As a business owner, you make hundreds of decisions every day. Some of them are simple, brainless choices, while others take a significant amount of brainpower to decide. It’s no surprise you fall into bed exhausted at the end of the day (if you get to sleep at all).
But, choosing a business formation service provider doesn’t have to be one of those impossible decisions. I haven’t been a big fan of LegalZoom after their pricing, turnaround times, and lackluster customer service in the past, but with their new free LLC formation service, I wanted to see if things have changed.
In this LegalZoom LLC review, I cover:
- Details about their pricing packages
- How to set up your own LLC with LegalZoom
- Their reputation
- What I like about their services
- The things I don’t like about them
By the end, you’ll know everything you need to make a decision on whether to use LegalZoom for your LLC formation. Let’s get started!.
LegalZoom Pros & Cons
Overall Rating: 3.75
- They offer a 100% money-back satisfaction guarantee
- The process is straightforward and easy to use
- LegalZoom has helped set up over 2 million businesses
- They have the most business legal services of any formation company
- LegalZoom can hold your order for up to 15 business days (unless you pay extra)
- Other providers offer registered agent services free for 1 year
- Their additional services are very expensive compared to other formation companies
Overall, LegalZoom’s process is easy enough to follow, although I found it a bit more complicated than some other entity formation service providers out there. Their customer support team seems to be good, although they try to get your info for marketing purposes initially.
But, knowing they can hold my order up to 14 business days before sending it to the state for processing is a huge letdown compared to other services.
While at the end of the day, you are going to get your LLC set up, LegalZoom comes out as one of the slower and higher-priced LLC formation companies out there.
Featured LLC Formation Services
Best for beginners
Pricing: $0 + State Fees
Most additional services
Pricing: $0 + State Fees
Best privacy protection
Pricing: $39 + State Fees
Pricing: 3.5 out of 5 starsDespite the value of the free Basic Plan, the high cost of additional services (worse than ZenBusiness) reduced our rating
LegalZoom offers three plans: the Basic Plan, the Pro Plan, and the Premium Plan.
Basic Plan: $0 plus state fees
The Basic Plan is the most affordable plan where you only pay the state filing fees. While we have guides on how to form an LLC in each state, there is some relief in having someone guide you in the process and make sure it was done right. This package gives you the essentials, like filing the Articles of Organization and ensuring your business name is available and valid.
On top of that, they’ll hand you a digital welcome packet, which is basically a step-by-step checklist that guides you on what to do after your LLC is registered. And here’s a nice little bonus – you’ll get a customizable website to establish your online presence, though you can already get a free website through Wix. If you’re just looking to get your business off the ground without any extra frills, the Basic package should do the trick.
Pro Package: $249 plus state fees
For $249 plus state filing fees, it covers all that the Basic package does and then some. With this, you get an operating agreement in which there are plenty of free templates available, though I do recommend not using a generic template and instead working with an attorney, especially if there will be multiple members or investors.
You also get an EIN. This is something your business may need, but here is our guide on how to get one for free. Plus, they provide business license research and phone consultations with an insurance agent and small business specialist (which I suspect are just going to be potential upsells). If you like the thought of the Pro Package, only because of the business license package, you can order it from LegalZoom for $99.
The Pro package also adds phone support versus email and chat, which is only available in the Basic plan.
Premium Package: $299 plus state fees
The most expensive package is the Premium package, and for $299 plus state filing fees, you get everything from the Pro package, but adds a few things.
For starters, you get 30 days of guidance from an experienced business attorney. Also for the first 30 days, you also get one copyright registration per month and access to a full library of customizable legal forms. If you don’t want to continue access with the attorney or copyright registration, be sure to cancel as those become a monthly subscription.
Which package would I choose?
My feeling is that the upsells give limited to no value, especially as many are things you can do yourself at no cost, so the Basic plan is the one I would choose.
That said, I’ve formed many LLCs, so if the additional add-ons in the Pro or Premium package make you feel more at ease, then they may be worth it – however, watch out as several of these add-ons are monthly subscriptions. Some of the negative reviews were due to people not understanding this and being charged for services that may not have been selected if they had paid better attention.
Even so, I would probably still go with the Basic plan and individually pick the services that I wanted. I’ll go through them all next.
How easy is it to form an LLC with LegalZoom?
Ease of formation: 4 out of 5 starsIt is easy to form an LLC through LegalZoom, though the upsells are tedious.
To get started setting up your LLC from the LegalZoom home page, click on the choice of packages.
In this example, I like free, and it is the package I’ll use for the rest of the example. I will explain what comes in the other packages later to help you evaluate what comes with each package.
Enter the name you would like to use for your LLC. It’s important to note that every state requires the business name to be unique, so the name you enter may not be available. LegalZoom will verify before filing the paperwork.
Next, enter the state where the LLC will be located. In most cases, the state where the owner resides is the best state to form.
There will be a screen confirming your choice, and then you can optionally enter the email and phone number of the primary contact.
On the next screen, enter a brief description of your business. Look for the activity that most closely matches with the primary activity of what your business does. If nothing matches, enter your own choice and click “Next.”
On the following screen, a registered agent will need to be appointed. You can use LegalZoom’s service (for the crazy amount of $249 a year), but my recommendation would be to select yourself as the registered agent (provided you live in the state of formation and are generally available during normal business hours or use a different registered agent service like Northwest which is only $125 per year. If you are looking to hire a registered agent service, it’s worth noting that while Northwest charges $39 for their LLC formation package, the registered agent is free in the first year, making it cheaper than LegalZoom.
Related: Can I be my own registered agent?
After choosing the registered agent, we start getting into some upsells, where you can opt for an operating agreement, operating agreement, Employer Identification Number, and operating agreement, EIN, and licenses.
Most states don’t require an operating agreement, and I wouldn’t recommend spending $99 on an operating agreement template. I would look at our free operating agreement, a free one from RocketLawyer, eForms, or LawDepot (or one of the many templates by doing a search online).
Even if not required for your state, an operating agreement is important for LLCs with multiple owners or investors, in which case I would definitely recommend working with an attorney to come up with something specific to your business to make sure the owners are all protected.
I also wouldn’t pay for an EIN. It takes 5 minutes by following our guide to registering for an EIN through the IRS. LegalZoom incorrectly says the EIN helps to open a bank account, get a line of credit, and apply for loans. The truth is that a single-member LLC can use the owner’s social security number, and the ability of an LLC to get a loan is mostly based on the owner’s credit history. The EIN won’t magically help because any members that own 20% or more of the LLC will need to also personally guarantee the loan.
The last upsell is at least helpful because they will do a business license search, but $199 is too much to pay. We have the general business license requirements for each state for free, or you can pay $99 to have a search done for you through Incfile.
The earlier upsells were pricey versus the competition, but now it gets even better. LegalZoom wants to sell you (scare you into selecting) its Total Compliance package for $280 a year. Want to know what that entails? They will form your LLC, right (aren’t they supposed to be doing that already?), and then each year, they will file your annual report.
To keep an LLC active, most states require filing a report each year and paying a state fee. Some states only require filing every other year, and Pennsylvania only requires filing once every 10 years. The annual report filing typically only takes about two minutes to fill out as it only requires updating the contact information of the members and registered agent. If you want to pay someone $280 for that, I would be happy to do this for you 🙂 Needless to say, this is an easy pass.
Another screen and another upsell. This time for accounting services. At least this one isn’t as badly priced as the others. I can’t comment as to the quality of the services, after all look at all the stars :), but my preference is to work with someone you can sit down with and talk face-to-face. Not everyone is like this, but for something as important as the accounting for your business, I would at least consider finding out who the best CPA is in your area.
The pricing for the standard tax return and advisory isn’t horrible. Most accountants will talk to you for free, which is why I would skip the advisory-only option. To have your personal and business taxes done will vary by provider and the complexity of your return, but expect around $1,000 a year for that.
The next upsell is for legal guidance. For $49 per month, you get unlimited 30-minute phone calls and access to over 150 legal documents. Not the worst deal in the world, but again, for something as important as legal protection, I would opt for someone who either specialized in my state and/or the type of business I was running.
Tired of upsells yet? Yeah, me too. This one is for a bank account. You can get up to $500 by opening a new account, provided you deposit enough cash into the account. If you are up to filling out the paperwork, it can be a nice way to add some cash to your startup.
While you can operate most businesses without stepping foot into a branch, this is an easier decision if you have a Chase or Bank of America branch nearby.
We are getting close to the end and have the option for expedited processing and a Founder’s Kit.
A note on the processing: the standard processing time is 5-14 days, which means the time it will take them to send the formation paperwork to the state. On top of 5-14 days, you are looking at the time it will take the state to process the paperwork, which can take up to 30 days.
For an additional $99, LegalZoom will get the paperwork out the door in one day, plus the state’s expedited processing time, which is usually an extra day or two.
The Founder’s Kit is the next upsell, and for $99 you get:
- Binder with your business name
- Formation documents printed on archival paper
- Articles of organization
- Personalized notebook
- Step-by-step checklist for what to do after your LLC is formed
You can get something similar from Amazon for half the price, but it includes more. For $99 you get a binder with your company name, formation documents printed on fancy paper (you will get a copy from the state on non-fancy paper), articles of organization (which is the filed formation paperwork, so I’m not really sure how this is different from the formation documents), a personalized notebook, and a generic step-by-step checklist (you get a free digital guide in the free plan)
Neither seems like a compelling deal to me.
And, we get to the end. You can review your order and pay the state filing fee and the LegalZoom processing fee (if any). I looked for a legitimate LegalZoom promo code and didn’t find anything, even for the higher-priced packages. The state filing fee is set by the state where the LLC is being formed, and there won’t be a promo code that removes that fee.
Reputation: 3.75 out of 5 starsLegalZoom appears to have a positive reputation online, but several recent ones were 2-star or below, which is very concerning.
Better Business Bureau (BBB)
Overall, LegalZoom has customer feedback from over 6,350 reviews, with an average of 4.62 out of 5 stars on the Better Business Bureau. Most of the reviews mention errors on LegalZoom’s part and being charged for things they didn’t sign up for.
Trustpilot LegalZoom Reviews
Out of the 3,352 LegalZoom reviews on Trustpilot, 85% rate them four stars or higher, which is much better than my last review.
LegalZoom User Reviews Conslusion
Most of the reviews I found online mentioned fraudulent charges, unknown subscriptions, and awful customer service. While there are a handful of positive reviews, and they have an A+ rating on BBB, it’s hard to ignore the sea of less-than-great reviews out there.
While I think they are much more upfront than a few years ago, and the number of positive reviews is trending up, there are still a lot of very recent comments.
So, your best bet is to make sure it doesn’t happen in the first place, always read the fine print, and understand 100% what you’re signing up for before entering your credit card information.
What I like about LegalZoom
After going through LegalZoom’s LLC business formation process, I found some great things I enjoyed about their services. So, I want to go over each of LegalZoom’s advantages and why they matter to entrepreneurs and small business owners.
1. They offer a 100% Satisfaction Guarantee
Most LLC formation service providers work to fix their mistakes and make things right. But, LegalZoom goes one step further by offering a 100% satisfaction guarantee.
If they mess anything up or you’re unhappy with your services and support, you’ll get your money back (aside from any fees paid directly to the state or other third parties). With that being said, they don’t guarantee the outcome (AKA acceptance) of documents filed with the government. This means you won’t get your money back because your documents or other filings were rejected.
If you have any problems, you can contact them a call during normal business hours within 60 days of your purchase. Additionally, you can exchange your purchase for other services and products.
2. The process is straightforward and easy to follow
If you feel like every part of starting a new business is confusing, you’re not alone. But, LegalZoom makes forming an LLC easy. Their process flows smoothly, and they only ask for one answer or decision at every step.
Staring at a screen with 13 questions can be overwhelming. So, it’s a breath of fresh air to answer one question at a time. You can move along at your own pace and save your progress for another time.
Plus, you can start a chat or give them a call if there’s anything you need help with.
3. LegalZoom has helped over 4 million businesses
With experience like that, it’s hard not to be impressed. There is absolutely no doubt they know what they’re doing, and they get the job done. Odds are, they’ve seen every scenario and snag you can imagine along the way.
4. They offer more than entity filings
Out of all the entity formation companies we review, only LegalZoom provides a full range of legal services like filing trademark applications, living trusts, divorce, estate planning, and more. If you are looking for one company to help with all your legal needs, LegalZoom is probably it.
What I Don’t Like About LegalZoom
Although my experience with LegalZoom was painless, several negative things stood out to me. So, I want to go through each one and talk about why it’s a problem and what it means for you.
1. LegalZoom can hold your order for up to 14 business days (unless you pay extra)
Like several other free business formation services, LegalZoom holds your order before processing it, but at up to 14 days for the free plan, LegalZoom is one of the worst offenders.
They do tell you their processing times when you choose a package, but it’s unclear what these time frames actually mean. Other than that, you have to dig pretty hard to find information about how long it takes from start to finish.
14 business days is a LONG time to wait, especially when most companies take less than a week to process your order and get things moving. All in all, you have to pay an extra fee or upgrade to a premium package to get the same turnaround time other companies offer for free.
2. Other providers offer registered agent services free for 1 year
Early on in the registration process, LegalZoom offers its registered agent services. While many LLC formation companies offer this for free for the first year, LegalZoom charges $249 a year (only $125 at Northwest).
As I mentioned earlier, every LLC is required to have a registered agent for each state it physically operates and to qualify as a registered agent, a person or entity has to:
- Be available during normal business hours to receive legal correspondence.
- List a permanent and physical address in the state where you will be available – PO boxes or virtual addresses aren’t allowed.
So, it’s not as simple as putting down your home address, especially if you aren’t there during normal operating hours or don’t want your name and home address listed on the state database. But, with other business formation providers, you get this service free of charge for the first year.
For whatever reason, LegalZoom doesn’t offer this to its customers, which could be an expensive drawback for new business owners.
3. Their additional services are very expensive compared to other formation companies
Not only is LegalZoom’s registered agent expensive ($249 vs. $125 at Northwest), other things are really expensive, like Total Compliance ($280 vs. $199 at ZenBusiness), business license research ($199 vs. $99 at Incfile), were perhaps the worst offenders.
If you’re interested in forming an LLC, there are many good formation service providers out there. Despite LegalZoom’s impressive background, it’s hard to look past the crazy fees for many of the additional services, in addition to the recent negative comments from unhappy customers.
While LegalZoom is a legitimate business offering legal services and advice, if you are looking for a company to form your LLC for nothing other than the state fee, I recommend using ZenBusiness or Bizee (formerly IncFile). They both offer a free package (and free registered agent services for a year) with the option to upgrade and choose add-ons at your discretion.
Common Questions About LegalZoom’s LLC Service
How do I contact LegalZoom customer support?
Contact LegalZoom customer support by calling 888-379-0854
– Mon-Fri: 5 a.m.-7 p.m. PT
– Weekends: 7 a.m.-4 p.m. PT
How much is LegalZoom’s registered agent service?
LegalZoom is one of the most expensive registered agent services at $249 per year.
Bizee, for instance only charges $119 per year.