7 Reasons Why You Should Not Use an Online Document Preparation Site or a Do-It-Yourself Software Program to Form Your Colorado LLC
1. No individualized advice: Document preparation services and legal software programs are not able to give you legal advice regarding your particular situation, nor are they licensed to do so. A Colorado attorney, however, has received years of legal training and can give you advice which is tailored to your specific needs. Also, an attorney is able to explain the legal significance of the clauses contained in your documents. The LegalZoom™ disclaimer states "The law is a personal matter, and no general information or legal tool like the kind LegalZoom™ provides can fit every circumstance... At no time do we review your answers for legal sufficiency, draw legal conclusions, provide legal advice or apply the law to the facts of your particular situation... LegalZoom™ legal document service is not a substitute for the advice of an attorney". We would have to agree.
2.No guarantee that the documents will accomplish your goals: Although document preparation sites and software programs often "guarantee" your satisfaction, they cannot guarantee that your legal documents will be the correct solution. For example: LegalZoom™ advertises a satisfaction guarantee, however, their disclaimer says, "the legal information on this site is not legal advice and is not guaranteed to be correct complete or up-to-date". The plain meaning of the text leads us to believe that you will be 100% satisfied with their services if you are ok with legal information that may be incorrect, incomplete, or out of date.
3.Their services are not professionally regulated: A Colorado attorney must comply with the Professional Rules of the Colorado Bar. On the contrary, legal form websites are not regulated in any way.
4.Legal challenges may be on the horizon: The North Carolina Bar has challenged LegalZoom™ by claiming that they are violating the state's unauthorized practice of law statute. We believe more states will soon follow the North Carolina Bar's lead. A document prep website may or may not be around to help you with your documents in the future.
5.Overstated fee savings: Many document prep sites promise significant savings when compared to traditional law firms. LegalZoom™ claims that when you use their services, as opposed to a law firm's, you can save a substantial amount of money. A side by side comparison of RockyMountainStartup™.com and LegalZoom™ tells a different story. Let's assume that an entrepreneur decides to form a LLC with LegalZoom™. He/She chooses the Express Gold package because it is the most popular package and when forming a business which is designed to shield your personal assets from liability, you want to make sure everything is done "correctly" (please see point 2 above). The Express Gold Package costs $359 plus a $50 state filing fee for a total of $409. Add on another $149 for the first year of registered agent service (which is included for free with RockyMountainStartup™.com) and the entrepreneur will pay a total of $558 for self help legal services. Now let's assume that the entrepreneur chooses to form their LLC with RockyMountainStartup™.com. he/she will pay $399 in legal fees and $50 in state filing fees for a total of $449. The flat fee includes a consultation with a Licensed Colorado Business Attorney, Articles of Organization filed with the Secretary of State, the required State Filing Fee, a Standard LLC Operating Agreement, an Initial LLC Member Resolution, sample LLC minutes, a LLC Post Formation Guide, and one year of free Registered Agent Service. Furthermore, the formation process through RockyMountainStartup™.com is likely a faster option considering the LegalZoom™ standard turnaround time is 20-35 business days and their priority rush service is 7-10 business days. The average turnaround time for RockyMountainStartup™.com is 10-14 business days and our expedited service is available with turnaround times of 5-7 business days. In short, there may be little or no difference in real cost to the client who chooses RockyMountainStartup.com and entrepreneurs will enjoy the peace of mind that comes with working with a professional throughout this important process.
6.A Fill in the Blank Document is all that stands between your business liabilities and your personal assets: If your business is sued above and beyond its insurance coverage, the plaintiff will likely try to "pierce the corporate veil" of liability protection in order to reach your personal assets. This means that a plaintiff's attorney will be arguing that your business is simply an alter ego to your personal matters. The attorney's argument becomes more convincing when he/she is offering a fill in the blank operating agreement into evidence that you got on the internet to save a few bucks. When your personal assets may be at risk, there is no substitute for competent legal counsel.
7.Law at your own risk: The last paragraph of the LegalZoom™ disclaimer sums up the self help legal concept as follows: "In short, your use of the site is at your own risk". We would advise you to read the entire LegalZoom™ disclaimer on their website for more information concerning the associated risks. Other document prep sites and software programs have similar disclaimers. After doing so, ask yourself- "If this disclaimer was provided by a self help surgery center or a self help dentistry clinic would I choose the self help route or seek professional advice?". It's up to you. We just want you to make a fully informed decision. Considering that your LLC formation may be one of the most important legal transactions that you are ever involved in, we strongly suggest that you seek legal advice from a licensed attorney regarding any business planning matters.