Do You Need a Lawyer to Form Your Corporation?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 15, 2021

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While it is possible to form a corporation without the help of a corporate lawyer, it is important to keep in mind that the steps involved can be complex and the legal ramifications of losing corporate status can be costly.

Drafting corporate bylaws is one of the most important and complex tasks required in order to form a corporation. Corporate bylaws lay out the “game plan” on how the corporation is to be run and operated and document how the corporation will comply with the requirements that need to be met. Ensuring compliance with corporate requirements through the corporation’s bylaws is extremely important, as failure to do so could mean a loss of corporate status. Once corporate status is lost, the liability protection of a corporation disappears, and the officers’ personal assets can be taken in a judgment against the corporation. A corporate lawyer can advise the corporation’s officers and directors on the state-specific requirements that must be met. Corporate lawyers can also suggest the best way to draft these duties and ensure compliance.

But forming the corporation is only a small part of the total mechanism of setting up a business.  An attorney’s advice is typically needed in connection with many other aspects of business start-up, such as code compliance, tax law, contract law, securities law, intellectual property law, and other state-specific corporate laws. Further, once the corporation is set up, the attorney can ensure that corporate transactions are conducted correctly. If you have employees, a corporate lawyer can also be a valuable asset when adding, changing, or drafting an employee handbook. You may just choose to have a corporate lawyer advise you during these transactions, or you can elect to have the lawyer act on the corporation’s behalf.

While using a do-it-yourself method is attractive because it is cheaper at the outset than hiring a corporate lawyer, this decision is risky and can end up costing more in the long run. Relying on a lawyer to set up the corporation will make it far more likely the whole job is done right. Compliance with corporate laws is essential to maintaining the liability protection of the corporation. Transactions between businesses can also be complex, and it is best to have an expert look over contracts before you agree to any important business move. Further, having the representation of a business attorney during the formation of your corporation or any business transaction that follows can also legitimize your business in the eyes of others.

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