When it comes to matters of consequence, “free” is a word that should be regarded with caution. A better question is “Is Legalzoom worth it”. Without context, this is an impossible question to answer. Legalzoom’s wikipedia page describes the company as this:
“LegalZoom.com, Inc. is an American online legal technology company that helps its customers create legal documents without necessarily having to hire a lawyer. Available documents include wills and living trusts, business formation documents, copyright registrations, and trademark applications. The company also offers attorney referrals and registered agent services. Cited as a disruption to traditional consumer legal services,the company asserts that this disruption benefits people who otherwise could not hire a lawyer by expanding their access to legal services.”Source: Wikipedia
Legalzoom offers a wide range of different options for business, professional, and personal legal needs. From business formation to registered agent services, attorney consultations, trademark registrations, and estate planning, pricing can be all-a-carte options or as a subscription.
All-A- Carte Pricing:
For this exercise, we will use setting up an LLC as a case study in price comparisons:
LegalZoom Economy package
This first level costs $79, a price that is not inclusive of the state fees. Under this, you get:
A name check. It’s vital that you come up with an identifier that has not been used before. The site has a service that allows you to scroll through a database and determine if you can go ahead with the name you have in mind. The beauty of this is that you get to save money which you would have used to file documents that would have been rejected.
Document preparation and filing. All you need to do is provide the details required to fill in the forms, and the agents will process these documents and hand them over to the authorities on your behalf.
Tech support. If you run into any issues, you can always contact customer support that’s available until 10 p.m. during weekdays and up to 7 during weekends. This availability makes it easier for customers to lodge their complaints.
A resolution to open an account. If you will not be the only one operating the business, you will need to come up with a list of names of the people authorized to transact on your behalf. In this case, you will need a resolution which you will present to your financier to effect this representation. LegalZoom can take care of this document on your behalf.
LegalZoom Standard package
Clients in this level part with $329, exclusive of the state fees. The mid-level gives you everything you will find in the first tier, with the following additions:
An organizer. Not only does having an organizing box help you stay organized but it also points to the professionalism in your company. You get this for free.
Membership certificates. For up to 20 members of your organization, you will get ownership certificates which you can use for official purposes. Additionally, these come with a decorative seal to add some aesthetic value.
Priority processing. By paying for this level, you automatically get your order processed ahead of anyone else in the first tier. If you are in a rush, this will be a good idea. This is the primary benefit of upgrading from the economy package
LegalZoom Express Gold package
At the topmost level, clients pay $349, which does not cover the state fees. For this price, you benefit from the features in the previous levels, as well as:
Priority processing. If you would like to get your documents processed fast, this will be the best level, as you will have priority over the previous levels. Furthermore, given that California has an option for an expedition, the company will ensure that you get your documents within a few days.
Fast shipping. Once your documents are approved, the company will send them to you, and provide you with the tracking number which you can use to assess the status of your package.
Generally, people who are in a hurry go for this package. If not, you can always choose the previous packages.
For more information on these LegalZoom LLC cost California packages, please refer to the graphic below:
How Does Legalzoom Compare to Using an Attorney
Some attorneys offer free consultations (usually 30-60 minutes) but will charge by the hour after that. On average, business attorneys charge between $150-350 per hour. Some will offer a flat rate for setting up an LLC, which can range from $500-2,000.
Cost variations depend on the experience and location of the lawyer. Specialties and rates differ from attorney to attorney, so digging into some research will help you find the best fit.
Where Do You Fall?
Legalzoom is not free but is it worth it? Turns out that for most entrepreneurs, it can be. Simple businesses that are straightforward can benefit from a start with Legalzoom. Businesses evolve over time and corporate strategy, tax strategy and legal protection evolve as well. What Legalzoom can do is make sure an entrepreneur doesn’t make predictable mistakes of consequence before they have a chance to evolve as entrepreneurs. Businesses succeed because the people running them get better each day. As businesses succeed, they may outgrow the original business model and require different corporate structures like moving from an LLC to an S-Corp or a C-Corp. Legalzoom can help many entrepreneurs take the first steps to something bigger.
Who shouldn’t use Legalzoom? Businesses that are complicated (from a tax perspective) and/or have industry specific regulations are not great candidates for a service like Legazoom. Why? These “edge” cases require special consultation on things like compliance, tax treatment and legal liability. It is highly recommended that corporate entity structure, accounting and operations are guided by a comprehensive and “custom fit” entity formation which can only be provided by specific professionals working in unison.
The best value for is the Gold package which adds the fastest service for only slightly more than the Standard package for those who are short on time.
Written by Tom Galido
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Tom Galido is a cofounder of Upright Data. His goal is to make sure that our customers are armed with the best insights to get the most out of their shopping experience. Tom holds a BA from Loyola Marymount University and an MBA from Georgetown’s McDonough School of Business. In his free time he is a science fiction / fantasy author.