Is LegalZoom worth it for your small business?

As an entrepreneur, you’ll find yourself learning about a lot of crucial aspects of running a business, including accounting, insurance, financing and contracts. Instead of becoming a full-fledged expert, you’ll likely rely on professionals and online services. 

Software like QuickBooks or FreshBooks can help you with bookkeeping and taxes while Nav can help you find a business credit card and check your business credit scores. For everyday legal tasks you may consider a service like LegalZoom.  

Read our LegalZoom review to help decide if LegalZoom is worth it for your small business. 

What is LegalZoom?

LegalZoom is an online service that helps small businesses with a variety of legal and business needs, including business formation, contracts, intellectual property, and legal help. Founded in 2001, it has helped millions of entrepreneurs start and grow their businesses.

Getting started with LegalZoom

With LegalZoom you have a menu of services you can purchase, each with its own pricing.

These services include: 

• Business formation: Perhaps the service it’s most well known for, LegalZoom can help entrepreneurs form an LLC, corporation, partnership, or nonprofit organization. It offers packages that include filing the necessary paperwork, obtaining a federal EIN, and creating documents like operating agreements or bylaws.
• Registered agent service: LegalZoom can serve as the registered agent for your LLC or corporation. 
• Registration for your DBA: If you need to operate on a fictitious name basis (“doing business as”) you can use a service like LegalZoom. 
• Legal forms and agreements: With LegalZoom, you can get access to a wide array of legal forms and documents, such as non-disclosure agreements, employment contracts, lease agreements, and more. You can customize these forms for specific needs.
• Intellectual property: If you want to file a trademark, copyright or patent,, LegalZoom can help with the necessary paperwork.
• Estate plans: a living will, financial power of attorney, and either a last will or living trust along with consultations with an attorney. 
• Legal plans: LegalZoom can help you stay compliant with a variety of laws and regulations, such as employment law, tax law, and environmental law. When you sign up for a legal plan, you can get access to a network of attorneys for questions. 

Business formation with LegalZoom

Business formation services are among the post popular, so it’s worth taking a look at the LegalZoom LLC formation packages available if you want to set up an Limited Liability Company (LLC):

The basic plan ($0 + state filing fees) includes: 

• Articles of organization, which you must have to officially register your LLC with the state in which you choose.
• Name check service so you can confirm the business name you choose is valid and can be reserved (not in use with another business, for example).
• A step-by-step checklist to follow after your LLC is officially registered.

Pro ($249 + state filing fees), gives you everything in basic plus:

• An operating agreement
• An EIN (the tax id number for your business)
• A comprehensive step-by-step guide to business licenses for your location and industry
• Initial phone consultations with specialists about business insurance and tax advice services

Premium ($299 + state filing fees) gives you everything in the pro plan plus: 

• Guidance from an experienced business attorney you choose from LegalZoom’s network. 
• Unlimited 30-minute attorney consultations about new legal topics related to your business (3 month subscription included, after which you will be charged a monthly fee)
• Attorney review of your legal documents and contracts  (3 month subscription included, after which you will be charged a monthly fee)
• Changes to your LLC formation documents within the first 90 days

Add-ons cost more, including these examples:

• DBA registration ($99 + filing fees)
• Annual report standard ($99 + filing fees) 
• Annual report rush ($119 + filing fees) (priority handling by LegalZoom and expedited 2-3 business day delivery of state docs when received by LegalZoom)

Please note all pricing here was gathered independently by Nav and may be subject to change.

Pros and cons of using LegalZoom

Overall, LegalZoom is convenient and it offers a streamlined customer experience.  Having worked with many different business owners over the years, it is no doubt familiar with common questions and challenges small business owners face and has tailored its business formation and online legal services to meet those needs. 

Main benefits of using LegalZoom

• Convenient and easy to use: LegalZoom’s website is straightforward and clearly describes the services it offers. 
• Affordable: LegalZoom’s prices are stated upfront and are generally competitive, especially when compared to the cost of hiring your own small business attorney on an hourly rate.
• Comprehensive: You’ll find the essential services most business owners need here, as well as referrals to partners. 
• Professional: LegalZoom states that it has a network of attorneys in all 50 states with “an average of over 15 years of experience and ratings of 4.8 out of 5 stars.”

Potential drawbacks of using LegalZoom

• Cost savings now, but more expensive later: You may choose cheaper packages to save money but miss out on important decisions that can save money in the long run. Choosing a business entity is one example. The least expensive option does not include attorney advice, and if you choose the wrong entity (or less than ideal state to form your entity) you may pay more later to change it. 
• Varying levels of expertise: While LegalZoom’s attorneys retain high marks overall, you may be assigned to one that’s not the ideal fit for your individual business. 
• Hard to compare oranges to apples: It can be hard to understand how your costs and services may compare to other options. For example, you can get your own employer identification number for free online, but LegalZoom includes it with its paid plans. And with the legal services plan, for example, you get unlimited 30-minute attorney consultations on new legal matters, and 25% off attorney services through its legal network. That discount can be subjective since attorney’s fees vary widely. 

Who should use LegalZoom?

If you’re starting a new business on a tight budget, or if you prefer a one-stop shop for your small business legal needs, LegalZoom may be right for you. It can save you the time and expense of trying to find your own attorney, and it’s far better than winging it and hoping that your business doesn’t run into legal problems. 

It’s also a great option if you feel overwhelmed by forming a legal entity. Operating as a sole proprietorship is risky and a service like LegalZoom can help you get over the hurdle of setting up a business entity. The proper business entity can help you save money on taxes, protect your personal assets, and even make it easier to qualify for certain small business loans.

On the other hand, quality and price are a tough mix. Streamlining services with templates and business processes, like LegalZoom has done, certainly can help bring down the cost. Still, it can be hard to find the perfect balance between top quality professional advice and a low price.

Complex or high stakes legal issues or contracts may require the services of an attorney with expertise in your business and the specific challenges it faces. 

LegalZoom alternatives

There are numerous alternatives to LegalZoom services, ranging from engaging the services of a small business attorney, to other corporation and LLC formation services. Here are some of the top competitors in the business formation space: 

Nav exclusive: 10% off Standard & Premium packages

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Swyft Filings

Create your legal entity with Swyft Filings — FREE and lightning-fast. Our dedicated business specialist handles all filing and paperwork, making it a breeze to form your LLC, C Corp, S Corp, nonprofit, or DBA. Nav exclusive! $0 for Basic package and 10% off both Standard and Premium packages. Discount applied at checkout.

Cost

Free + State Filing Fees

Entity Types Supported

• LLC
• S-Corp
• C-Corp
• Non-Profit
• DBA

Noteworthy Perks

• Fast Turnaround Time
• Free Dedicated Business Specialist
• 100% Satisfaction Guarantee

Is LegalZoom reliable?

LegalZoom (US) gets an average customer rating of 4.7 stars (out of 5) on Trustpilot.

Over 80% of respondents gave it a 5-star review, and most positive comments relate to the quality of customer service received. Many reviewers specifically compliment the employee that helped them.

Negative LegalZoom customer reviews tend to center around unwanted charges, difficulties receiving refunds through customer support, and partner services (like tax). 

Overall, LegalZoom is considered a reliable provider for business formation services, as well as basic and general legal services for small business owners. Understand that you may or may not be talking with an attorney, depending on the services you purchase, and that it may try to sell you other services.