Legal Zoom


By: Jesse Jones

What About Legal Zoom?

It isn’t just legal zoom – if you’re an entrepreneur, you might look into any number of the online legal services companies that have sprouted up over the past +/- 20 years to help set up your new business.  These online legal services companies can play a useful role for certain types of new businesses, so they should not be discounted completely. However, we regularly help with the cleanup once a company moves beyond those services companies to a law firm like Fourscore, so this article gives our perspective on companies like Legal Zoom.

Based on what we have seen, these types of legal services companies tend to be best utilized when an entrepreneur needs to set up a single member limited liability company (a business that will not receive outside investment and that is solely owned by a single person). The process to set up a single member LLC is very, very simple. Frankly, it is hard to mess up, and even if it does get messed up, there is only one owner, so that owner can do whatever needs to be done to fix the mess without discussion.

Companies like legal zoom offer other services as well – you can set up a multi-member limited liability company or a corporation using online providers, but it is not recommended unless you are confident that you understand what needs to be included in the documentation. A well drafted (and practically useful) operating agreement for a multi-member limited liability company has many concepts that are often either misunderstood by entrepreneurs or omitted entirely from the operating agreements produced by online legal services companies.  The documentation we have seen for businesses set up as corporations is usually less complete than the LLC documentation.

When a new client engages with Fourscore as an already existing company, we use an expanded intake process to gather information and documentation that has already been prepared by a prior law firm, the founders themselves, or in some cases an online legal services provider. Our process helps us to understand more about the company and allows us to make recommendations about documentation that may be missing key provisions and/or absent entirely. What we normally find when the company’s initial documents were produced by an online legal services company (especially with regard to multi-member LLC and corporate entities), is that the cleanup ranges from about half of what we would need to do if we were setting up the business on day 1 to actually starting over because the documents are inadequate for the needs of the business.

If you do use an online legal services provider, it is important to understand that filing a charter with the secretary of state is not the end of the set up process – it is just the beginning! The next two steps are (1) to get an Employee Identification Number for the new business (it can be done for free in about 10 minutes), and (2) set up a business bank account. For more information on setting up a new business download the Fourscore super-simple entity formation checklist, or watch it on Fourscore Briefs.

Headquartered in the Research Triangle region of North Carolina, Fourscore Business Law serves entrepreneurs and businesses in the Triangle, throughout the Southeast and in Silicon Valley / San Francisco. We also represent venture capital funds and other investors who invest in companies throughout the U.S. The idea of delivering maximum impact in a simple and succinct manner is what we’re calling the Fourscore Principle. And that is what Fourscore Business Law is based on. Our clients operate in a broad range of industries including tech, IoT, consumer products, B2B services and more. Questions? Shoot us an email or give us a call at (919) 307-5356. Your first call is on us.