Starting a new business can feel complex, but entrepreneurs and startup founders have many tools at their disposal. One resource that is incredibly useful at the start of any new venture is a business formation service. These companies help you form your new business by guiding you through the process to satisfy all state and federal filing requirements.
There are many service providers to choose from. Two popular options are LegalZoom, and Incfile. In this article, we will compare the two, helping you choose the best fit for your small business.
Essentially, these two services help guide you through the business registration process. Instead of working directly with the state agency in charge of new businesses, you’ll work with Incfile or LegalZoom. Although the basics are similar, there are some key differences to consider.
Check out our roundup of Best LLC Services
Incfile is a business formation service. Their primary focus is on helping clients start new business entities - in fact, their tagline is “Where Business Begins”. Since Incfile’s founding in 2004, it has helped form over 250,000 new businesses. With the service, you can start a:
Incfile offers some of the lowest prices in the industry. In fact, they have a free plan. The Silver Package costs $0 - you simply pay for the state filing fees (which are mandatory, even if you file directly with the state). In addition to this plan, they have a few other packages, ranging from $149 to $299.
Incfile is likely the cheapest LLC formation service available. If you’re wondering how they are able to offer these services for free, it’s because of partnerships they have with other companies. When you sign up for Incfile, they will recommend various products to you, such as business bank accounts, business website hosting, etc.
See the full review of Incfile here.
LegalZoom is an online legal services provider. They do offer business formation services, but that’s just one aspect of their selection of features. With LegalZoom, you can form a:
Beyond business formation, LegalZoom offers a broad suite of legal services. They can help with all your legal needs - from drafting a Last Will and Testament, to handling various other estate-planning tasks. They can help you file for trademarks and copyrights. And, of course, they can help with ongoing business compliance, custom legal forms, company alerts, legal issues, and filing requirements.
Also unique to LegalZoom is their on-demand legal advice service. For a subscription fee ($10 to $35 a month), you can get unlimited 30-minute legal help consultations with a legal professional. This could be to review business contracts, discuss business structure amendments, or even to help with estate planning.
See the full review of LegalZoom here.
These services are quite different in their overall offerings. That said, we can compare pricing when it comes to business formation packages to get an idea of how these two companies stack up in terms of value for small business owners.
Other Business Services from LegalZoom
When comparing LegalZoom vs Incfile pricing, you’ll notice a few things off the bat. For one, Incfile has more of a “bundle” approach, while LegalZoom starts with the basics and lets you add-on additional services.
On the lower end of the scale, Incfile certainly has cheaper prices. Their basic plan is free, and includes one year of Registered Agent services. The same service from LegalZoom would cost you at least $348. For the upper-tier packages, pricing is more similar between these two services.
As for Registered Agent services, which is something that many companies will keep long-term, Incfile is a clear winner. It costs just $119/year (with the first year free), compared to $249/year from LegalZoom. That said, some people choose to serve as their own Registered Agent, if certain requirements are met.
When it comes to business formation services, features from these two firms are similar. They both support the same types of business entities (LLC, corporation, partnership, nonprofit), they both serve as Registered Agents, etc. They can both help you select an available business name, with a company name availability search feature. The main difference here is pricing, and the bundle structure of Incfile compared to the à la carte style of LegalZoom.
Both services also offer some level of ongoing business services. They can both help with annual report filing, and other necessary steps to keep your business compliant and in good standing.
As for processing time, both services are similar. Incfile offers a more tiered approach, depending on the filing services you select. Both can file by the next business day, if you’re willing to pay for expedited services. Although, keep in mind that the total turnaround time for incorporation or LLC formation still requires waiting for your state’s agency to process everything.
Where the services really differ is in legal services. LegalZoom offers a huge range of legal services, for both business owners and individuals. On the business side, they can help file for patents, trademarks and copyrights, and help you review business contracts and other legal documents, with their business legal advisory services. On the personal side, they can help draft a Last Will and Testament, Power of Attorney, and much more. LegalZoom can also connect you to qualified experts in your area; tax professionals for business tax consultations, attorneys for in-person representation, and more.
Both of these services offer lifetime support for clients. Both can be reached via phone or email.
In this category, LegalZoom earns some bonus points for being available on the weekend. Plus, LegalZoom offers legal advice services, allowing you to discuss legal matters over the phone with licensed attorneys.
To be clear, neither of these companies has a great reputation for customer service. If you look at customer reviews on the Better Business Bureau (BBB), TrustPilot, etc. you will see many complaints about customer support. Overall, ratings for both companies are mediocre - but similar to each other. Some positive reviews noted better experiences with email support, compared to phone support.
We’ve covered all the details, but what’s the bottom line? Which firm makes more sense for your new business venture?