How to Incorporate: DIY, Online Service, or Attorney?

The decision to incorporate or form an LLC is a big step in the life of any business. For some owners, the main impetus to incorporate is protecting their personal savings and other assets. For others, a financial advisor may have mentioned they could lower their taxes with a different business structure. And some businesses simply need a legal structure in order to win a large client contract. 

But for most business owners, the process to incorporate or form an LLC is an unfamiliar road to navigate. And the process raises many questions: Where do I start? How much does it cost to form an LLC? How long does the process take? Can I form my own corporation or is an attorney required?  

In most cases, you set up an LLC or Corporation with the secretary of state’s office for whichever state you choose as your "state of incorporation." For an LLC, you’ll need to file Articles of Organization or Certificate of Organization with your state’s secretary of state. To form a corporation, you’ll need to file “Articles of Incorporation” or “Certificate of Incorporation.”

The three main methods for filing your Articles of Organization (LLC) or Articles of Incorporation (Corporation) are: 

• Do-it-yourself
• Legal filing service (typically online)
• Attorney

For full disclosure, I am founder and CEO of CorpNet.com, an online legal filing service, but will hopefully provide objective advice here and spark input from the AllBusiness community, because depending on your specific situation, each option has its own set of pros and cons. 

1. Do-it-yourself: In this case, you can download or request the forms from your state’s secretary of state’s office, complete, and submit the forms on your own. This is obviously the lowest cost method. You’ll still have to pay the state filing fee (exact fee amounts vary by state; for example, in California it’s $115 for a Corporation and $85 for an LLC). This is a good option if you’re more concerned about saving money than time, and if you have a relatively high tolerance for paperwork and details.

2. Online legal filing service: An online legal filing service will file the documentation for you. This option is slightly more expensive than filing yourself, but for some, the time savings more than makes up for the price. Legal documents can be tedious, time-consuming, and full of details. Regulations and requirements vary across states, even down to little details like paper size, font size, number of copies, and ink color! By turning to a service that specializes in these matters, you can save yourself the headache and hassle of learning and staying current on each and every detail. And you can focus your time and energy on your own business. 

Of course, it’s important to understand that a document filing service is not a substitute for a retained attorney, accountant, or tax advisor. A customer service expert at a legal filing service can give you general help and information, but they are not allowed to give you specific legal or financial advice for your set of circumstances.

3. Attorney: For those of you with particularly complex business needs — for example you have strict requirements for shareholder structure or stock allocation, or you’re dealing with millions of dollars up front — you should retain your own expert counsel to help get you started. An attorney will be able to assess your situation and provide specific legal advice. Likewise, a tax or financial advisor can help you figure out the financial implications in forming an LLC, S Corporation, or C Corporation for your particular situation. 

When it comes to legal matters, I’ll be the first to say that trying to save a few dollars up front can end up costing you big in the long run. Trust your gut; if you feel like you need to bring in expert counsel, then by all means do so. Just remember that you are able to file for incorporation or LLC formation without an attorney, and this could be a reasonable and cost effective way to go. 

Nellie Akalp is the CEO of CorpNet.com, an online legal document filing service. Find out more about her, get exclusive CorpNet.com discounts, and great giveaways on the CorpNet.com Facebook page.