Need to form an LLC or corporation and prefer to have a professional service handle the paperwork for you? LegalZoom is one of several companies that can get the job done.
In this review, we’ll talk about the important details you need to know before choosing their service. Alternatively, you can check out our comparison guide of the top online incorporation services.
Why We Rated LegalZoom 6/10
When it comes to online incorporation services, here’s what matters most:
- Does the company offer good value for what you pay?
- Does the company have a track record for providing high-quality service?
- Does the company have good customer support if you need help?
- How easy is it to place and create an order?
- How quickly is your business formed?
The LegalZoom customer service impressed us, but it still wasn’t enough to make up for the unreasonably high prices of packages and features. Plus, due to their rather disastrous recent website redesign, you can’t even see your total price until you make it through the application process and input all of your business info, which can be a hassle if you’re simply researching options.
Even with the higher prices, we would have given them a better score if their application process was less confusing and more transparent.
For example, you’ll read in the “fine print” at the end of the application process that you will be charged an additional $159 fee for registered agent service once your business formation is final.
Quick Note: A registered agent service is important for business owners who don’t want to make their address a matter of public record, or miss important document deliveries. It also cuts down on junk mail received because LegalZoom will sort through your mail and send it to you electronically.
In our opinion, the main reason someone should choose LegalZoom is if they want to use the best-known service, and don’t mind paying a premium rate.
They Scored 6/10
- *Fair Overall Value
- *Massive Brand Power
- *Many, Many Up-Sells
Northwest Scored 9/10
- *Better Pricing & Features
- *Great Customer Reviews
- *No Up-Sells
LegalZoom Overall Pricing and Value
As we mentioned above, LegalZoom is one of the most popular LLC and incorporation services available, but we found that does not translate into better value for their customers. In fact, LegalZoom fell toward the bottom of our list for price vs. value because of one main factor.
While LegalZoom does offer an affordable $79 starting package to form an LLC and a $149 package to form a corporation, the number of upsells can get overwhelming — and expensive. Long story short, you will most likely end up spending significantly more through LegalZoom because of this.
LegalZoom was founded in 1999, and they’ve served 3.6 million customers since then. While their focus isn’t solely on business formation services, they have helped form over 1 million business to date.
If you look through LegalZoom customer reviews on any third-party site, you will almost always find a large number of one-star ratings and equally as many five-star reviews. Overall, LegalZoom customers seem to be either thrilled or disappointed, but their average review scores lag well behind some of their competitors.
LegalZoom offers phone and email support. We reached out twice via the email form on their site, but it took them a full week to respond. The response we received was generic – thanking us for reaching out, but not answering our question. We were referred to call their support number.
When we reached out via phone, our question was answered very thoroughly. The representative went into detail about our different options and then sent us an email with their direct extension so that we could reach out directly with questions. Of course we know that they would love to make a sale, but it’s that extra help that can really make a difference for an entrepreneur starting a business.
Overall, while their in-person customer service is great, their online support could be improved.
Ease of Placing an Order
The ordering process with LegalZoom is quite different than that of other online business formation services. While it’s not more complicated to use, it’s essentially built to get you to spend more money than you intended.
Instead of showing you the package options up front and then walking you through the order process, you begin entering your personal info first. While it’s an inconvenience to begin the order process without knowing what kind of price to expect, it is a clever (if somewhat underhanded) tactic on their part.
Once you make it to the package options, you’re pretty invested in the process – even if it only takes 15 minutes of your time to get there.
Overall, it was easy to walk through each step. Our only complaint is that there are a series of rather pricey upsells that occur before even choosing a package option. They clearly explain each one and why you might need the additional features, but we would personally like to see those come after you select a package and have a base price in your mind to work from.
It’s also important to note that they have a different application “flow” for LLCs and corporations. Most other incorporation services offer very similar packages and features for both. We highlight below the similarities and differences of features vs. cost so you can make the best decision for your business.
Overall Turnaround Time
LegalZoom doesn’t specifically explain their own turnaround time for filing with the state, but they do offer an estimated total turnaround for each of their packages. With their most expensive package, you could receive your finalized business formation documents in 7 business days, but their cheaper packages take as long as 30 business days (six weeks).
That said, in many states, LegalZoom’s turnaround times are similar to that of other LLC or incorporation services.
Pricing & Features
It’s important to note that unlike some other incorporation services out there, LegalZoom has two separate package offerings for LLCs and corporations.
LLC Optional Add-ons
First, let’s take a look at the “add-ons” that LegalZoom offers before you make it to the package selection. As we mentioned earlier, LegalZoom starts you out in the application by inputting all of your future business’ information before finally selecting a package at the end of the process.
As you walk through the screens, you’ll be offered the following mini-packages of add-on items:
1) Registered agent service – The first upsell you’ll be offered during the LegalZoom LLC formation process is for their registered agent service. For the rate of $159 per year, LegalZoom will receive your important government documents, scanning and forwarding them to you in a timely manner.
In this step, you have two choices. You can either choose to subscribe to LegalZoom’s registered agent service, or you can elect to appoint a different registered agent.
2) Essential documents – The second option you will be offered is for your business documents. The pricing for these add-ons is structured as follows:
- Operating agreement – $99
- Operating agreement plus federal tax ID number (EIN) – $159
- Operating agreement, EIN, and assistance acquiring permits and licenses – $249
An operating agreement describes how your business will function regarding management and finances. It is a strongly recommended document, but paying $99 for one is a hefty price tag, considering there are operating agreement templates available online for free.
As for the EIN, this is a necessary aspect of nearly all American businesses, because it allows you to hire employees, pay business taxes, open business bank accounts, etc. However, you can get an EIN for free by simply requesting one from the IRS.
Finally, most companies do require permits and licenses to operate in compliant fashion. These could be on the federal, state, county, or local level. With this feature, LegalZoom will research the permits and licenses needed by your business, and provide you with the applications.
All told, these upsells are quite expensive considering what you’re really getting, and it’s odd that they don’t give you the option to purchase an EIN or license research package separately from the operating agreement.
3) Tax options – Another option you will be offered is regarding your business taxes. For $320 per year, LegalZoom’s third-party partner Affordable Tax will assist you in filing your state and federal returns, as well as having a tax professional available for advice all year long.
4) Legal assistance – The next upsell attempt involves LegalZoom’s legal services subscription package. For $320 per year, they will provide HR documents like employment agreements, along with attorney advice sessions, as well as payroll advice.
5) Compliance assistance – Next up is LegalZoom’s Total Compliance package. According to their description, this includes annual report service, help with corporate recordkeeping, and assistance keeping your personal and business assets separate. This service costs $280 per year.
Final thoughts on add-ons: If you opt in for all of these upsells, you will already be on the hook for a whopping $1,328 before you even have an opportunity to select which formation package you want to purchase, or to pay your state fee.
While some of these upsells are important features, like registered agent service for instance, LegalZoom’s pricing is so high that we do not recommend opting in for any of these add-on services.
LLC Formation Pricing & Features
Economy for $79
Best for: Entrepreneurs looking for the bare minimum when forming an LLC.
This package costs $79, plus the state filing fee. Features listed for this package are:
- Name availability confirmation
- Preparation of articles of organization
- Document filing with the state
- Financial account authorization letter
- Access to a “Next Steps” guide for what to do once your business is formed
Standard for $329
Best for: Entrepreneurs creating an LLC but want a symbolic organizational binder and seal.
The Standard package costs $329 plus the state filing fee, which is $250 more expensive than the Economy package. Along with all of the features from Economy, you’ll also receive:
- A binder and a company seal personalized with your business name
- 20 company membership certificates
Express Gold for $349
Best for: Entrepreneurs needing to register an LLC as quickly as possible.
The complete package is $349 plus state filing fees. Although it appears that you get several additional features with their largest package, you’re really just getting the expedited formation of your LLC.
For the additional $20 compared to the Standard package, they guarantee your LLC will be completed in 7-10 business days, and also offer express shipping of your documents.
Corporation Formation Pricing & Features
The application process to form a corporation is much more in-depth than forming an LLC.
Before getting to your options, you’ll be prompted to obtain an EIN and sign up for registered agent service. When it comes to the corporation-specific upsells, LegalZoom offers the following add-ons during the formation process.
Corporation Optional Add-ons
1) Minutes Manager – This service electronically tracks and formats the meeting minutes for your business, which you are required by law to maintain. The first year costs $69, and each year thereafter is renewed at $99.
2) Compliance options – Their basic compliance offering costs $280, but it only includes email reminders for important filing dates and the minutes manager mentioned above. In other words, you’re paying about $200 for email reminders.
Or, for $320 you can get their “full-service” compliance offering that also includes the filing of your annual report, assistance filing your taxes, credit alerts for your company, and access to a library of sample forms.
3) Legal protection – This add-on costs $375 per year (first 30 days are free) and includes 30-minute attorney consultations for new legal matters, contract and legal document reviews (up to 10 pages), and an annual business evaluation.
4) Business license package – Unlike with the LLC package, where the business license service is only offered in a bundle with an operating agreement and an EIN, for corporations it’s offered as a standalone feature for $99.99. For this fee someone will review all of your necessary licenses, permits, registrations, and applications.
And finally, LegalZoom will present a series of partner offers for bank accounts and various discounted third-party services. Once you’ve made it through these features, you’ll see the three package options, which are similar to the LLC packages, but with a few tweaks.
Economy for $149
Best for: Entrepreneurs looking for the bare minimum when incorporating online.
The Economy package costs $149. For this price you’ll receive:
- Name availability confirmation
- Document filing with the state
- Personalized bylaws, which include provisions to protect directors and officers from liability
- Action by written consent of the incorporator, which means that you can make business decisions without calling a special shareholder meeting
- Resolutions from the first meeting of the board of directors, which includes a banking resolution so that a business account may be opened
- A $50,000 guarantee that if something goes wrong during the filing process, LegalZoom will cover up to $50,000 to fix it
- 10 non-customized stock certificates
Standard for $239
Best for: Entrepreneurs creating a corporation who want custom stock certificates and an organizational binder.
The Standard package costs $239. For $90 more than the Economy package, you’ll receive:
- 20 customized stock certificates
- Incorporation kit for managing your business documents, embossed with your company name and a corporate seal.
Express Gold for $369
Best for: Entrepreneurs needing to register a corporation as quickly as possible.
The Express Gold package costs $369. For your additional $130, you’ll receive rush service of your business incorporation (7-10 business days) and two-day delivery of your final documents.
Final Thoughts on LegalZoom
The LegalZoom application process is lengthier and includes more upsells than any other business formation website out there. It’s also considerably more expensive than many competitors, like Incfile and Northwest Registered Agent.
However, their customer service via phone is excellent, and we appreciated their patience in answering several questions, explaining the process and being thorough in their responses. That earned a lot of credit for us even though we recognize that their ultimate goal is to make a sale.
One final benefit to using LegalZoom over other companies is that they offer an array of other services. So, if you’re looking for an attorney or intellectual property service, you can do it all in one place with LegalZoom.