Law Technology

Incorporation by Go Daddy

By Bryan Sims

Erblawg reports that GoDaddy now offers incorporation services in all 50 states. according to the owner of Go Daddy, the service allows customers to “launch a legitimate business without having to hire a lawyer.” I agree with the poster at Erblawg, however, that this really isn’t the case. Anyone who does corporate work, knows that filing the documents with the Secretary of State is just the tip of the iceberg in terms of forming a corporation properly. Erblawg explains:

Customer can in fact launch a legitimate business, but it?s quite questionable how legitimate that business will be over time. Why is that? Well, it?s shocking how many businesses never issue stocks, elect a board, or appoint officers, sign operating agreements, elect S treatment, or hold annual meetings. As long as everyone gets along, there may not be a problem. As soon as two ?owners? of the company disagree or someone sues the company, those little details become important. After all, if no stock is issued, no one really owns the company, and if there?s no board or officers, than no one is really authorized to run it. And if someone sues a company with no minutes or worse, no officers, that company isn?t going to provide a whole lot of protection.

Many of the people I meet with who want to talk about incorporation don’t know why they want to incorporate or what they think they can gain from it. Instead, many want to incorporate because that is what you are supposed to do to protect yourself.

I also get those who complain about the fees that I charge to incorporate a business. I explain all of the services that I provide and why they are necessary to ensuring proper protection. However, some people can’t seem to get past the idea that I am doing something more than filing a form with the Secretary of State.

The reality is that at sometime the person is likely going to have to pay someone to straighten out the incorporation mess. As Erblawg explained,

As the saying goes, you can pay me now or you can pay me later. Later is always more expensive.

I just wished that more clients realized this.

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Full post as published by The Connected Lawyer on November 24, 2009 (boomark / email).