A lot of tech entrepreneurs are saying that you shouldn't use legalzoom to incorporate. What are the reasons for this? Is there room in the market for an alternative that can make both founders and investors happy? Or is this a problem that is inherent to any online incorporation service?
The simple answer is incorporation is not a commodity; every company has different needs depending on their founder/investor structure - therefore it's not something you can (or would want) to automate easily.<p>The more drawn out answer is the older legal mistakes get, the more expensive, frustrating and dangerous they become to fix. A simple mistake in your articles of incorporation can cause serious pain down the road, even potentially derailing your company all together.<p>Therefore for most "serious" entrepreneurs, it's much cheaper in the long term to just get incorporation done right from the get go. So is it really worth it to take that risk to save $1000?<p>All that being said - I'm not a lawyer - but I've been told by my lawyer that if you're a sole entrepreneur without any partners or investors, the legal side of incorporation is pretty straightforward, and you could probably get away with using a discount automated service provider. Things get complex once you have partners, shareholder agreements, employee options, investors, and so fourth.
Startups are generally better structured as C-corps rather than S-corps due to the likelihood of of pursuing outside investors and retaining earnings to fuel growth.<p>Therefore, they tend to have radically different needs than the type of small business Legal Zoom targets with its services