Direct Incorporation vs. LegalZoom

If you’re looking to start a registered business, then you might be considering using a business formation service like Direct Incorporation or LegalZoom. These business formation companies (and other companies like them) can be very helpful if you feel overwhelmed by all the business paperwork you’re facing.

But in the Direct Incorporation vs. LegalZoom matchup, who comes out on top? Are there any alternatives you should consider instead? In this guide, we’ll review both Direct Incorporation and LegalZoom, comparing how these two options compete in terms of value, customer service, customer reviews, and more.

Let’s get started.

About LegalZoom and Direct Incorporation

LegalZoom and Direct Incorporation are two companies that can help you form and manage a business in the U.S. On the surface, the two brands might seem really similar, but each company has its own pros, cons, and company history.

LegalZoom started in 2001, originally offering a small library of services to help form limited liability companies (LLCs) or assist individuals with writing wills and testaments. Over time, they expanded their service library to cover legal services for both business and personal needs. Since its founding, LegalZoom has helped people with more than 9 million different legal needs.

Direct Incorporation is based in Ann Arbor, Michigan, and they’ve been in business since 2003. According to their website, they’ve served over 80,000 clients in that time, helping with business formations, trademark registrations, and more.

Key Facts About LegalZoom and Direct Incorporation

Both Direct Incorporation and LegalZoom have a lot of common ground since they’re both business formation service companies. But they do have their own key differences, too. We’ll dive into the nitty-gritty of how these brands differ throughout this guide, but here’s a quick glance at these companies.

LegalZoom

• Huge volume of customers (over 9 million served)
• Service offerings include a mix of business and personal legal services
• Offers a free LLC formation package (plus state fees), but other fully-featured packages and other services fall on the pricier side

Direct Incorporation

• Registered agent service is more affordable than some competitors
• Poor customer support
• Lackluster customer reviews

Direct Incorporation vs. LegalZoom: Our Full Review

In our assessment of Direct Incorporation and LegalZoom, we evaluated each company on the basis of several different categories: business formation services, registered agent service, additional service offerings, customer feedback, and customer reviews.

Let’s take a closer look at those categories.

Business Formation Services

LegalZoom can help you form an LLC, corporation, or nonprofit, while Direct Incorporation can help you form an LLC or corporation. Both brands can also help you file paperwork to get S corporation status (if that’s something that interests you). LegalZoom and Direct Incorporation both offer packages for their business formations, too.

Since LLCs are popular business structures, we’ll compare the LLC formation packages for both these brands in this section. Let’s start with LegalZoom:

• Basic ($0 plus state fees): LegalZoom checks if your name is available and then files your Articles of Organization on your behalf. You’ll also get a free tax consultation.
• Pro ($249 plus state fees): You get everything in the basic package, plus an operating agreement and EIN. You’ll also get access to a library of customizable legal templates (for one year) and a free 30-day trial to LegalZoom’s legal assistance subscription, which lets you have 30-minute consultations with an attorney in your state.
• Premium ($299 plus state fees): You get everything in the pro package, plus several tools to help with bookkeeping, expense tracking, and invoicing.

Next, here are Direct Incorporation’s packages:

• Standard ($174 plus state fees): Direct Incorporation will run a preliminary name check of your desired name and file your formation documents for you. You’ll also get an EIN (and S corporation election, if you need it), one free year of domain name registration, a month free of their business compliance program, and a free tax consultation. You also get access to their client resource center.
• Premier ($297 plus state fees): The premier package gets you everything in standard, plus corporate documents like an operating agreement, resolutions, and more. You also get a corporate record book and company seal.
• Elite ($429 plus state fees): You get everything in the premier package, plus four months of website hosting, one free email account, and a do-it-yourself website.
• Venture ($699 plus state fees): This package includes everything in the elite package, plus more advanced branding services, including their trademark protection package, 3 months of their trademark monitoring service, a year of domain name registration and website hosting, five free email accounts, and a professional website. This package also includes 12 months of their business compliance program.

Direct Incorporation’s packages are definitely on the pricier side, but they do include a nice variety of services (most of which are quite helpful). That said, it’s hard to argue with LegalZoom’s free LLC package (you just pay state fees). That’s why ZenBusiness offers the same package: we’ll form your LLC for free; you only pay state fees.

Registered Agent Service

Every registered business needs a registered agent. In some cases, you could serve as your own agent, but only if you meet the criteria: you’re a resident of the state, have a physical address, and can be at that address during all normal business hours. Since those criteria are too restrictive for most small business owners, many opt to hire a registered agent service. Both LegalZoom and Direct Incorporation offer registered agent services.

LegalZoom offers registered agent service for $249 per year. You can buy it as a standalone service or add it onto your formation package.

Direct Incorporation offers registered agent service for $159 per year, and you’ll get free registered agent service for six months if you hire them to form your business. You can also get those first six months for free if you use their registered agent change service, an amendment service that costs $149 (it doesn’t appear that you can get agent service as a standalone product without using their amendment service).

Strictly speaking, LegalZoom’s costs for registered agent service are cheaper for the first year of service; after the first year, Direct Incorporation’s service is more affordable. In contrast, ZenBusiness offers registered agent service for $99 for your first year, then $199 per year after that.

Additional Services

Registered agent service and formation services aren’t the only products you can purchase from LegalZoom and Direct Incorporation — which is good news if you want a variety of services from a single brand. We won’t go over every single service offered by both of these brands; this guide would be miserably long if we did. But we can give you a decent picture of the services you could get with these companies.

LegalZoom is one of just a few companies offering online legal services for both business and personal applications. For example, on the personal law side of things, LegalZoom can help you set up a trust or a living will, navigate divorce proceedings, set up power of attorney paperwork, and more. In the business solutions side of their business, LegalZoom helps business owners file an annual report, get an EIN, research business licenses, get trademarks, and more. They also have a program where you can get support directly from licensed attorneys if you need more customized support than you can get with their standard services.

Direct Incorporation only offers business services. On top of their business formation services, they offer foreign qualification services, amendments, corporate kits, dissolution assistance, help filing for 501(c)(3) status, annual report filing, and even trademark services. They also have a monthly business compliance program designed to help remind you of compliance requirements from the IRS and your state government offices; you can even customize deadline reminders yourself.

Customer Reviews

When we’re assessing a company, we like to look at third-party review sites like Trustpilot or the Better Business Bureau; we find that these are great sources to get an unbiased view at what customers are saying. So we took a look at some of the reviews for Direct Incorporation and LegalZoom.

LegalZoom has a very strong showing on Trustpilot; currently, across more than 23,000 Trustpilot reviews, they have an average score of 4.6/5 stars. Generally, customers report a good experience with LegalZoom. Positive reviewers typically mention that the ordering process was easy to navigate, and that customer support representatives were a big help. That said, negative reviewers often say that they had a difficult time getting support when they needed to cancel a service. A few others complained that they’d signed up for certain services without meaning to.

Customer reviews are a pretty glaring weakness for Direct Incorporation. For starters, there aren’t tons of reviews available on third-party sites. For reference, they have zero reviews on Trustpilot, four reviews on their BBB profile, and only 24 reviews on Yelp. For a company started in 2003, that’s a very small number.

To make matters worse, their reviews are pretty negative across the board (not counting the reviews they feature on their own website, which we don’t find to be a realistic indication of a brand’s performance). All of their BBB reviews are one-star, and the BBB even gives them an F rating for unanswered customer complaints. Their Yelp reviewers frequently cite unhelpful customer support, slow service, and other problems.

If you’re looking for a brand with a great reputation with its customers, stay far away from Direct Incorporation. Brands like LegalZoom and ZenBusiness have far, far better scores.

Customer Support

If you ever encounter a question about your paperwork or about your business, you want to feel confident that you’ll get prompt, helpful customer support. That’s why we’ve taken time to review these brands’ customer support channels.

LegalZoom offers support through live chat or phone support. In fact, they have three different phone numbers listed across their site, with two numbers dedicated to sales and customer care. When we tested their live chat feature, we got a helpful answer to our question within a few minutes. Their customer support team also has a wide range of availability: you can reach them on weekdays from 5 a.m. to 7 p.m. PT or 7 a.m. to 4 p.m. PT on weekends.

Most customer reviews mention a positive experience with LegalZoom’s support team, too. There is a little room for improvement, especially when it comes to sorting out issues with unwanted subscriptions, but all told, people appreciate the support they receive.

Customer support is another glaring weakness for Direct Incorporation. A lot of their negative feedback stems from their poor customer service. We’ve had a frustrating experience trying to contact them, too. We’ve tried to ask questions through their chat feature more than once, and we never received a response (one time we even waited over 40 minutes for a chat agent to appear, and we never got connected). Our attempts at phone support were equally disappointing; one time, we were instructed to leave a message, and it took hours for someone to call us back.

We wondered if their support department was completely absent, but we did get contacted twice by customer support — not to answer our questions, but to push us to complete the order form (which we’d opened to see pricing for their registered agent service, which isn’t immediately available on their website). Their support agents seem more interested in getting you to make a purchase than in helping you with your questions. Technically, their listed customer support hours are from 10 a.m. to 5 p.m. ET on Monday through Friday, but in our experience, reaching out during that timeframe doesn’t guarantee a response.

Which is the best LLC formation service?

If you’ve read this far, you’ve probably got reservations about Direct Incorporation. After all, no one wants to deal with lackluster customer support, and their customer review scores leave a lot to be desired.

But LegalZoom might not be the perfect fit, either. Yes, the brand offers a large library of both business and personal services, which could be helpful to some entrepreneurs. But some of their prices are on the higher side (especially for their more premium packages), and upsells throughout the order process could have you spending more than you intended.

If you’re seeking alternatives, check out ZenBusiness. We’re proud to offer our customers the best value and service. Like LegalZoom, we’ll form your LLC for free (plus state filing fees). But we can also provide you with registered agent service at a great value ($99 for your first year and $199/year afterwards). Plus, we’re BBB accredited, and our customer feedback is fantastic: out of 24,381 Trustpilot reviews, we’ve got a 4.8/5 average score. We pride ourselves on providing excellent customer service whenever you need it.

We can help!

Here at ZenBusiness, we pride ourselves on providing reliable services for a variety of small business needs at a great value. Whether you need registered agent service for a good price, help starting your LLC, a Money Pro app for managing your business finances, or something else, we’ve got your back. We’ll help handle the red tape for you so you can focus on what you love: running your business.