I got outside to do some yard work towards the end of last week. My son was at band camp at the high school, so I got out and wrestled the lawnmower around the yard and then did the edging weedwacking and blowing, while listening to a radio show I hadn't heard in some time. The experience stands out for two reasons: 1) I was reminded just how happy I should be that my son helps around the house with the yard work most weeks and how much easier the work is when we work as a team; and, 2) a commercial repeatedly played on the radio show that just left me scratching my head asking where the value was in this company's services.
I can't recall the company, but the advertisement talked about the need for business people to incorporate or form a LLC so that they could "protect" themselves and their assets from business problems. This company prominently stated that business owners would be most "protected" by ensuring they had a business entity filed with their state, and that they could handle the filing. The commercial continued to prominently state that the company was NOT providing any legal advice or accounting advice, but that it's goal was to simply help business owners be protected, and to protect their assets, by forming a legal entity in their own state. During the time I was working in the yard - about an hour and a half or so - I heard this commercial at least 4 times. And it bothered me more each time I heard it. Why? Read on.
My problem with this company's commercial is that I think they're not providing real value to their clients. Sure, they can file online with a state to form a corporation or an LLC. Anyone can do that -it takes only a bare amount of know-how, a computer and internet connection and a credit card. But if they're not providing legal or accounting advice, what value are they actually providing? They're making money to file online something that the client could do themselves for less, and are then not providing the critical information needed for the stuff that follows.
I've often said that a lawyer doesn't really provide value when we file a corporation or an LLC. Our value is instead provided when we analyze the proposed business and help the client choose the best entity type for their business, be it a corporation, a LLC, a PC, or whatever. Then, we provide value to the client by tailoring the initial books and records of the new business to the manner in which the business and its owners will operate, and then by giving them some information on how to operate the business and actually get the benefit of limited liability (to the extent possible under law) from this entity after it is formed. And this is something that actually requires the provision of legal advice. For example, lawyers help newly formed businesses understand: *how to sign contracts on behalf of the business entity and not the individual to bind only the business, *how to transfer assets or property into the name of the business and how to have the business acquire additional assets, *how to operate and observe the required business formalities including separate accounts, annual shareholder meetings, corporate minutes, etc. to maintain the separate existence of the entity to help prevent the corporate "veil" from being pierced and exposing the owner(s) to personal liability), and by providing information on all of the other start-up business issues that arise including licenses, permits, and the importance of establishing a relationship with a tax advisor to determine the tax status election, establish accounts with the DOL, IRS and state taxing authority, etc. (this isn't an exhaustive list, just some examples).
Sometimes, there's just not a good replacement for actual legal advice, or accounting advice, when starting a new business. When the disclaimer is so broad that the value provided is entirely questionable, I think there's a problem. My advice: when you want to start a business of any type, seek guidance from qualified lawyers and accountants, and get real value for your money. I think you'll be glad that you do.