With Direct Incorporation and LegalZoom, we’re talking about two popular options in the LLC formation industry. They each have their own advantages.
First off, LegalZoom has more experience than most competitors, as they’ve served more than 2 million business customers. Furthermore, their $0 (+ state fee) baseline price point for LLC formation service is considerably lower than Direct Incorporation’s $174 price tag. However, Direct Incorporation offers some advanced features in its premium packages that you won’t find with LegalZoom.
If you would like some more information before making your choice, read on to discover all the details of these two service providers, or check out our list of the top LegalZoom LLC alternatives.
1) Affordable: Direct Incorporation and LegalZoom can both save you hundreds of dollars over hiring a traditional law firm. Seeing as many LLCs are relatively simple business structures, you may not even need the expertise of an attorney to draft and file your formation documents.
2) Customer Support: Even though it’s much less expensive than a lawyer, a service like Direct Incorporation or LegalZoom can still make your life quite a bit easier than the DIY route. Their customer support reps can help with any questions you might have, saving you countless hours trying to find your own answers.
3) Experience: If experience is a priority for you, both of these companies have plenty of it. LegalZoom and Direct Incorporation have each handled thousands of LLC formations, and they have the expertise necessary to do the job right.
4) Additional Services: If you need other business services, including anything from foreign qualifications to federal employer ID number (EIN) obtainment and more, they can help. Both of these companies offer many other business solutions, making them one-stop shops for your company.
5) Efficiency: Are you in a hurry to get your LLC formed? That’s no problem for Direct Incorporation and LegalZoom, as they both have ways to speed up your formation. There’s an extra cost associated with expediting your order, of course, but it can be worth it if you’re short on time.
6) Educational: LegalZoom and Direct Incorporation have extensive learning centers on their websites. Even if you don’t end up purchasing services from them, you can find lots of information on everything from formations to ongoing compliance issues.
Identify the LLC package and services that fit your needs and then get started.
LegalZoom: While LegalZoom does offer a $0 (+ state fee) package for LLCs, the number of upsells can get overwhelming — and expensive. They charge $199 per year for registered agent service.
Direct Incorporation: Their starting price point for business formation is $174 plus the state’s fee. However, this package does include six months of registered agent service, and they’ll also obtain your EIN. Their higher-cost plans are intriguing for the right entrepreneur, as they include advanced features that some competitors don’t offer. So, if you’re in the market for features like custom logos, web design, trademark protections, and more, Direct Incorporation could be worth a look.
LegalZoom: LegalZoom has served more than 2 million business customers since it started offering business services online in 2001.
Direct Incorporation: Direct Incorporation opened in 2003, and as a mid-sized company, they’ve served more than 80,000 customers since then.
LegalZoom: LegalZoom offers phone and email support. We reached out twice via the email form on their site, but it took them a full week to respond. The response we received was generic, thanking us for reaching out but not answering our question.
When we contacted them via phone, our question was answered thoroughly. The representative went into detail about our different options and then sent us an email with their direct extension so that we could reach out directly with questions. Overall, while their customer service via phone is good, their online support could be improved.
Direct Incorporation: One of the things we appreciate about Direct Incorporation is the fact that they provide a full list of every employee’s direct contact information on their website. If you need specialized support, it’s easy to look through the list and find the right person to talk to about your questions or concerns. If you would rather contact their general support line, you can also do that via phone or email.
LegalZoom: Their turnarounds are based on which package you order rather than which state you’re forming in. With their most expensive package, you could receive your finalized business formation documents in 7-10 business days, but their cheaper packages take as long as 30 business days (six weeks).
Direct Incorporation: Their processing speeds are based on state turnarounds, so they can be as quick as a few days or as slow as several weeks, depending on the requirements of your specific state. They also usually file your paperwork with the state by the next business day, and you can find all of their state-by-state formation speeds listed conveniently on one page on their website.
LegalZoom: We found 6,000+ reviews for LegalZoom, and while they do have some negative reviews mixed in, a majority of this feedback is positive. Their satisfied customers often talk about how convenient and easy it is to use LegalZoom’s services.
Direct Incorporation: Direct Incorporation has a few dozen reviews across the web. While a slight majority of their reviews are positive in nature, they also have more than just a small handful of negative reviews, and they clearly don’t have nearly the volume of feedback that some competitors have.
LegalZoom: First, you’ll pick your business entity type (LLC, corporation, nonprofit) and which of LegalZoom’s three packages you’d like to purchase. From there, you fill out your business information and payment details over a series of screens that also include upsells for registered agent service, an operating agreement, an EIN, a license research package, ongoing compliance assistance, a tax consultation, ongoing legal guidance, standard or complex tax returns, a legal protection plan, two options for business bank accounts, expedited processing, and an LLC kit and seal.
Direct Incorporation: In our experience, you can fill out their order form in under 15 minutes, and the entire process is streamlined and easily understood. Recently, they also redesigned their package selection screen, improving it from a somewhat convoluted setup to a much simpler presentation.
With either LegalZoom or Direct Incorporation, you’ll have access to a wide variety of additional services to help you start, maintain, and grow your new LLC. They offer many of the same services as well, including registered agent service, annual reports, doing business as (DBA) names, foreign qualification, amendments, dissolutions, attorney consultations, and more.
However, there are also some services that you can only purchase from one or the other. For instance, only Direct Incorporation offers logo design and web design features, while only LegalZoom offers personal services like last will and testament, living trusts, and divorce papers.
Direct Incorporation and LegalZoom are among the most popular LLC formation services online, and they’re both capable of helping you form your LLC. Still, some of you likely remain undecided, so to help you choose, we’ll close by reviewing some situations where you may prefer one over the other.
While Direct Incorporation’s prices are higher than LegalZoom’s, they include more features, and they also offer more advanced branding services. If these items appeal to you, they could be worth a look.
If you appreciate their brand power and large volume of customers, LegalZoom should satisfy your needs. Also, their baseline price point for LLC formation is considerably lower than Direct Incorporation’s, so if you’re looking to save money, LegalZoom could be a good choice as well.
If you’d like to form your LLC with ZenBusiness, we’re here to help. We offer free (+ state fee) LLC formations, and we have a larger volume of positive customer reviews than either Direct Incorporation or LegalZoom. Form your LLC quickly and get more tools to start your dream business.
Starts at $0 + state fees and only takes 5-10 minutes
The most widely recommended LLC formation package offered by LegalZoom is its Basic plan, which is free if you pay your own state fee. With this option, you’ll receive a business website package from Wix in addition to your formation.
LegalZoom offers no assistance with these requirements, and neither does Direct Incorporation. Looking for another option? Check out our New York publication service offer.
In our opinion, Direct Incorporation keeps the upsells to a minimum. They do provide opportunities for you to upgrade to a higher level of LLC formation service or to add features on an a la carte basis, but they aren’t pushy about it. Meanwhile, LegalZoom has an extensive series of upsells throughout its order form, and it would add more than $1,000 to your order if you bought all of them.
LegalZoom has one of the industry’s best refund policies. They provide their customers with a 100% satisfaction guarantee that says they’ll grant a refund to anyone requesting one for any reason within 60 days of their purchase. It’s nearly identical to the refund policy we have at ZenBusiness.
Direct Incorporation doesn’t have a great refund policy. In their own words: “If an order for any of our services is canceled after we have received payment then the full amount will be refunded less a $40.00 processing fee.”
LegalZoom bases its processing times on which level of LLC formation service you purchase from them. Their Economy package has a 30 business-day turnaround, while their Standard package takes 15 business days, and the Express Gold package can be ready in 7-10 business days. Direct Incorporation bases their turnarounds on the actual capabilities of each state, so their times could either be faster or slower than LegalZoom depending on your state (and which package you want to purchase from LegalZoom).
You can. In fact, quite a few entrepreneurs do choose to form their own LLCs without any assistance. However, the do-it-yourself route doesn’t provide the peace of mind we get from hiring a professional service. In addition, each state sets its own rules and regulations for LLC formations, so it’s not always easy to figure out what your state requires.
LegalZoom’s biggest advantage over many competitors is its pricing, as it offers a free (+ state fee) LLC formation service package. As for Direct Incorporation, their advantage is the fact that they provide a number of features that many competitors don’t offer, like their custom logo design and trademark protection services. Not everyone needs these features, but for those of you that do, they’re available.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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