Wednesday, November 9, 2011

Ask a Lawyer - Why Should I Hire a Lawyer to Help Incorporate My Business, Part 3

Ok, after a brief interlude, I'm back to complete the third and final part of my answer to the latest question in the "Ask a Lawyer" series.  The question is, "Why should I hire a lawyer to incorporate my business?"  We have broken this question down into three parts, as follows:

  1. How do I know what form of business entity is right for me?  Should every business incorporate?
  2. What's the difference between a corporation and a limited liability company?  Which is right for me?
  3. Why should I hire a lawyer to help form my corporation/LLC?  Why not do it myself?  
Having addressed 1 and 2 in previous posts, this post will answer 3 and complete our response to the overall question.  

Allow me to call out the elephant in the room implied in question 3 -- lawyers cost money, perhaps a lot of money. That's money that could be spent investing in the business.  On the other hand, forming a corporation is "easy."  To satisfy the State of Illinois, you simply fill out a form on the Secretary of State's website, pay a fee, and, you have a corporation or LLC.  I've even given you hyperlinks to the State's website.  Or, maybe you're thinking of using one of the web-based services offering pseudo-legal assistance to form your corporation on the cheap.  Why not do that?  

I believe the question should not be merely, "Should I hire a lawyer to incorporate my business."  The better question is, "Should I retain a lawyer to advise me regarding the legal issues of starting and operating my business?"  It is about connecting and forming an ongoing relationship with a trusted legal advisor, not just performing the rote task of filing Articles of Incorporation with the Secretary of State.  Talk with your lawyer about the possibility of using a retainer, flat fee or alternative billing arrangement to keep the cost within your budget, and to help determine what your budget should be to suit what is best for your business.  It is perfectly appropriate for you to be concerned that every phone call to your attorney may be "on the clock" and to not want to live in fear of a surprise legal bill every month or year.  At the same time, good legal advice is valuable; you should expect to pay for it and budget accordingly.

Whether or not you should incorporate your business, what formation documents should you have, what operations issues should you be aware of - these are just a few of the many legal questions that come up with a new business, and there is no "one-size-fits-all" answer.  A good attorney will help you consider the options, choose what is best for you, and then help you address the issues that arise on the way.  It is best, and most cost-effective in the long run, to have your attorney involved from the beginning, to help you avoid problems, rather than to wait to call an attorney cold when you have a serious (and at that point expensive) problem.



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