Welcome to my “3 ways to” series. With this series of articles, I aim to share some traditional and some creative solutions to everyday business problems. A friend contacted me recently looking for advice on setting up their own business. Today we’ll be looking at some ways to form your own company.
Everyone has something that they thoroughly enjoy doing outside of their typical workday. It might be a hobby, a passion for the community, or a new invention that you think may take off. But what happens when that idea becomes more than just a concept and develops into a full-blown way to make money? That’s when things start to get more interesting. What to do? For many, you may review the options and decide to dip a toe into the business waters and form your own company. This article assumes that you evaluated the pros and cons and have now decided to start a limited liability company. But how should you go about creating your company? Here are three options.
DIY Online. It has never been easier to get free or cheap help online to start your business. There are dozens of popular services such as LegalZoom.com, IncFile.com, and RocketLawyer.com, to name just a few. These services offer a great step-by-step guide to help you do every stage of the process, including selecting a business name, registering that business with your local Secretary of State, and formally filing your articles of organization or formation. I just checked through several of the options out there and was pleasantly surprised at how easy they are to use. They take you by the hand and walk you through the process step-by-step.
Hire an Attorney. Ugh, an attorney recommends using an attorney—big surprise! Hold on, and please hear me out with an example. During law school, I worked at a small law firm where we did wills, trusts, and estate planning. We would frequently get the couple that came in asking for a will. A standard part of client intake was to ask about any prior wills currently in effect. Inevitably, we would periodically get one of the DIY wills from a website. It would be 120 pages long and have lots of inapplicable wording. It was a mess. It was only after we asked numerous detailed questions that we were able to find out what really mattered to them and then tailor their needs to an aptly-fitting 12-15 pages that cleanly explained their final wishes. When we finished, anyone with a fifth-grade education could read what we wrote and understand what should happen. That was not always the case with the “DIY online” option. Granted, that was some number of years ago, but the principle still applies. In trying to cover the 80% of the bell curve majority, some cheap online providers have to come up with creative ways to handle all of the outliers. Whereas, an attorney who understands the local jurisdiction in which the business will operate, can cleanly customize the wording and actively warn you of issues you may never have thought about. You can easily find local attorneys in a number of ways. One way is to search for “_____ state bar association” and include the state where you reside. You will see your local bar association or other attorney licensing entity. From there you can do a search based on your city and attorney specialty. Look for specialties like “company formation,” “business formation,” or “company startup.”
Combination of DIY Online and Attorney. What if there were a way to combine the best of both worlds? Maybe there is. Attorneys charge flat rates for certain services but will also charge an hourly rate to do ad hoc review as requested. You may be able to achieve the best of both worlds by using the online forms as a checklist and guide. These sites explain each step involved. You may then also be able to use an attorney to do a review of the critical documents such as your articles of formation and warn you of some basic tax and other risks you should consider when choosing various options. It may be that you will still be better off going the 100% attorney route based on what you want to do, but it is worth asking and confirming for your particular situation.
I hope these ideas give you some great ways to tackle your business challenge. Some of these ideas may create additional risks that need to be solved when designing a solution. This article is written strictly for informational purposes only and is not a substitute for sound legal advice. However, if you do want some great legal counsel, have I got a deal for you! I happen to be available at the time of this writing and would love to chat about your company’s needs for an in-house lawyer and how I can help. Please DM me at: