LegalZoom Step-by-Step Guide to Setting Up an LLC

LegalZoom, an online legal service, assists you in the LLC (limited liability) registration process. Although you can register your LLC online through the state website, many business owners prefer to have LegalZoom assist them.

LegalZoom may offer you questions or other products that you are unsure about during your LLC registration. We discuss what LegalZoom offers and explain why you should pay.

Before you begin reading the following information, you might find it helpful to visit the LegalZoom LLC registration page. Follow the instructions:

Visit LegalZoom

1. Select an LLC name and confirm it’s available

LegalZoom allows you to start your LLC by entering your business name.

If the name is still available, your LLC registration will be valid. You will need to register another business name if the name is not available.

These are the requirements that you will need to follow when naming a business.

  • Be unique – Your LLC name should not be identical to any existing LLC in your state.
  • Do not confuse customers. Don’t give your LLC a name that is similar to another competitor’s to confuse the public or to try to get customers.
  • Avoid restrictive terms

 

Tip If your business name has not been selected and you want to verify that it is, LegalZoom offers a free service in which they will contact the state government to confirm that it is available. Once they have made their determination, which takes around 15 minutes, a LegalZoom representative will contact you.

 

2. 2.Define the purpose of your LLC

After you have been notified that your business name has become available, you will be asked to answer some questions about when you plan to launch your business.

Is this your first LLC:

And what industry your business is in:

LegalZoom asks these questions to provide you with more relevant information and services throughout the process for your particular business.

3. Indicate whether you’ll hire employees

LegalZoom will use this question to find out more about you and offer additional services. This will not affect the LLC.

4. Identify a Registered Agent

Next, you will need to answer the question: Who should you choose as your Registered Agency (RA). Registered agents are your official contact for legal and other state documents.

You could choose yourself as your own RA. However, if you do so, you or an employee must be available Monday thru Friday from 8 a.m. to 5 p.m. to receive a legal document such as a summons or subpoena. If you’re not available during this time, you could lose your LLC status with the state.

LegalZoom can act as your Registered Agent if you are unable to be there or if you prefer LegalZoom to do this for you. Many business owners find that having an outside RA provides them with peace of mind knowing they won’t lose any important documents. LegalZoom acts as your registered agent for $249 per annum.

5. Choose from the Recommended LLC Documents

The LegalZoom LLC sign up process for “Essential Documents”, consists of three parts: the Operating Agreement, employer ID number (EIN),, as well as business licenses.

Here’s a further breakdown of the “Essential Documents” LegalZoom is offering:

LegalZoom’s Essential Documents Best for Additional cost
Operating Agreement Business with multiple owners or one who wants to modify the rules of their LLC $99
EIN and Operating Agreement If a small business plans to hire employees or elects to be taxed like a corporation, it can opt to be subject to the corporate tax. $159
Operating Agreement, EIN, and Licenses Licenses and permits are required for small businesses to be able to operate. $199

Operating Agreement

Operating agreements are used to describe how companies run and can help prevent or resolve disputes. Although most states do not require LLCs for operating agreements to be filed informally, many states require that one is kept on file with your company.

No matter what state requirements, we recommend that you draft an operating agreement for your LLC in order to establish your management structure and remove uncertainty. An operating agreement can be purchased through LegalZoom at $99 when you file for an LLC.

You can still purchase LegalZoom through your online account if you decide that LegalZoom is the right service for you.

Employer Identification Number

The EIN (Internal Revenue Service number) is what the IRS uses to identify your company. The IRS website allows you to request an EIN for free. LegalZoom can help you skip this step if you prefer. The EIN is a crucial legal step in starting a business. Without it, you can’t file taxes.

Business License

LegalZoom can help you determine the right type of permit or license your business requires. This is a great service if you have multiple licenses that your business requires from different government agencies.

 

Free ebook: How to Start Your Business Step-by-step guide that will show you how to go form idea to launch your business in just 30 days 

6. Select Additional Business Services

The last step in selecting the pricing package for your LLC is to look at LegalZoom’s other business services, Smart Employer or Total Compliance. You won’t likely see Smart Employer services if you haven’t stated earlier that you don’t intend to have employees.

Smart Employer

The Smart Employer legal package includes unlimited legal forms, legal advice, tax consultations, and legal advice. The Smart Employer legal package costs $39.99 per calendar month after a 10-day trial.

If you believe you will have legal questions for an attorney, or if you will need to create customized legal forms, this may be the right package for you. You could use the legal forms for employment, client, or vendor contracts.

Total Compliance

The Total Compliance package protects you from missing renewal deadlines for LLCs. The state may charge a late fee if you miss a deadline. You may also lose your LLC status if your LLC expires more than six months after the renewal deadline.

7. Select an LLC Package and Pay

LegalZoom LLC costs vary depending on the speed you need your documents filed and what your stats filing fee is. The state filing fee is $40 in Kentucky and $500 in Massachusetts.

If you’re already in business and have customers, you likely want an expedited filing to get your personal assets protected as-soon-as-possible. If you haven’t started your business and can wait for your filing, choose the Economy package.

LegalZoom LLC Packages at A Glance

Economy Standard Express Gold
Pricing $79 + State Filing fees $329 + State Filing fees $349 + State Filing fees
Name check and business filing      
Articles of Organization      
LLC Next Steps Guide      
Peace of Mind Review ™      
Lifetime customer support      
Financial Account Authorization Letter      
Deluxe Organizer N/A    
Official Seals and Certificates N/A    
LegalZoom VIP Processing N/A    
Rush Processing with the Secretary of State N/A N/A  
Express Shipping N/A N/A  
Learn More Learn More Learn More

8. 8.

After you have selected your pricing package, you will need to give the final details to create your LLC. Although the information required will vary from one state to another, generally it is your business and personal information. LegalZoom will also ask you for a payment method.

After you have selected a package, LegalZoom will ask for the following information:

  • Your primary business address: LegalZoom will list any state-specific requirements.
  • You can form a Professional LLC if you are a licensed professional in medicine, law, accounting or architecture.
  • End date of your fiscal years. This is usually Dec. 31. If your business receives large amounts of revenue at one time or another, you may need to consider a different date.
  • Dissolution Date: Choose a dissolution day if you have a temporary business, such as one that was formed to attend a particular event. Your LLC doesn’t need to have a dissolution date.
  • Names of the owners: Enter the names of each owner. If you are the only owner, please enter your name.
  • Ownership interests Describe whether ownership is expressed in units or percentages. Next, list the interests of each owner and select the type of consent required to transfer ownership.
  • Management structure: Indicate if your LLC will be managed by one owner or multiple owners. This will decide who can open bank accounts, sign checks, and bind the LLC.
  • Information about your EIN: LegalZoom will obtain an EIN for you LLC. Please provide details about your business. This information will be required if you decide to apply for an EIN yourself.
  • Contact information: Name, phone number and Social Security number for one of the LLC owners, managers, presidents, or employees to the IRS.

Once you have completed the information, hit submit and LegalZoom begins preparing your documentation. Once it is completed, it will be sent to your Secretary Of State. LegalZoom will notify your via email once the application has been approved. After you have received the notification, your LLC has been set up and you are ready to launch your business.

LegalZoom to Form an LLC: The pros and cons

LegalZoom is a great tool to create an LLC. However, it may not be the right choice for every business. LegalZoom is a great tool that can help you save time and money but it doesn’t replace an experienced attorney.

LegalZoom’s Pros and Cons for Forming an LLC

  • Full service LegalZoom’s add on services can assist you with all aspects of your initial filing, including tax, legal and compliance issues.
  • Time-saving: LegalZoom helps you save time by handling all the paperwork required to form your LLC.
  • Less expensive that hiring an attorney. Attorneys can charge between $150 and $500 per hour. LegalZoom can help you save money by organizing your LLC and handling other legal matters.
  • Additional support and reminders. LegalZoom’s add on services can help you recall important filing dates and answer any questions you may have about running your business.

LegalZoom to Form an LLC: The Cons

  • A limited amount of expertise is No one can replace the knowledge and experience of a qualified business lawyer.
  • More costly than other services: It costs $79 to form a LegalZoom LLC, plus filing fees. Similar services are available on other websites for filing fees (as part a trial), or $49 plus filing fees.
  • More time to respond: Although LegalZoom claims a turnaround time of 7-10 business days for their Express Gold package with a fast turnaround, many customers complain about slow service and long processing times.
  • Potentially confusing. LegalZoom’s Add-ons can be helpful, but they can also be confusing if your aren’t sure which services you require to form an LLC. If you choose to add on services such as tax consulting or registered agent, pricing can become confusing.
  • Limited customer service: Customer feedback reveals that customer support can sometimes be difficult to reach or unhelpful.

Bottom line

You will need to be familiar with state requirements and tax obligations in order to set up an LLC. Although you can register your company yourself, the process can be time-consuming and confusing. For $79 to $359 plus filing fees, you can save money by forming a LegalZoom LLC within 15 minutes.