Whether you are setting up your business entity or preparing for taxes, figuring out the documents you need for essential purposes like this can be confusing. Mistakes can be costly.
However, not every business can afford to have an in-house legal department or keep an attorney on retainer. For those businesses, there is LegalZoom.
LegalZoom Business Services provides entrepreneurs like you with solutions to help create and complete the documentation you need for your business. It enables you to fill out documents quickly and assists with filing, so you have less to worry about and can focus more on your business operations.
Below is our full review of LegalZoom so you can determine if they are a good fit for your business.
Interested in LegalZoom?
LegalZoom focuses on helping business owners with the creation and filing of basic business documents. What LegalZoom does is provide affordable legal assistance to those who may not be able to hire an attorney.
LegalZoom is one of the top legal service providers, servicing customers from all over the country. The company customizes your services to your local area to ensure that you receive exactly what you need for your business according to your state and local laws.
The company provides you with the documents you need, instructions for those documents, and preparation assistance. If you need further legal help, the company can connect you with an attorney in your area.
LegalZoom brings independent attorneys and consumers together in a community that benefits both parties. It does not directly provide legal services but rather focuses on document preparation services and providing information about business documents.
Through LegalZoom services, you can complete the necessary paperwork to start a business or handle other legal business matters on your own without the need to hire an attorney. Should you end up needing legal assistance, you can go through LegalZoom to get that help, making it a one-stop shop for all your needs.
Structure Breakdown: Who is LegalZoom Good For?
LegalZoom provides services for all types of businesses. Below is a breakdown of which business entities LegalZoom is a good fit for.
LegalZoom is a good fit for LLCs. They offer LLC services as part of their basic affordable package which only costs $79 + filing fees. They will help you gather all of the necessary paperwork and file your business name.
Since an LLC requires members to file taxes as self-employed, you may need LegalZoom services to help with your tax filings. It can also provide you with membership documents and the creation of documents for dissolving your LLC if the time comes.
There are two main types of corporations that LegalZoom can help with. For both corporations types, LegalZoom charges $149 + filing fees.
A C corp requires formal structuring, which means a lot of legal documents to prepare. It also needs extensive record-keeping and reporting. Taxation occurs for the business, so you may need some assistance with that as well.
An S corp differs from a C corp in that there is no double taxation. However, it is otherwise the same as a C corp, so LegalZoom can assist with the exact needs. LegalZoon will also be able to help with the additional paperwork that comes with registering as an S corp with the IRS.
A partnership involves two or more people running a business together. You should always have a formal partnership agreement in place, which LegalZoom can help with.
Since the taxation passes through to the partners, you may need some assistance with your tax filings each year. You could benefit from LegalZoom’s tax assistance offerings.
A sole proprietorship is where you run a business by yourself. There is no distinction between you and the business. It can make for tricky tax filings, which is where LegalZoom may be beneficial.
You can also secure a DBA or trade name for your business for $99 excluding filing fees. LegalZoom can help you with this as well. You need to file specific documents and ensure you complete the paperwork correctly.
You may need additional documentation to help you set up your business should you decide to change your business entity. It can also help to have formal paperwork if you want to secure funding as it adds legitimacy to your business.
A non-profit organization focuses on helping others and not turning a profit. Special tax filings are required to secure the non-profit benefits of not paying taxes. LegalZoom can assist you with the required documentation. They charge $99 excluding filing fees for the basic setup of a non-profit.
You also have to follow many of the same rules as corporations. There are a lot of documents you will need, making LegalZoom quite helpful.
LegalZoom Packages & Pricing
Economy Package - $79
The Economy package costs $79. At this level, you’ll get state business registration, but keep in mind that the filing fees are not included in the price. You also get guides to assist you with document reviews along with a personal assessment of your documents.
You have access to create your Articles of Organization and a financial account authorization letter, which gives permission from the business to a person to open bank accounts for the business. Finally, you will have access to customer support.
Standard Package - $329
The Standard package costs $329. You get everything from the Economy package, along with an organizer embossed with your company name, company membership certificates with your company seal for ownership recording, and VIP processing.
Express Gold Package - $349
The Express Gold package costs $349. At this level, you receive everything from the other two packages and rush processing with the state and express shipping.
The advanced processing options with the Standard and Express Gold packages mean it takes less time to process any filings you make with the state.
In addition, with the express shipping from the Express Gold package, you will receive anything you order from LegalZoom faster. These shipping options can be critical and may mean the difference between getting what you need in time to open your business doors, so it is definitely worth considering when choosing a package.
Other Services - A La Carte Pricing
LegalZoom provides other services at extra costs, such as operating agreement preparation for $99. Some services are free for a trial period only, and then you will pay a recurring fee.
You will sign up with LegalZoom under a package and then have access to the additional services and options. You should take time after signup to assess the other options carefully. It is very easy to end up with a bill totaling over $1,000 once you start adding services.
Overall Value vs. The Competition
Cost seems to be the one major downside of LegalZoom, especially when compared to other services. LegalZoom is one of the highest-priced options. For example, ZenBusiness provides more benefits than LegalZoom and is generally comparable to LegalZoom in every way, but it costs about $60 less.
Rocket Lawyer is another option with a lower price tag. However, the quality is slightly lower than LegalZoom, so there is a trade-off in what you get.
Do note with ZenBusiness and Rocket Lawyer, the price comparisons are only to package offers. When adding in extra costs, you may end up paying the same or close to the same price as you do for LegalZoom.
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LegalZoom Document Management & Online Experience
LegalZoom is relatively easy to use. You can find what you need and access your information without hassle.
The biggest issue with LegalZoom is the consistent upselling attempts. As you move through the system and even begin creating documents, you will receive pop-up messages and other redirects that try to upsell you on services.
The company also slips in extra charges in almost every step. If you don't read the fine print, you could end up stuck with these charges, which can be hard to remove.
The constant upsells can derail you as you navigate the system. They also waste time. So while it is easy to find what you want, LegalZoom makes it difficult for you to do what you need to do.
It would be much easier if you could simply go in and access your documents or create documents without having to mess with those extra steps. You might find the process more tedious than it should be, which can drag down the whole experience.
LegalZoom Processing Time
Part of the legal process is waiting for the processing of your documents. This is where the upgrades from the higher packages come in handy. Processing time with LegalZoom can take anywhere between 10 to 30 business days, depending on your package.
You do have the option to pay additional fees to speed up processing, but it is usually well worth it to just go with a higher package level if this is a concern. With that said, some people have had bad experiences with LegalZoom processing taking much longer than they specified.
You should note that processing not only depends on how fast LegalZoom is but also on the entity at the other end. If your local department is behind or slow, it will impact the time it takes, which is something for which LegalZoom cannot be held responsible.
LegalZoom Compliance & Track Record
LegalZoom has a decent track record for compliance. It creates legal documents that work for the intended purposes. Legal compliance with various states is a top priority to ensure that you get the documents you need and that the state will accept.
However, you should keep in mind that LegalZoom is not a lawyer service. The people working at the company are not attorneys; they do not have legal training like licensed legal professionals. While you should expect the documents provided to be legally compliant, you also cannot hold the company to the same standards you would hold a lawyer.
Furthermore, using this service is only a way to help you complete the documents. You can consider it a step above doing it yourself. LegalZoom simply provides you with the tools and some guidance in completing your forms. You retain all liability for the documents created. You must always review them before submitting them to the state.
LegalZoom Customer Service
LegalZoom provides customer service seven days a week. On weekdays, agents are available from 10:00 a.m. Eastern Standard Time to 8:00 p.m. Weekend service times are 10:00 a.m. to 7:00 p.m. EST. You can reach customer service online or via the phone.
The company gets a 3.78 out of 5 stars, A+ rating from the Better Business Bureau. While LegalZoom offers friendly and knowledgeable customer service, wait times are incredibly long.
It is far easier to reach the sales team, which is a bad look. It is an indication that the company puts more value on selling its services than helping those who are already customers. This comes across with the hidden fee issues and the misleading packaging pricing.
However, when you get to speak with customer service, they usually are quick to resolve issues. They also have a high level of professionalism and do seem to care about your needs.
The Last Word: Is LegalZoom Worth It?
LegalZoom, like any business, has its pros and cons. On the plus side, it does offer a beneficial service for businesses. It can save you a lot of money over hiring an attorney. The company provides an excellent range of options and services, so you should be able to handle any need.
The issues with LegalZoom are largely in the transparency of prices and the constant upsell attempts. It is easy to get a huge bill from the company and not understand how it happened. Plus, trying to resolve any issues is tricky when the wait times to reach customer service are extensive.
The bottom line is that LegalZoom is the right fit for small businesses that need some extra help with business documents. It is suitable for someone who can read all the fine print and won't likely need a lot of customer support.