organize the company in the first place.
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.
© 2021 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved
This website and article have been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal or financial 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.
