Corporate & Securities Law

Filing a Charter Is Not a Startup Incorporation

By Ryan Roberts

I’ve noticed a lot of recent articles promoting that a startup can “skip the lawyer” and incorporate via an online service. These sites typically list about 20 incorporation tasks they’ll do for your startup for around $250 plus the applicable state filing fees.

Sounds like a great deal, but there is more to a proper startup incorporation than simply filing the articles of incorporation with the Secretary of State. The 19 other “tasks” they list? Little or no value.

Want to vest your founders’ shares? Can’t do that through an incorporation service. In fact, typical incorporation services do not even offer a stock purchase agreement. And you can definitely forget about a technology transfer agreement or anything else IP-related. Documents like these are the critical components of a proper startup incorporation.

When you use an online incorporation service to incorporate your startup, you aren’t getting a deal on incorporation. Instead, you are overpaying for 1/10th of a proper startup incorporation.

If all you want to do is file a charter, you can “skip the lawyer.” And you can skip the incorporation service as well.

Full post as published by The Startup Lawyer on August 18, 2010 (boomark / email).