Need to incorporate a business 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 LegalZoom Scored 6/10
When it comes to online incorporation services, here’s what matters most:
- Is it a good deal?
- Is it a reliable company?
- Is there good customer support?
- Is the incorporation website easy to use?
- How quickly do they incorporate your business?
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 confusing 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.
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 should also understand that they won’t get a free registered agent service like they otherwise would with other services.
That said, if you’re looking for the best value possible in an incorporation service, we recommend ZenBusiness. This service is $110 less than LegalZoom, has more features and hundreds of positive online reviews.
In Depth: LegalZoom Review
LegalZoom Overall Pricing and Value – 5/10
As we mentioned above, LegalZoom is one of the most popular 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 offers a $149 package to form incorporate, 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.
Track Record – 8/10
LegalZoom was founded in 1999, and they’ve served over 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.
Customer Support – 6/10
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 any follow-up 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 phone support is great, their online customer service could be improved.
Ease of Placing an Order – 6/10
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 frustrating) 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 – 5/10
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 7-10 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 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 a rate of $159-299 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 a variety of 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 – $199
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) Legal assistance – The next upsell attempt involves LegalZoom’s legal services subscription package. For $39.99 per month, they will provide HR documents like employment agreements, along with attorney advice sessions and more.
4) 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 at least $1,118 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 $99
Best for: Entrepreneurs looking for the bare minimum when forming an LLC.
This package costs $99, 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 who want a symbolic organizational binder and seal.
The Standard package costs $329 plus the state filing fee, which is $230 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, your LLC will be completed in 7-10 business days, and also offer express shipping of your documents.
Incorporation 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 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) Essential documents – Similar to the way they present these options for LLCs, you’ll have an opportunity to add the following documents to your order:
- Bylaws and resolutions – $99
- Bylaws/resolutions plus EIN – $159
- Bylaws/resolutions, EIN, and business licenses – $249
2) Tax service – Through their partner Affordable Tax, you’ll receive assistance with the preparation and filing of your state and federal business income tax returns. They also provide professional advice, and the total cost is $320/year.
3) Legal assistance – This is the same as the legal services plan offered for LLCs, except the pricing is entirely different. This feature still includes legal and HR documents, 30-minute legal consultations, etc., but instead of the $480/year it costs for an LLC, corporations only have to pay $320/year.
4) Compliance options – With this feature, they’ll take care of your annual reports, and they’ll supply you with their Minutes Manager tool to electronically track and format your corporation’s meeting minutes. This add-on costs $280/year.
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
- “Next Steps” guide
- Free trial offers from 1-800-Accountant
Standard for $329
Best for: Entrepreneurs creating a corporation who want custom stock certificates and an organizational binder.
The Standard package costs $329. For $180 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 $349
Best for: Entrepreneurs needing to register a corporation as quickly as possible.
The Express Gold package costs $349. For your additional $20 over the Standard package, 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.
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.
How Does LegalZoom Compare to Other Incorporation Services?
While LegalZoom is probably the most well-known incorporation and LLC formation service available, they are not our favorite. Both Northwest Registered Agent and ZenBusiness offer LLC service starting at $49 (plus state fee), which is much less than LegalZoom.
In addition, both ZenBusiness and Northwest provide a year of registered agent service with your formation, which LegalZoom only offers as an add-on feature. Finally, Northwest and especially Incfile receive more positive customer feedback than LegalZoom does.
What Are LegalZoom’s Biggest Advantage and Disadvantage?
Experience matters and LegalZoom has a ton of it. They’ve been around for 20+ years, and they’ve helped millions of customers. They’ve even formed over 1 million LLCs! Their longevity and customer volume are their biggest advantage.
When it comes to disadvantages, we think their pricing is rather unappealing. Especially considering that none of their LLC or incorporation service packages include registered agent ― and they charge a variable rate of $159-299/year to add it on ― their price points are simply too high to compete with some similar services.
If I Use LegalZoom, Which Features Should I Buy?
Whether you’re forming an LLC or a corporation, we feel like their Economy package ($99 for LLCs, $149 for corporations) is easily their best offering. We also typically advise that our readers purchase registered agent service, but because LegalZoom’s price for this feature is so high, it’s probably a better idea to use someone else as your registered agent.
Do They Offer Publication Service?
There are a handful of states that require you to publish proof of your business formation in a local newspaper: Arizona and Nebraska require publication for LLCs and corporations, New York requires it for LLCs only, and Pennsylvania and Georgia have this requirement for corporations only.
Unfortunately, LegalZoom does not offer assistance with publication requirements, so you’ll either need to do it yourself or contact one of their competitors.
Does LegalZoom Help With Ongoing Compliance Requirements?
They do, but unfortunately they don’t bundle any of these features into their LLC or incorporation service package. If you want LegalZoom to serve as your registered agent, you’ll need to pay them $159-299 per year extra. They also offer annual report service, which has a more reasonable price point of just $55.
What Is Their Refund Policy?
LegalZoom’s satisfaction guarantee is one of the strongest refund policies in this industry. They give you 60 days to analyze your purchase and determine if you think it was worth the money. If you decide to request a refund, they will grant one with no questions asked, and they don’t charge any cancellation fees to process refunds.
Do I Need to Use a Formation Service?
It is not necessary to use a formation service to assist you when forming a corporation or nonprofit corporation. If you would rather form your own business entity, the do-it-yourself route is always available.