A:
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Yes, the Secretary of State has forms on its website to help you create
and file the certificate of formation (formerly called articles of
incorporation or articles of organization). However, these forms
contain only the basic amount of information needed to have the Secretary of
State accept the filing. It does not contain any of the additional
clauses and information that you need depending on your business plans and
that an attorney will add for you. Further and more importantly,
merely filing a certificate of formation with the Secretary of State does
not "form" your new entity; it merely registers your entity with the State
of Texas. In order for your new business to be properly formed, there
are several additional documents, based upon the nature and type of
business, which must be created and which help govern the operation of your
business.
A significant percentage of people who come to us with a business dispute
do not have all of the proper formation documents. Not only did this
normally contribute to the rise of the problem, but once the problem has
arisen there are no documents detailing how the dispute should be resolved.
The Texas statutes offer very little assistance on these questions, as the
legislature has assumed that if you are savvy enough to create the entity,
you do not need a high degree of legislative protections. Who then
decides how the dispute is resolved? If the owners are not able to
agree amongst themselves through negotiations or an alternative dispute
resolution process, then the decision is left for a jury. Normally,
asking a jury to resolve a dispute involves a lot of time and large legal
bills. It's much less expensive to set up the business correctly from
the outset. Think of these legal fees as your first purchase of
"business insurance."
What if your bookkeeper, accountant, or CPA offers to perform some or all
of the drafting and filing for you? Legally, no one except a licensed
attorney can perform these services for you. However, that's likely
less important a reason than this: would you have your barber prepare your
taxes? Would you ask an out of state document preparation company to
sell your house? No - because you want to use the right people for the
right job. So then why would you allow anyone but an attorney to
perform legal work for you?
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