Considering LegalZoom™? Choose Nationwide Incorporators and Get Much More for Much Less! (No Fine Print Needed!) (Updated September 2018)

Getting the Unexpected

It's generally true that you get what you pay for. Attorney-provided services invariably provide better quality services and products, but you'll pay more than an online service and it will take longer, right? Not with it comes to forming a corporation or LLC!

Nationwide Incorporators turns this adage on its head. All your documents and forms are prepared by an experienced corporate attorney for much less cost than LegalZoom!™ Let me say that another way: Using LegalZoom™ to form your corporation or LLC instead of Nationwide Incorporators will a) cost you more, b) provide inferior quality documents, and  c) require you to handle more tasks yourself to properly complete your formation.  Surprised? Read the details below and become a believer.

Overview of the Numbers

Look at the two cost comparisons below. One shows the costs of the two companies for forming a general business corporation and one for forming a limited liability company. The examples are for California entities, but other than the differences in state filing fees, the formation services and costs are generally the same for every state. Note: Costs based on published fees as of September 1, 2018.

Comparison of Top Incorporation Packages

Both companies offer three different formation packages with varying services included in each package. I selected the top package for both companies for this comparison. LegalZoom's™ Express Gold Incorporation package is priced at $369 and Nationwide Incorporators Priority Premium Incorporation package is priced at $375 (Note: our $375 package includes optional services that are extra with LegalZoom™). There are additional, optional services offered by both companies, commonly selected by customers, that are included in the following tables for the total cost. 

 

1 2 3 4

LegalZoom Top Package

Item/Service

Nationwide Incorporators Top Package

Important Notes
tick,check on,checked,correct,right,yes,ok,check mark Name availability check tick,check on,checked,correct,right,yes,ok,check mark  
Image result for red x icon
 Name reservation tick,check on,checked,correct,right,yes,ok,check mark Holds name for 60 days
tick,check on,checked,correct,right,yes,ok,check mark Prepare/file Articles of Incorporation tick,check on,checked,correct,right,yes,ok,check mark  
tick,check on,checked,correct,right,yes,ok,check mark Personalized bylaws tick,check on,checked,correct,right,yes,ok,check mark We fully customize with officer names; no blanks
tick,check on,checked,correct,right,yes,ok,check mark Action by Incorporator tick,check on,checked,correct,right,yes,ok,check mark  
tick,check on,checked,correct,right,yes,ok,check mark Initial Director's Minutes tick,check on,checked,correct,right,yes,ok,check mark Fully customized from scratch with your information; not a preprinted form with blanks like LegalZoom
tick,check on,checked,correct,right,yes,ok,check mark Deluxe Corporate Kit tick,check on,checked,correct,right,yes,ok,check mark  
tick,check on,checked,correct,right,yes,ok,check mark Corporate Seal tick,check on,checked,correct,right,yes,ok,check mark  
tick,check on,checked,correct,right,yes,ok,check mark Stock Transfer Ledger tick,check on,checked,correct,right,yes,ok,check mark We fully customize for the initial issuance of shares
tick,check on,checked,correct,right,yes,ok,check mark Corporate Minutes Forms tick,check on,checked,correct,right,yes,ok,check mark  We fully customize your initial minutes; there are no blanks for you to fill in. 
tick,check on,checked,correct,right,yes,ok,check mark Customized Stock Certificates tick,check on,checked,correct,right,yes,ok,check mark We complete the certificates for the initial shareholders, not blank certificates like LegalZoom that you have to complete.

$115

 State Filing Fee

$105

  
tick,check on,checked,correct,right,yes,ok,check mark Prepare form for Federal Tax ID (EIN) tick,check on,checked,correct,right,yes,ok,check mark  
$49 Obtain EIN from IRS tick,check on,checked,correct,right,yes,ok,check mark We obtain the EIN the day we receive your filed Articles
tick,check on,checked,correct,right,yes,ok,check mark Prepare S Corp Election Form $60  We prepare the form AND file it with the IRS
$35 File S Corp Election with IRS tick,check on,checked,correct,right,yes,ok,check mark  

$568

Total Cost

$540

  
Image result for red x icon  Unlimited Free Ongoing Support from an Experienced Corporate Attorney tick,check on,checked,correct,right,yes,ok,check mark  LegalZoom™ has no free attorney services. The only option is signing up for a prepaid legal plan for attorney access. 

Comparison of LLC Formation Costs and Services

Let's now take a look at a pricing and service comparison between LegalZoom™ and Nationwide Incorporators for forming a California LLC. Since many of the services are the same or analogous to forming a corporation, I'm going to skip the long table and get to the bottom line cost for both companies' top LLC formation package and then add a few important notes. 

LegalZoom's™ top package is priced at $349. Our top package is priced at $375, but includes obtaining your federal tax number (EIN) and a completely customized Operating Agreement, an essential item for the proper formation of any LLC in any state. LegalZoom™ charges $159 extra for obtaining the EIN and providing a preprinted, essentially "boilerplate" Operating Agreement in essentially a "one size fits all" format.

Here are the total equivalent costs for essentially the same LLC formation services:

LegalZoom™: $578.00

Nationwide Incorporators: $450.00

But here are important factors to consider:

Important Optional Services NOT Even Listed by LegalZoom™ 

Electing to Have Your LLC Taxed Under the S Corporation Classification

An LLC can choose to be taxed under the S Corporation tax classification just like a regular business corporation can. This is an important option because it provides the ability to save on self-employment taxes. These consist of Social Security and Medicare taxes and have a combined tax rate of 15.3% in additonal to income taxes. 

We provide the optional service of preparing and filing your S Corporation election with the IRS for $60 total. 

Initial Reports, State Tax Numbers and Seller's Permits

California and many other states also require preparing and filing initial reports, obtaining state taxpayer ID numbers and obtaining a Seller's Permit if you sell products and are required to charge and deposit sales taxes. These additional services are available for a very reasonable cost with Nationwide Incorporators but NOT with LegalZoom.™  

One Significant and Costly LegalZoom™ Upselling Example : Choosing Your Registered Agent

Okay, let's discuss one important example of "upselling" by LegalZoom™ that can be very costly and confuses most people. It's the registered agent selection that every state requires for every corporation and LLC that's formed.

Let's use forming an LLC as an example. How does LegalZoom™ describe the selection of your LLC's registered agent? There's a screen that says "Relax with our Registered Agent Service." It encourages you to select LegalZoom™ as your registered agent but it doesn't really explain what this means or what your options are.

Quite simply, a registered agent is a person listed as authorized to accept legal papers on behalf of a corporation or LLC. In other words, if someone wants to sue a corporation or LLC, the formation document (e.g., Articles of Organization) must list the name of the registered agent and the physical address where that person can be found so that legal papers can be properly served.

The most common and inexpensive option for a registered agent is YOU (or any member of your LLC or officer if you're forming a corporation). You DON'T have to pay LegalZoom™ or anyone else to act as your registred agent unless you form a corporation or LLC in a state other than where you live. 

So, why doesn't LegalZoom™ clearly explain this to you? Simple: it generates an annual fee of $199 every year for LegalZoom™ that it automatically charges to your credit card. Multiply $199 times all the LLCs that LegalZoom™ forms in every state and you can see what a financial windfall this annuity has become and why they don't want you to understand your option to act as your own registered agent! 

The upselling efforts by LegalZoom™ don't stop there. If you browse LegalZoom's™ online LLC questionnaire, your head will be spinning with screen after screen of additional services it encourages you to add to your order, most with little explanation of what they are or whether they're really necessary to properly form your LLC. 

No Upselling and No Guesswork with Nationwide Incorporators

By contrast, when you complete our online questionnaires, we clearly explain that you can act as your own registered agent if you live in the state where your corporation or LLC is being created. Also, if you happen to complete our online questionnaire and request that we provide registered agent services at the additional annual cost of $145 (not $199), we will notify you that this expense can be avoided and gladly refund this portion of your online payment. In short, we strongly believe that it is unethical not to clearly explain to customers that this expense could be avoided, especially when the company concealing this information is secretly profiting from this lack of transparency.

Importantly, with Nationwide Incorporators, you also have the option (which we encourage you to use) to call without having to complete our online questionnaire and speak with an experienced attorney AT NO COST to discuss the formation of your new entity and discuss questions that you have. In just several minutes, we can obtain all the needed information over the phone and email an itemized invoice to you through our PayPal account, thereby avoiding completion of our online questionnaire. We'll gladly discuss each service and option with you and clearly explain the final cost and what it includes. 

The Bottom Line

Using LegalZoom will cost you more than Nationwide Incorporators and provide you with less. You'll have no access to an experienced attorney at no cost to answer questions after your formation is completed or to have the same attorney who handled your original formamtion prepare or update your documents at a reasonable, up front flat fee. 

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