Using LegalZoom to form LLC: Yay or Nay?

Question

What would/wouldn’t you use an online provider like LegalZoom for (LLC formation, leases, etc)?

Kaiser J. · Answer

A single member LLC is very easy to set up on your own, directly through your state website. No point in paying extra to do it through LZ. An EIN is even easier and takes no more than a few minutes. Registered agent services are a dime a dozen. I would not pay LZ for any of those. For the lease or a partnership agreement, use an attorney.

Others may know better than I do what forms they found value in from Legal Zoom (and I would be interested in knowing, too).

Kory Reynolds · Answer

I only have experience with operating/LLC agreements written in Legal Zoom.

Legal zoom can work for very basic arrangements - ie 50/50 partners with equal capital contributions. As noted by others, it is not 'required' for a single member LLC, but it isn't a bad idea to help solidify the separate entity from your personal assets.

If you start to do anything outside of these simple parameters, Legal Zoom is not capable. Profits interest, guaranteed payments, management fees, unequal capital contributions, any contributions of property...etc. Even with a simple partnership I wouldn't use it as it can do more harm than good if you get a poor operating agreement, inadvertently don't follow it, and end up with unhappy partners or a lawsuit. In the grand scheme of your business the costs of a good LLC agreement could save you immense headache and money if a disagreement between partners comes down the pipeline.

Daniel Hyman · Answer

Our firm used to recommend those types of companies, until investors would show us their overly complex entities that they formed on their own, not realizing the tax and administrative implications of the entity that they created.

Now we always recommend consulting professionals prior to forming an entity.

Shelby Brooks · Answer

@Dusty Garland I am a newbie investor and I just established my LLC through the state website in 10 minutes for $50.... legal zoom charges up to $199 for something that is super simple.

Using LegalZoom to form LLC: Yay or Nay?

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