LLC formation services are the modern entrepreneur’s best friend.
After all, filing LLC paperwork is annoying (if you don’t mind paperwork, then this guide probably isn’t for you), so an LLC formation service can remove some of that headache for you.
But which formation service should you use? There are dozens of options available to choose from. To put your money to good use, you’ll want to choose the perfect one.
Generally speaking, a good formation service does two things. First, they help you form your business, offering advice along the way. Second, they’ll help you maintain your new company by reminding you of due dates, state requirements, and more. Other important factors to consider are the service’s track record, their cost, and how easy it is to use their service.
In this review, we’ll give you our in-depth opinion of LegalZoom’s LLC formation service.
Rocket Tip: Looking for the best and most affordable LLC formation services? Compare the top 3 LLC websites to see how they stack up.
Our philosophy: What makes a formation service “good?”
Ultimately, the “best” business formation service boils down to a matter of opinion. Which one is best for you depends on what you want from a service. But that said, there are certain qualities that make one formation service better than another.
Whenever we evaluate LLC formation services, here are some questions we like to ask:
- Does this service give me a good value for what I’m paying?
- Does this company have a proven record of supplying high-quality service?
- What is the quality of this company’s customer service?
- How easy is it to use this service?
- How quickly will my business be formed?
A good LLC formation service will receive high marks in these categories. We’ll consider the answers to these questions in our in-depth review below.
What is LegalZoom?
LegalZoom is a web-based, one-stop shop for online legal services. From business formation services to estate planning to trademark acquisition (and many points in between), LegalZoom has your back.
The LegalZoom idea hatched in 1999, when their founders envisioned a world with affordable, accessible legal advice for all. That dream became a reality in 2001. Since then, LegalZoom has formed more than 2,000,000 businesses and advised more than 4,000,000 people. They’ve even expanded to the United Kingdom.
LegalZoom’s claim to fame is simply how comprehensive it is; their network of lawyers spans all 50 states, and you can get legal advice on just about anything. But we won’t be so exhaustive; in this review, we’ll focus on their LLC formation services.
How does LegalZoom work?
If you use LegalZoom to start a business, you can expect to start by choosing your state and what entity you want to form (in this case, an LLC). Then, you’ll get started by typing in your desired business name. After that, you can expect to enter additional information about your business, such as who will manage it, who the members are, and more.
Unfortunately, with LegalZoom, you don’t know exactly how much you’re spending until you’re fairly invested in the process. You insert all your info first, and along the way, LegalZoom offers you a few add-ons to consider. So you’ve racked up a bit of a check by the time you even see the package options. That said, if you know exactly what you want going into it, you can simply decline those offers instead.
Once you’ve made your purchase, though, LegalZoom will complete your desired service, filing your business formation paperwork for you.
Is LegalZoom a good option?
In our experience with LegalZoom, there is no middle ground. Customers are either thrilled or disappointed by their service. Generally, though, we’ve found that a lot of the negative reviews stem from misunderstandings about what it means to sign up for a given service. So if you understand exactly what you’re ordering, then you should have no surprises.
The biggest disadvantage to using LegalZoom is the fact that you’ll pay more than you would using a different company. However, LegalZoom does have the widest variety of services in one place. You may find it more convenient to spend a little extra and have all your needs met in one place.
What are LegalZoom’s customers saying?
With over two million businesses formed, LegalZoom has thousands of reviews. And those reviews are quite mixed; you’ll find lots of 1-star critiques and 5-star praises alike.
Here’s a fly-by of the positive reviews:
- Well-known, established brand
- More convenient than meeting with a local lawyer
- Quick and helpful customer service representatives, especially over the phone
And here’s what customers complained about:
- Delays in order processing
- Confusing pricing
- Pricier than competitors
- Tough to cancel or opt-out of registered agent services
Ultimately, LegalZoom’s reviews are a mixed bag. Many of their negative reviews stem from misunderstandings about their registered agent services and their pricing.
If you want to avoid extra charges, very carefully read about each service, or, better yet, talk with one of their customer service representatives. They’re not the fastest or the cheapest service, but they do offer a unique blend of services that other companies lack.
ZenBusiness vs. LegalZoom: What’s the difference?
On the surface, LegalZoom and ZenBusiness seem to accomplish the same purpose: helping you form your LLC. And while that’s true, the difference between them goes much deeper than that. We’ll give you our full analysis in just a moment, but here are a few key differences:
- LegalZoom has been in business for much longer than ZenBusiness, and has formed over 1 million businesses. But during that time, LegalZoom has accrued both good and bad reviews alike.
- As a Public Benefit Corporation, ZenBusiness gives back to support women and minority-owned small businesses with its Pay-It-Forward initiative.
- LegalZoom offers more expensive packages and sends more upsells your way during the order process, so it’s easy to spend more than you intended with them.
- ZenBusiness is far more affordable. You’ll save $40 or more by using their LLC services.
Both ZenBusiness and LegalZoom can help you create an LLC online.
Who is LegalZoom best for?
If you don’t like dealing with pushy salespeople, then LegalZoom probably isn’t for you. LegalZoom is well-known for up-selling and offering dozens of add-ons. They’re fairly transparent about each add-on they offer, but some may find it annoying to sift through the extras.
However, if you know exactly what you want, you can just click “no-thanks” and move on. Then LegalZoom gets the job done. Since their services are so diverse, LegalZoom is ultimately a good option for entrepreneurs who want to bundle together a wide variety of services.
But if you’re looking for the best priced LLC service, look elsewhere.
LegalZoom: Our in-depth review
Cost to form an LLC
For a business, money is always a factor. That goes for new and established businesses alike. That’s why you should always factor in cost when considering an LLC formation service. LegalZoom is no exception.
To be honest, overall cost is one of our biggest complaints about LegalZoom. They charge far more for the same services than their competitors. And to make matters worse, they offer lots of add-ons before you even select your package. So you may find yourself accidentally spending more than you intended.
You first encounter a breakdown of LegalZoom’s pricing towards the end of the order process. Please note that you’ll need to pay state fees on top of what we’ve listed. Here are their main packages:
Economy: This is LegalZoom’s most basic package for a price of $99. This package includes a name availability check, a letter of financial authorization, and preparing and filing your Articles of Organization.
Standard: The standard package is significantly pricier than the economy one, running you $329. This includes all of Economy’s features, plus an LLC kit and 20 membership certificates.
Express Gold: On the surface, it might seem like Express Gold adds a lot of features for only $20 more at a total cost of $349. However, the only real difference between Standard and Express is that the second expedites your order. So an Express package will usually be processed within 7-10 business days.
Optional add-ons: LegalZoom offers a huge variety of add-ons, including a legal advice subscription service, obtaining an EIN, registered agent services, and more. To put it in perspective, if you say “yes” to every add-on offered by LegalZoom, you’ll add on $1,118 in expenses. And that’s before you even see the package costs!
LegalZoom’s order process
Have you ever tried to order something online, only to get lost in a never-ending series of cluttered web pages? The harder it is to order a service, the less likely you are to use it. Streamlined ordering is an important component of any good formation service.
Under our pricing review, we mentioned that LegalZoom doesn’t give you the breakdown of their packages until you’ve already clicked through their add-ons.
To be fair, it’s a fairly easy to follow—the web pages are simple enough—and LegalZoom does a good job explaining what each add-on does. But the constant up-selling makes it more time-consuming than it necessarily needs to be. We think it’d be a big improvement to switch the sequence so the packages come first and then the add-ons.
Customer Support Friendliness
Since online formation services are entirely virtual, they can sometimes feel a bit impersonal. But good customer support—complete with friendly, prompt customer service representatives—brings a personal touch to your experience.
LegalZoom’s customer support is like their reviews; there are positives and negatives. When we consulted them with a question of our own via email, we had to play the waiting game for a week. The response we did get was generic, directing us to the call center.
LegalZoom’s phone support was much more satisfying; we got a clear, quick, detailed answer. And the representative even provided a direct extension so we could follow-up. With a little work on their online support, LegalZoom’s good customer service representatives could take their support to the next level.
LLC Formation Speed
Technically speaking, you can file your own LLC paperwork yourself. But you’re a busy, budding entrepreneur, so you may not have the time to spare. Hiring a formation service like LegalZoom can save you time—provided they’re fast enough. Poor processing times could leave you wishing you’d formed on your own instead.
So how quickly will LegalZoom process your order? We’re not exactly sure; LegalZoom doesn’t spell it out for you. What we do know is this: if you use their Express Gold package and expedite your filings, then you can expect to have your order processed within 7-10 business days. Other packages may wait as long as six weeks.
If you ever change your mind about a product you’ve purchased, you want to be able to return it, right? Unfortunately, with any business formation service, a full refund is impossible. That’s because part of the money goes to the state as their incorporation fee, and states do not refund those fees.
But occasionally, a customer changes their mind about a package they purchased. Perhaps they no longer want to subscribe to the registered agent service, or the company completes the process incorrectly. Each company has their own policy for refunds. We’ll summarize those policies here.
You can cancel your service with LegalZoom at any time (although some customers have noted that canceling can be a bit tricky). Refunds are also allowed if they fall under LegalZoom’s Satisfaction Guarantee and you make the request within 60 days. You can also exchange for a comparable service, too.
Assistance with ongoing compliance
Starting a business takes a lot of time and effort, but so does maintaining it! Each state is a little different; some require annual reports, some require you to renew your license each year, and more. Keeping track of these requirements can be confusing.
That’s why a lot of services help you with ongoing compliance. But just how much help you’ll get depends on what service you choose.
For $69 per year, you can subscribe to LegalZoom’s Compliance Calendar program. This service helps you stay up-to-date with your due dates by alerting you so you can get them filed on time. You can also subscribe to additional services that will complete this report for you, if you’d like. They also offer registered agent service for $159-299 per year.
LegalZoom’s final score
When we tally the scores, we give LegalZoom 3.1/5 stars. They charge more than their competitors, and it’s easy to spend extra simply because of distracting add-ons. But their customer service presents great potential, and they’ve served millions of companies along the way.
At the end of the day we recommend comparing them with ZenBusiness to check out their services before forming an LLC. The service is objectively better with lower prices, more features and ease of use.