3 Methods To Incorporate A Business: Pros & Cons Of Each

1. Do it on your own or have a friend/colleague do it for you.

2. Hire a lawyer or law firm.

3. Incorporate online with an incorporation service.

This article sets out the advantages and disadvantages of each incorporation method.

1. The Do-It-Yourself Incorporation Approach

Advantages:

i. It’s the cheapest method. Note, however, you’ll still have to pay state or provincial fees (the amount varies depending where you incorporate). when resources are limited, you may have no choice but to do it on your own.

ii. You learn a few things about incorporating. If you’re a real hands-on person and like doing everything yourself, then you’ll add “incorporating a business” to your list of experiences.

Disadvantages:

i. Incorporating on your own is the approach that will probably take up most of your time. You need to spend time doing it yourself. Filling out the forms takes time, but the real hassle is figuring out what it is you need to fill out. Also, when incorporating a business, there are steps you must do in a particular order. The number of steps involved and the order to do them depends on which state or province you incorporate. Regardless in which jurisdiction you incorporate, there will be some learning involved.

ii. You may do it wrong and have no recourse. By no recourse, I mean you have no lawyer from whom you can make a negligence claim.

2. Hire an Attorney

Advantages to hiring a lawyer:

i. Little hassle other than instructing your lawyer and signing documents. Note that hiring a lawyer for an incorporation may be more work on your part than you expect. The lawyer needs to be properly informed and instructed about your business situation.

ii. You get legal advice and in the event you need it, you get a customized incorporation – which may be necessary if you have a complex business situation. Moreover, you can get legal advice about setting up your company. If your situation warrants it, you very well may need to get a lawyer to advise you about specialized options.

iii. You have recourse if something goes wrong – lawyers are insured. Note, however, if a lawyer acts on your instructions, then you reduce or eliminate your recourse. This is a professional negligence area which is very fact specific.

Disadvantages to hiring an attorney for your incorporation:

i. The cost. Hiring an attorney is generally the most expensive option of the 3 options presented in this article.

ii. It’s not without requiring your time. You must make time-consuming visits to your lawyer’s office and/or on the telephone for which you pay.

3. Use an Online Incorporation Service

Advantages to paying for an incorporation service:

i. It generally costs less than hiring a lawyer, yet your documents are prepared and filed for you based on a questionnaire you complete.

ii. Speed: an online incorporation service can quickly prepare your documents and file them for you. Note that processing documents at the government end may result in a delay.

iii. Very little hassle on your end. You don’t have to figure out the incorporation forms you need, how to complete the forms, or where to file them. You simply provide the basic information about what you want and the service takes care of the paperwork.

iv. You can use both an incorporation service and then get legal advice. You can have a lawyer review your completed incorporation documents by an online service. This saves you the cost of having a lawyer draft them. Yet, you get legal advice.

Disadvantages to incorporating online with incorporation services:

i. Using an incorporation service costs more than incorporating entirely on your own.

ii. There is some time involved when using an incorporation which includes answering questions so the incorporation service knows which paperwork to prepare. You need to take the time filling out a questionnaire to provide to the online service. If you don’t know the answers, then you need legal advice and/or advice from an accountant. This may be a good step to take regardless.

iii. You don’t get as much protection as hiring an attorney. You have limited recourse if something goes wrong. If something goes wrong, you aren’t actually hiring a lawyer so there is little recourse. In other words, there isn’t any professional negligence claim you can make. You can avoid this by hiring a lawyer to review your prepared incorporation documents.

Next, read about getting an incorporation in Canada, and specifically about incorporating in Quebec.