Incorporating your business? Find out if the super-popular (but extremely expensive) LegalZoom incorporation service can help you, and whether you get a good bang for the buck.
There are plenty of good reasons to incorporate your business, and it’s a good idea to obtain the services of a professional outfit. Some of their professional services (such as registered agent services) may even be required by law.
The good news is that you have plenty of these incorporation service providers to choose from, which leads us to LegalZoom. It’s perhaps the most popular option among customers today, but they charge rather high rates for their services. So, the question is: are LegalZoom’s incorporation services worth the high cost?
Factors to Consider
How exactly do we determine if LegalZoom (or any other brand for that matter) offers a terrific incorporation service or not? To determine this, you should closely look at certain crucial factors:
Value for Money
It’s a truism in any industry that if you want more, you need to pay more. But like any rule, there are notable exceptions.
You can get yourself a good deal if you get a lot (in terms of the number and quality of services) while you pay comparatively little. Some of these incorporation service providers offer a lot of assistance while charging a pittance, which can actually make you wonder if they’re in the business for altruistic reasons and not just to make money.
At the other end of the scale, you have a bad deal when you pay a lot and get little in return. That’s something you want to avoid.
To help with the incorporation of your business, you need a service you can really rely on. It can be a disaster to rely on dubious brands which are unable to do what they promise to do. Incorporating your business is complicated enough, without adding incompetence into the equation.
How do you know if a company is reliable? You do it the usual way, by checking out whether the company has lots of positive customer reviews. If you have thousands of reviews with the vast majority heaping praises for the company, that company is probably a safe choice.
You can also investigate the history and popularity of the brand. If they’ve been around a long time, chances are that it’s a reliable brand. After all, they won’t have survived a competitive industry without providing satisfactory services over the years. If a brand is popular, there’s also probably a good reason for this, too.
Quality of the Customer Support
For many first-timers, incorporating a business can be intimidating and confusing. You’ll probably have a lot of questions. The best brands in the incorporation service industry tends to offer excellent customer support and helps guide you through the entire process.
It’s great if they can answer your questions with detailed and complete answers when you call them up. If you send them an email message, the response should be quick enough, and come with detailed answers as well.
How Easy Is It to Place an Order?
The website should be easy to use. Incorporating your business is complicated enough without a messy web design added to the mix. Your questions for the customer support should be about the process itself, and not about how to use the website.
The incorporation service should offer an estimate as to how long the whole process should take. Granted, it depends a lot on your particular state government efficiency. But the brand’s turnaround time should roughly be the same as the other brands.
Some brands do offer an expedited option. You can then jump the line to get things done faster, but you will have to pay extra for this privilege.
How Does LegalZoom Fare?
With the factors in mind, let’s check out how LegalZoom performs in each of the important considerations:
LegalZoom Value for Money
Even the most ardent fans of LegalZoom concede that the cost can become rather high in the end. You don’t get a lot, even when you pay more than you would with the other brands.
The upsells are also numerous, and expensive too. You don’t even realize just how much you’re signing up for until near the end of the sign-up process.
Basically, you better have a large budget if you want to use LegalZoom. Many of the services that are part of the basic packages with other brands are expensive add-ons with LegalZoom. The most notorious example here is the lack of the registered agent services in any of the incorporation packages.
LegalZoom is one of the oldest names in the business, as they’ve been offering these services since 1999. Along the way, they’ve helped more than 4 million customers and have assisted in the formation of more than a million corporations.
With that level of popularity, you can certainly find a lot of customer reviews on LegalZoom. Reactions to their services is generally polarized, with as many “dismal” reviews as “excellent” reviews. Most of the negative reviews focus mainly on the prohibitive costs.
In any case, you can rely on LegalZoom to get the job done. They certainly know what they’re doing. But it’s another question entirely if the job they do for you is worth what they’re charging.
Quality of LegalZoom Customer Support
The email support is frankly terrible. Send them an email, and don’t be surprised if it takes them an entire week to respond. When you do get your email answer, the reply seems to be an automated message that most likely won’t really answer your questions at all. You get the obligatory thank-you message, and a reminder to call their support phone number instead.
The phone support is much better. They’ll answer your question in great detail, and provide you with various options. After talking to a representative, they will then send you an email with their direct extension, so that we can contact them again for follow-up questions.
Just keep in mind that these representatives may also offer various upsells, which will again drive up the total costs.
How Easy Is It to Place an Order with LegalZoom?
The website itself is rather easy to use. What’s frustrating is that their whole sign-up process seems designed to hide the total costs until the final reveal at the end. It’s not really meant to make things easier for you. Rather, it’s meant to make it easier for LegalZoom to make more money off you.
The first step involves entering your personal information and then picking whether you want to go with the LLC route or with the corporation route. It’s a rather time-consuming beginning.
After that, they start off by offering you expensive add-ons before you even get to pick from the incorporation packages. Sure, they offer a detailed explanation of each add-on service and why you might need it. But this would have made more sense if they were offered after picking the incorporation package.
LegalZoom Incorporation Completion Time
All in all, LegalZoom generally takes the same amount of time as other brands do to complete the whole incorporation process. They also offer a projected completion time for each package.
With their more expensive packages, you can complete the process a lot faster. It may take just 7 to 10 business days. That’s because you jump the queue and get processed ahead of the customers who opted for the cheaper packages. If you’re one of those customers, you may need to wait as long as 30 business days. That’s 6 weeks!
A Closer Look at LegalZoom Services
Many of the other brands offer packages that work for both LLCs and corporations. With LegalZoom, you have different packages for LLCs and for corporations.
Now let’s take a closer look at the services offered, in the order that LegalZoom offers them. That means the optional add-ons come first.
Optional Add-Ons for LLCs
These are the extra incorporation services that LegalZoom offers. If you opt for all of them, you’ve already signed on to pay $1,257.88 a year—and that’s before the formation package fee and the state fee.
Registered Agent Service
That this is an “extra” service tells a lot about what you get from LegalZoom. With other brands, this is part of their core packages. After all, most states have this as a requirement if you want to run a business.
The registered agent maintains a physical address and regular business hours, so they can receive government documents for you. They then scan all these documents and then forward them to you ASAP.
Here, you can either go with the optional LegalZoom registered agent services for up to $299 a year, or go with another brand for these services. Take note that some of the other brands offer incorporation packages for less than $40, and that’s with the registered agent services included!
This means you get LegalZoom assistance for a variety of important documents along with several other services as well.
- For $99, LegalZoom can help you come up with your operating agreement. This is quite expensive, considering that you can easily find templates for operating agreements online for free.
- For $159, you get the operating agreement service and LegalZoom also obtains your EIN (federal tax ID number) for you. That means you’re paying $60 for something you can get for yourself simply by visiting the IRS website.
- For $199, you have those 2 services plus LegalZoom’s help in getting necessary licenses and permits. LegalZoom will research the licenses and permits you need, then get you the needed applications.
Legal Services Subscription Package
With this package, LegalZoom can provide you with 30-minute attorney advice sessions, along with other important business documents like employment agreements for your HR.
The package costs about $40 (or $39.99 to be exact) per month. That’s basically $480 (or $479.88) a year.
You get help with your annual report, corporate record-keeping, and separating your business and personal assets. For this, you’ll have to pay $280 a year.
LLC Formation Packages
With the add-ons finally done, you can now pick the formation package you want. Keep in mind that the fees here don’t yet include the state fees (which will differ depending on the state).
For $99, you get the following services:
- Checking the availability of your corporation name
- Preparing the articles of organization
- Creating the financial account authorization letter
- Filing your documents with the state
- Providing you with a guide on what you ought to do once you’ve incorporated
This costs you $329, and the services include the ones for the Economy package. This means that you’re paying an additional $230 for these particular services:
- Creation of 20 company membership certificates
- Creation of a binder and your company seal that’s customized with your business name
This time, you pay $349 and you mostly get the services offered in the Standard package. This may be a better option than the standard, since for just $20 more you get:
- Faster formation (7-10 business days instead of 30)
- Express shipping of your business documents
Optional Add-Ons for Corporation
Now if you want to form a corporation instead of an LLC, this is your route. And once again, the add-ons come first:
Registered Agent Services
It’s the same as with the LLC.
This is also similar to the LLC.
- For $99, you get bylaws and resolutions
- For $159, you also get your EIN
- For $249, you add the business permits and licenses
LegalZoom helps you prepare and file your state and federal business income tax returns. You also get other bits of professional advice about these matters. All these will cost you $320 a year.
Legal Services Subscription Package
It’s the same package as with the LLC, but it’s cheaper with this corporation route. This time, you pay $320 a year instead of $480.
They’ll handle your annual reports, plus provide you with their Minutes Manager tool. This tool makes it easier for you to track and format the minutes of your corporation meetings. This will also cost you $280 a year.
Finally, we come to the incorporation packages.
This will cost $149, and you don’t get the free registered agent services. You do get the name availability service, state document filing, and the guide on what to do next after the formation of your company. There are also free trial offers from 1-800-Accountant (which is basically another upsell offer).
The cost jumps to $329, meaning you pay $180 more. That money gets you the Incorporation kit to help you manage your business documents. This kit has your company name embossed on it, along with your corporate seal.
This costs $349, and again you get an expedited process. It also takes only 2 days to deliver your final documents.
Are there refunds?
Fortunately, LegalZoom has an excellent refund policy. You have as many as 60 days to realize you’re paying too much for services that you can pay a lot less with other brands. They don’t as questions when you ask for a refund, probably because they know the high costs have something to do with it. They won’t hassle you, and won’t even charge you with any sort of cancellation fee. You get all your money back, no questions asked.
Does LegalZoom offer a publication service?
Some states may require an LLC or a corporation (or even both) to publish proof of your business formation in your local newspaper. Other brands offer this service, but LegalZoom doesn’t.
How does LegalZoom help with your compliance requirements?
One way is through their registered agent services. But these are quite expensive, and may get up to $299 a year. Other brands offer these services as part of their formation packages.
The other way is with the Compliance service, which is bundled with the Minutes Manager tool. You’ll have to pay $280 to get this bundle.
Can LegalZoom get the job done? The short answer here is yes. They have a long record of getting the job done correctly. They’re entirely reliable this way. It’s the main reason why they’re so popular.
If you also want a lot of add-ons, then LegalZoom is an excellent option as well. They offer a long list of add-ons that other brands don’t, and you can count on them to offer these to you on a frequent basis. Services such as professional legal advice regarding your intellectual property aren’t available with the other incorporation service providers.
On the other hand, if you want a simple set of incorporation services that includes the essentials—without paying through the nose—then you may want to go with another brand. Some of the LegalZoom add-ons (like the all-important registered agent services) are part of the basic formation packages with other brands. And those formation packages cost a lot less.
LegalZoom is good, but they’re just too expensive. For the money you dole out, these services simply aren’t enough.