Starting a new business comes with a variety of challenges, including selecting the right legal structure and handling the required paperwork.
With the rise of online business formation services, entrepreneurs can now streamline this process without needing to hire expensive attorneys.
Two of the most popular platforms for business formation are ZenBusiness and LegalZoom. Both services offer essential tools to help entrepreneurs form LLCs, corporations, and nonprofits, but they cater to different needs and budgets.
In this detailed comparison, we’ll dive into the features, pricing, and benefits of ZenBusiness and LegalZoom. By the end of this guide, you’ll have a clear understanding of which platform best suits your business formation needs.
Overview of ZenBusiness and LegalZoom
Overview of ZenBusiness
ZenBusiness is a relatively new player in the business formation industry, founded in 2015. The platform was created with the goal of simplifying the business formation process and making it affordable for small business owners and entrepreneurs.
ZenBusiness is based in Austin, Texas, and has gained popularity for its customer-friendly pricing and strong customer support.
ZenBusiness specializes in LLC formation but also provides services for forming corporations and nonprofits. Beyond formation, ZenBusiness offers additional features like registered agent services, compliance assistance, and tools to help businesses stay in good standing with their respective states.
Key Strength: ZenBusiness is known for its affordability, transparency in pricing, and worry-free compliance services, which are tailored to the needs of small business owners and first-time entrepreneurs.
Overview of LegalZoom
LegalZoom, founded in 1999, is a veteran in the online legal services industry. LegalZoom offers a wide range of legal services, including business formation, intellectual property protection, estate planning, and legal consultations.
While business formation is one of its core services, LegalZoom’s versatility makes it a one-stop-shop for legal services.
LegalZoom is best known for its long-standing reputation and the breadth of services it offers. Entrepreneurs who need help with more than just business formation—such as legal contracts, trademarks, or wills—may find LegalZoom to be a better fit.
Key Strength: LegalZoom’s reputation, extensive range of legal services, and ability to provide ongoing legal support make it a strong choice for entrepreneurs who need comprehensive legal assistance beyond business formation.
Features of ZenBusiness and LegalZoom
Features of ZenBusiness
Business Formation Services:
ZenBusiness offers a straightforward, easy-to-use platform for forming LLCs, corporations, and nonprofits. Users are guided through the process of selecting their business structure, filling out necessary paperwork, and submitting documents to the appropriate state agencies.
ZenBusiness also helps entrepreneurs understand state-specific requirements, ensuring that everything is filed correctly and on time.
Registered Agent Service:
Every business is required to have a registered agent who is responsible for receiving official legal and tax documents on behalf of the company.
ZenBusiness provides registered agent services as part of its packages, which ensures that businesses stay compliant with state regulations. By using ZenBusiness as your registered agent, you can avoid missing important deadlines or legal notices.
Worry-Free Compliance:
ZenBusiness’s standout feature is its worry-free compliance service, which helps businesses stay in good standing with their respective states.
The service includes tracking important deadlines, filing annual reports, and offering two free amendments per year to help you update your business information with the state as needed.
Operating Agreement and EIN:
ZenBusiness provides operating agreement templates for LLCs and helps businesses obtain an EIN (Employer Identification Number) from the IRS.
The operating agreement is crucial for defining the structure of your LLC and outlining how the business will be run. The EIN, on the other hand, is essential for opening a business bank account and hiring employees.
Business Website:
In some of its higher-tier plans, ZenBusiness also offers website creation services. This includes domain registration, business email setup, and a website builder.
For entrepreneurs who need an online presence, this feature provides a simple, one-stop solution for creating a professional website.
Features of LegalZoom
Business Formation Services:
LegalZoom offers LLC formation, corporation formation, and nonprofit formation services similar to ZenBusiness.
However, LegalZoom provides additional flexibility by allowing users to choose from a wider variety of business structures, such as sole proprietorships and partnerships.
LegalZoom also provides state-specific guidance, helping users navigate the legal requirements of their chosen business structure.
Registered Agent Service:
LegalZoom also provides registered agent services to ensure that businesses stay compliant with state regulations. LegalZoom’s registered agent service comes at an additional cost, but it provides an added layer of protection for businesses by ensuring that they never miss important legal notices.
Comprehensive Legal Services:
LegalZoom’s key differentiator is its extensive range of legal services. In addition to business formation, LegalZoom offers legal consultations, trademark registration, copyright protection, and assistance with contracts and agreements.
This makes LegalZoom a great choice for entrepreneurs who anticipate needing ongoing legal support.
Operating Agreement and EIN:
LegalZoom provides customizable operating agreement templates for LLCs and assistance with obtaining an EIN from the IRS. LegalZoom’s EIN service helps ensure that businesses are set up correctly to pay taxes, open business bank accounts, and hire employees.
Legal Forms and Documents:
One of the major benefits of LegalZoom is its library of customizable legal forms and documents. Entrepreneurs can access templates for contracts, NDAs, partnership agreements, and more.
This makes LegalZoom a more versatile option for businesses that need legal documents beyond just formation paperwork.
Pricing Comparison of ZenBusiness and LegalZoom
ZenBusiness Pricing:
ZenBusiness offers three pricing tiers, each designed to cater to different needs and budgets. The following are the main packages:
Starter Plan ($0 + state fees):
The Starter Plan includes basic LLC formation services, registered agent service for the first year, and a customizable operating agreement template.
This is an excellent choice for entrepreneurs who need to form a business on a budget. However, compliance services are not included in this plan.
Pro Plan ($199 + state fees):
The Pro Plan includes everything in the Starter Plan, plus worry-free compliance services, an EIN, and expedited filing.
This plan is ideal for businesses that want to stay compliant with state regulations without managing the paperwork themselves.
Premium Plan ($299 + state fees):
The Premium Plan offers all the services in the Pro Plan, plus additional features like website creation, domain registration, and a business email.
This plan is perfect for entrepreneurs who need an online presence in addition to business formation.
LegalZoom Pricing:
LegalZoom’s pricing structure is slightly more complex, with multiple tiers and add-on services. Here’s a general breakdown:
Economy Plan ($79 + state fees):
The Economy Plan includes basic business formation services but does not come with any registered agent services or ongoing compliance support.
It’s a barebones option that is suitable for entrepreneurs who are comfortable handling compliance tasks themselves.
Standard Plan ($329 + state fees):
The Standard Plan offers additional features, including a corporate kit with a seal, certificates, and a personalized binder. However, it still doesn’t include registered agent services or legal advice.
Express Gold Plan ($349 + state fees):
The Express Gold Plan includes expedited filing and priority processing, making it ideal for businesses that need to form quickly. However, like the lower-tier plans, it doesn’t come with registered agent services or ongoing compliance support.
FAQs
Which is better for small businesses, ZenBusiness or LegalZoom?
ZenBusiness is generally better for small businesses due to its affordable pricing, worry-free compliance, and simple business formation process. LegalZoom is better suited for businesses that need ongoing legal support.
Does ZenBusiness provide registered agent services?
Yes, ZenBusiness includes registered agent services in all of its plans for the first year, making it easy for businesses to comply with state regulations.
Is LegalZoom more expensive than ZenBusiness?
Yes, LegalZoom is typically more expensive than ZenBusiness, especially when you factor in the additional costs for registered agent services and compliance support.
Does LegalZoom offer legal advice?
Yes, LegalZoom offers legal consultations as an add-on service, which can be useful for entrepreneurs who need ongoing legal support.
Which service is better for ongoing compliance support?
ZenBusiness is better for ongoing compliance support, thanks to its worry-free compliance feature, which helps businesses stay in good standing with their respective states.
Can I form a corporation with ZenBusiness?
Yes, ZenBusiness offers services for forming LLCs, corporations, and nonprofits.
Does LegalZoom offer more than business formation?
Yes, LegalZoom provides a wide range of legal services, including contract creation, intellectual property protection, and legal consultations.
Conclusion
When choosing between ZenBusiness and LegalZoom, the best option largely depends on your business’s specific needs and budget. ZenBusiness excels in providing affordable, straightforward business formation services tailored to entrepreneurs and small business owners.
Its worry-free compliance feature, registered agent service, and pricing structure make it ideal for businesses that need to form quickly and stay compliant with minimal effort.
On the other hand, LegalZoom offers a broader range of legal services that go beyond business formation.
If you anticipate needing ongoing legal assistance, such as trademark registration, contract drafting, or intellectual property protection, LegalZoom may be a better choice.
However, the cost of LegalZoom is significantly higher, and many of its premium features come as add-ons, which can quickly increase the overall expense.
In conclusion, ZenBusiness is the better option for entrepreneurs who want a cost-effective and streamlined approach to business formation, while LegalZoom is ideal for those who need a more comprehensive legal service platform.
Both platforms offer reliable business formation services, but their strengths lie in different areas, so understanding your business’s long-term needs will help you choose the right provider.
