Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on September 5, 2022
When you’re in the initial stages of setting up a business, creating your business entity is one of the primary and most critical challenges you will encounter. This procedure can be exceedingly complicated and lengthy, prompting many business owners to seek out specialized formation services.
LegalZoom is a popular choice amongst these services. This analysis aims to provide a more detailed view, taking the perspective of an entrepreneur, to guide you in selecting the formation service that will set you on the path to success.
Taxes, Licenses, and Permits, Legal Forms and Agreements, Trademark, Patent, and Copyright, Business Changes and Filings
Number of Businesses Served
Over 3.5 million
Money Back Guarantee
60 days
Our Verdict on LegalZoom
LegalZoom offers incredibly useful services for individuals looking to start their own business. The platform is not only user-friendly but also promises an excellent customer experience, a fact we confirmed through our own interactions with their support services and the extensive number of customer reviews we analyzed.
Beyond simplifying the business start-up process, LegalZoom helps maintain compliance with your state’s regulations without the stress and inconvenience usually associated with it. Their pricing is competitive too. For comprehensive business and legal solutions, LegalZoom emerges as an ideal choice.
Pricing
Turnaround Time
Help and Support
Customer Satisfaction
Ease of Use
Overall Score: 4.2/5
LegalZoom offers affordable pricing plans with the option to add on additional services. The company has a great industry reputation and offers a variety of other legal services.
LegalZoom offers assistance with the formation process for various business entities such as LLCs, Incorporations (S Corp, C Corp), Nonprofits, Sole Proprietorships, Limited Partnerships (LP), Limited Liability Partnerships (LLP), and DBAs. Each type of business structure comes with different pricing plans.
However, in this article, we will primarily concentrate on LLCs, as they represent the most prevalent business structure. Here’s a comprehensive list of all business products and services that LegalZoom provides.
Business Formation Service
The formation of your LLC involves filing articles of organization with your state, which can also be referred to as a certificate of organization or formation. This can be carried out online or via mail. LegalZoom manages this online filing on your behalf, and the time it takes for LLC approval differs from state to state.
If you wish to register a specific name for your entity, it must be verified for its availability within the state where you plan to establish your company. LegalZoom provides a service for checking the availability of the entity name and also reserves it on your behalf if it is available. Name check service is included in all the plans. Entity name reservation service starts at $49 + state filing fees.
For an entrepreneur, this process can be daunting and time-consuming, and it’s often difficult to secure customer support from your state government office. However, with LegalZoom, you can avail of customer support services seven days a week.
Once your LLC is approved and official, you can access your formation documents on the LegalZoom website at any time.
Registered Agent Services
In most states, when you form an LLC, you need a registered agent. A registered agent is a person or business authorized to accept and respond to legal, tax, and financial documents on behalf of your business.
For $249 per year, LegalZoom can act as your registered agent and handle official correspondence. They will ensure all correspondence is handled on time and keep copies of documents for you. They will keep track of deadlines for you and send you reminders of things you may have to file, such as tax forms or annual reports.
Operating Agreement
An operating agreement for an LLC is an important legal document that details who owns the business and also provides essential information pertaining to member duties. It helps you set entity guidelines and settle potential disputes.
LegalZoom streamlines the creation of your LLC operating agreement through the following steps:
Online Query: You answer relevant business questions, such as your company’s structure, members, and operational procedures.
Document Production and Shipment: They generate a custom LLC agreement based on your answers and mail it to you.
Signature Collection: To officially validate the document, all LLC members must sign it.
Under the Basic plan, which is free, the operating agreement is not provided. The cost of obtaining an operating agreement starts at $99. However, the operating agreement is incorporated within the Pro and Premium plans at no extra cost.
EIN
An employer identification number (EIN) is a tax-identifying number for your business. It’s required if your LLC has more than one member or has employees. It’s obtained by applying through the IRS.
The process is quite simple. You will need to complete our simple online questionnaire. LegalZoom will handle the application process to the IRS and send you your EIN as soon as it’s approved.
The Basic plan, which comes at no cost, does not include the provision for an EIN. The standalone fee to acquire your federal tax ID is $79. However, the EIN feature is built into the Pro and Premium plans without any additional charges.
Business Licenses and Permits
LegalZoom offers advice on the potential licenses and permits your business may require, depending on your specific state and industry. LegalZoom obtains these licenses from the relevant government authorities.
The guide for business licenses and permits is not part of the Basic plan. The cost of obtaining business licenses and permits starts at $99.99 + state fees. However, this feature is included in both the Pro and Premium plans at no extra cost.
Annual Reports
In the majority of states, there’s a legal obligation for LLCs to submit regular reports. Non-compliance could result in your business being penalized with fines and potentially losing its liability protection.
LegalZoom assists by fulfilling these legal requirements, ensuring that the state is up-to-date with the latest information about your company, such as its name, address, and management.
The cost of this service starts at $99 + filing fees.
Trademark and Copyright Services
LegalZoom offers trademark and copyright services that other services, such as ZenBusiness, do not.
Forming your LLC will protect the name in your state, but the only way to protect it across the US is to trademark your business name. Applying for a trademark can be a complicated process, and using a service like LegalZoom ensures that the application process is handled smoothly and professionally.
At $599 plus federal filing fees, the service is somewhat expensive, but if you plan to expand your business to other states or online, a trademark ensures that your name is protected across the country.
If you’ve created a logo or other creative images or written copy for your business, a copyright can protect those from being copied by others. The LegalZoom copyright service handles this process for you. At $114 plus filing fees, this is a solid value buy.
Other Business Services
Website
All plans come with a customizable business website.
Attorney Consultations
With the Premium plan, you’ll have access to unlimited 30-minute attorney consultations for 30 days.
Legal Forms and Agreements
LegalZoom maintains a comprehensive library of legal forms and documents to cater to both business and personal requirements, all of which are prepared by professional attorneys.
Plans and Pricing
Service
Basic
Pro
Premium
Price
$0 + state filing fees
$249 + state filing fees
$299 + state filing fees
Articles of Organization
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Name check service
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Business filing service
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Operating agreement
$99
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Federal Tax ID Number (EIN)
$79
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Business licenses & permits guide
$99.99 + state fees
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Small business and insurance guidance
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Attorney guidance
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Customizable website
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Available support channels
Email & chat
Email, chat, & phone
Email, chat, & phone
Basic Plan
The Basic plan includes a business name availability search through your state and the business formation service, with full customer support. It also offers a few extras, including a digital welcome packet and a business website. You’ll also have access to your formation documents online at any time.
This plan is a good value and appropriate for entrepreneurs with a limited budget who just want to get their business up and running and plan to handle annual reporting and the operating agreement themselves. You can add additional services at the time of purchase or later.
This plan, at the cost of state fees only, is of great value.
Pro Plan
The Pro plan includes all the services included in the Basic plan, but with the addition of an operating agreement, an EIN, a business license guide, and initial phone consultations with specialists.
This plan, with all that’s included, is an excellent value.
Premium Plan
The Premium plan includes everything in the Pro plan with the advantage of unlimited 30-minute attorney consultations and changes to your LLC for 30 days, plus hands-on guidance from a business attorney.
Turnaround Time and Cancellation
We asked email customer service about filing turnaround times and received a response in about 48 hours.
20 days for Basic
10 days for Pro
2-5 days for Premium
All times depend on the state’s turnaround time.
The LegalZoom plans are one-time charges and services, so there is no need to cancel. If you want to cancel an order, you can call the Customer Care Center at (800) 773-0888. If you’re canceling s subscription, you can cancel online through the “My Account” portal or call (888) 310-0151.
We did note that a few of the reviews of LegalZoom were about difficulties with cancellation.
Forming an LLC Using LegalZoom Service
We took our review a step further and actually went through the entire process to form a real LLC.
We had to choose a package, answer a few questions about the business, and quickly into the process, we were offered services that we could purchase in addition to the LLC formation.
We were offered to proceed with one of LegalZoom’s partner banks (Chase and Bank of America, or skip the step.
We finally got to the processing, where we could choose to speed up the process and add the Founder’s Kit.
We clicked the Expedited Processing button and opted out of the Founder’s Kit, and received our total price.
It was possible to pay the cost in three monthly installments (including a $5 monthly installment fee), or as one payment.
On the checkout page, we were prompted to select either payment in installments or a one-time fee and fill out the form. You can also sign in to your existing account here or create the account.
Since we didn’t have an account, we decided to create it. Then we went through another series of questions about our business, including how it would be named and the state it would be based in.
The entire process only took about 20 minutes. It was quite simple, but the upselling of other products was a bit intrusive.
We received an automated welcome email within minutes.
A short time later, we received a more personal welcome email.
All that was left to do was to wait for our filed documents. To our surprise and pleasure, we received them in 24 hours! We also received some other helpful documents, including instructions and a guide to our next steps, such as drafting an operating agreement.
We found this document to be quite helpful.
With our Legal Zoom account, we are able to access our documents online at any time.
After the process was completed, however, we did continue to receive emails upselling other products. This is to be expected but is a bit intrusive.
Overall, our experience with Legal Zoom was quite positive. We had no issues, everything was simple, and what we received is a good value for the money.
Customer Support
We tested all three forms of LegalZoom’s customer support, as detailed below.
Chat support
When we tested the customer service response time through the online chat option, we received a response almost immediately.
We asked about the price of operating agreements and what determines the final price since it’s listed as “from $99”. The answer was that it was $99 for standard processing and $199 for rush processing.
The customer service agent was quick and polite, and after the chat, we received a follow-up email almost immediately.
Chat Support Rating:
Response time:
Immediate
Phone support
We called LegalZoom to ask a question about registered agent services. Our call was answered in two minutes, and the question was answered promptly. The question was whether registered agent services were included in any of the plans, and the answer was no.
The customer service representative was very professional and polite and made no sales pitches.
Phone Support Rating:
Response time:
Immediate
Email support
We asked email support what the standard filing time is vs. expedited filing. Our email was sent on a Saturday, and we received a response on Monday at about 11 a.m. The answer was polite and clear.
Email Support Rating:
Response time:
Very quick
Customer Reviews
The best way to learn about LegalZoom is to see what real customers thought of their experience. We visited the Better Business Bureau and Trustpilot.
LegalZoom is an accredited business with the Better Business Bureau and has an A+ rating. They have 4.63/5 stars from over 6,500 customer reviews.
The following aspects are emphasized as positive in BBB customer reviews:
Knowledgeable and responsive team
Easy and fast process
The following aspects are emphasized as negative in BBB customer reviews:
Surprise charges
Miscommunication
LegalZoom has 4.6/5 stars on Trustpilot, from nearly 3000 reviews.
The following aspects are emphasized as positive in Trustpilot customer reviews:
Simple process
Excellent customer support
Professional and informative team
The following aspects are emphasized as negative in Trustpilot customer reviews:
Poor communication
Surprise charges for unwanted services
Alternatives to LegalZoom
We explored similar services to LegalZoom to see how they stack up to the competition.
LegalZoom
ZenBusiness
Rocket Lawyer
Northwest Registered Agent
Plans and Pricing
3 plans, $0 - $299
3 plans, $0 - $349
$99.99 plus state fees or free with member discount, which is $0.00 for 7 days ($39.99/month after)
LegalZoom is more expensive than some competitors. However, they do offer a wider variety of legal services and have been in business for more than 20 years.
Your choice will ultimately depend on your specific needs, budget considerations, and preferences.
ZenBusiness
LegalZoom and ZenBusiness are both well-known providers of legal services, including business formation, but they have notable differences.
LegalZoom offers a comprehensive range of legal services beyond business formation, making it a versatile platform for various legal needs. However, LegalZoom tends to have higher pricing and additional upsells compared to ZenBusiness, which is often praised for its affordability and tiered packages that cater to different business requirements.
Rocket Lawyer
LegalZoom and Rocket Lawyer are both popular platforms for legal services, including business formation, but they have some distinct differences.
LegalZoom offers a wide range of legal services beyond business formation, making it a comprehensive solution for various legal needs. On the other hand, Rocket Lawyer focuses primarily on subscription-based legal services, offering access to legal documents, consultations, and other resources for a monthly fee.
While LegalZoom may have a broader range of services, Rocket Lawyer’s subscription model can be cost-effective for ongoing legal support.
Northwest Registered Agent
LegalZoom offers a wide range of legal services beyond just business formation, making it a comprehensive platform for various legal needs.
However, LegalZoom tends to have higher pricing and upsells compared to Northwest Registered Agent, which provides a singular, competitively-priced package with essential business formation services.
Northwest Registered Agent is also known for its exceptional customer service and commitment to privacy.
LegalZoom was founded in 2001 by a group of entrepreneurs and attorneys. LegalZoom has helped more than 2 million businesses get started. The company employs more than 1,000 people, and the CEO is Dan Wernikoff.
According to LegalZoom, they are “a tech company that’s in the business of providing clarity, making things simple, and creating innovative services so that legal and tax help are accessible to every business owner, creator, and every family.”
Our Approach
As an entrepreneurial advisory site, we take our responsibilities seriously. We understand that countless entrepreneurs, and potential entrepreneurs, rely on our judgments and insights, particularly when it comes to creating their business.
As a result, our writers do their utmost to gain a comprehensive understanding of the services offered and the actual customer experience. In this case, we:
Examined every single page of the LegalZoom website
Reviewed all of their offerings, from a la carte products to packages
Put ourselves in the customer’s shoes, creating an account
Communicated with customer service via chat, email, and phone
Gained a full understanding of the customer experience and service value
Thanks to this full immersion in the actual customer experience, our reviewer and team are able to provide the most complete and insightful review of LegalZoom’s LLC formation services.
FAQs
Why should I use a business formation service like LegalZoom?
A service like LegalZoom can make the business formation process easy for you and ensure that it’s done correctly. They provide customer support and additional services to support your business.
What can LegalZoom do for me?
LegalZoom offers business formation services to handle the paperwork and cut through the red tape with your state, so you don’t have to. They also offer additional services, including registered agent services and an operating agreement.
Can I just pay a one-time fee to form my LLC with LegalZoom?
Yes, all of their plan prices are one-time fees.
What does it cost to cancel my LegalZoom plan?
There are no fees or penalties to cancel your annual services with LegalZoom. If you want to cancel an order, you can call the Customer Care Center at (800) 773-0888. If you’re canceling s subscription, you can do it online through the “My Account” portal or call (888) 310-0151.
Is LegalZoom a good value?
The LegalZoom Plans all offer a lot for the money, particularly their Basic Plan that costs state fees only.
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