Starting a new business is an exciting time. But it also requires administrative tasks that can be challenging when you don't have a legal background. Thankfully, there are several services out there that can support you in setting up a limited liability company (LLC).
So, which LLC formation service provider is the best for helping you incorporate an LLC? Let's do a LegalZoom vs Rocket Lawyer vs doola comparison and find out.
Starting a new business involves making lots of decisions. One of these decisions is what type of legal structure you'll use.
This choice is not something you should take lightly. It will have consequences for how you're taxed and whether you'll be held personally liable for any business losses or lawsuits.
Whether you’re starting an ecommerce company, a service-based company, a real estate company, a startup, or just doing some estate planning, there are two main entities you can form: a limited liability company (LLC) or a C corp.
Let's quickly explore both options.
LLC is short for a limited liability company. This business structure is popular because it provides limited liability for the owners.
What that really means is that you and the business are considered separate legal entities. So, if your business incurs any losses or liabilities, your personal assets are protected. For example, you won't lose your home if you go bankrupt or get sued.
LLCs have lots of advantages. One of the main ones is that it allows for pass-through taxation. Any profits the business makes can be passed through to the owners to be taxed as personal income.
A C corp, or C corporation, is a type of business structure owned by shareholders. Shareholders purchase shares of company stock, which represent their ownership.
Like an LLC, owners' personal assets are protected in the event of losses. However, these businesses have to pay corporate income tax. As a result, both the company and the owners are taxed separately.
One of the most significant advantages of setting up your company this way is that it's easy to raise outside capital through new shareholders. However, C corps require more paperwork and maintenance.
Both LLCs and C corps have advantages and disadvantages. Neither is better; it's about what works best for you.
You should start an LLC if you:
You should start a C corp if you:
So, now that's all clear, let's get into our Rocket Lawyer vs LegalZoom vs doola comparison. We'll focus on which is best for helping you set up an LLC in the US.
Rocket Lawyer is an online legal help platform. Formed in 2008, Rocket Lawyer offers individuals and small to medium-sized businesses legal advice and services.
The platform specializes in several services, such as legal, employment, tenancy, and family documents. They also offer bespoke services, such as assistance in setting up a company.
Rocket Lawyer can also help you connect with legal professionals to seek advice on several matters. Per their terms and conditions, this advice comes with a 33% discount on the attorney's typical fees.
Rocket Lawyer's business model isn’t exactly straightforward. It charges for individual services but offers its members free or discounted prices when they require specific work or advice.
Rocket Lawyer’s pricing is based on a subscription business model. People needing legal advice must pay a monthly fee of $39.99 per month.
If you don't have a membership, RocketLawyer charges $99.99 (plus state fees) to incorporate an LLC, plus $149.99 for access to a registered agent service. You'll need to get a registered agent if you don't have a physical address in the state you are incorporating your LLC.
Incorporating LLCs isn't Rocket Lawyer's primary area of business or expertise. Preparing legal documents and connecting people with experts to provide legal advice is what they are really about. As such, they lack the extra services you can get with other platforms.
LegalZoom is an online legal service that was formed in 2001. The company's mission is to make various legal and incorporation services accessible to Americans, including company formation.
The platform helps users connect with legal professionals for advice and guidance across a wide range of legal questions. Perhaps the best thing about the platform is its flexible and customized approach for different legal needs
Incorporating an LLC through LegalZoom can be done with two different packages: Standard and Premium.
The standard formation package starts at $79 + legal fees.
The premium package costs $119 + legal fees. However, that also includes a 14-day trial of their Business advisory plan.
The most important thing to note about LegalZoom is that their standard and premium packages are pretty stripped back. If you want to add extra services that you need to open an LLC, you'll have to pay for each one separately.
For example, you'll need a Registered Agent to file your LLC. That costs an extra $299. Similarly, your operating agreement and EIN will set you back an additional $159. An Annual State report is $55, while a virtual mailbox (useful if you're starting your LLC from abroad) costs $9.50 per month.
All in all, setting up an LLC with LegalZoom will run you over $700 plus state fees.
Business incorporation is just one part of LegalZoom’s model. They offer a range of other legal services, but each one costs extra money. In some ways, this can be seen as a positive because you’re only paying for what you need. However, the costs can quickly add up, especially when compared to rival offers.
Considering this, we can say that, yes, LegalZoom offers many extra services. However, they don’t come as part of their LLC incorporation package.
Related reads: ZenBusiness vs LegalZoom review: Which is best for LLCs?
doola is an online service that specializes in helping entrepreneurs start US businesses from anywhere in the world. Launched in 2020 in New York and counting the prestigious Ycombinator among its backers, doola has quickly cemented its status as a one-stop shop for people starting a business.
Unlike Rocket Lawyer and LegalZoom, doola specializes in business formation. It’s very user-friendly with transparent pricing, which makes it perfect for founders of every level of experience.
doola charges $197 plus state fees to incorporate your LLC. However, your money goes a long way.
Included in the price is:
Consider that these are all things that founders need to deal with and pay for during the first year of operation, and you can see that your investment of $197 goes very far.
While doola's main work involves helping businesses incorporate, it offers several other services to help new small business owners thrive.
Incorporating your business is just the start of your journey. However, you need to take care of plenty of other things. Some of doola’s extra services include:
doola Banking: One of the most valuable features of the platform is that it can help businesses set up a bank account. Start-up founders can gain access to a global business card, accept online payments, and manage their accounts from anywhere in the world.
doola Bookkeeping: Bookkeeping is one of the principal stresses that come with running a business. doola’s accounting service helps busy founders stay up to date with monthly reports, which takes a lot of the strain off during tax season.
doola Tax Package: doola provides a tax package that includes consultations with a CPA and help filing taxes, all at super competitive prices.
doola Total Compliance: Finally, doola offers a Total Compliance package that allows businesses to stay compliant, manage their accounts, and file their taxes
So that's it. Our Rocket Lawyer vs LegalZoom vs doola comparison is over, and now all that's left to do is declare a winner.
When it comes to setting up an LLC, each company does the job well.
doola and LegalZoom are a bit more user-friendly. All you need to do is fill out some basic legal forms to start the process, with advice and help never far away.
Rocket Lawyer is a bit more standoffish. The platform is perhaps better suited to users who have done a lot of research into the business structure and documents they need. Help is available, but be aware that it will cost extra money.
TIE: doola & LegalZoom
When it comes to costs, there is no real contest.
LegalZoom is a very expensive option. What begins looking like a bargain of $79 plus state filing fees soon spirals out of control with add on like $299 for a registered agent and $159 for an Operating Agreement and EIN.
Rocket Lawyer is more cost-effective. However, their pricing structure is a little confusing. While the platform provides free incorporation for subscribers, it charges for other necessary business formation services. You’ll be charged $250 for incorporation and a registered agent if you don't have a membership. If you do have a subscription, you get 25% off that price, but the membership is $39.99. Throw in extra fees for your State Report, EIN, and advice, and the costs rack up.
By comparison, doola offers a simple payment structure of $197. It’s lower than both Rocket Lawyer and LegalZoom while giving you more options.
There are a few different ways to look at this. While Rocket Lawyer and LegalZoom do offer extra services, most of them aren’t related to opening an LLC. This situation stems from the fact that while these platforms can help your business form an LLC, it’s not their primary purpose.
The extra services that Rocket Lawyer and LegalZoom offer are good, but if you need a platform that will support your business during and after formation, doola is the obvious choice.
Starting an LLC is a critical moment for any entrepreneur. You want to work with a legal service that you can trust to handle your information, give the right advice, and complete the job smoothly in just a few business days. So, what better way to judge than looking at each business's customer reviews on Trustpilot?
LegalZoom has a Trustpilot rating of 4.2. It's a decent score, with most customer complaints being related to slow-moving services and problems related to home sales. In fairness to LegalZoom, they outsource this work, so their ratings are based on the quality of their partners rather than the platform itself. But it’s still something to consider.
Rocket Lawyer comes in second place with a very strong 4.7 rating. Most customers are satisfied with the platform's service across various legal matters — however, a few complaints related to subscriptions recurring with the customer's knowledge. The problem seems to stem from customers not understanding the terms and conditions of their trial more than anything sinister.
doola finishes in first place with a near-flawless 4.9. Customers are overwhelmingly happy with service, citing attentive customer service and smooth company formation. Of course, no business gets it right every time. Still, a quick glance at any complaints reveals a detailed reply with attempts to rectify and follow up on issues, which is indicative of the service level that doola users can expect.
When it comes to opening an LLC, doola is the clear winner — especially when it comes to ease of use, turnaround time, and customer support. The process is smooth and user-friendly, the costs are low, and the platform offers various services that help businesses to stay compliant after the incorporation process.
While Rocket Lawyer and LegalZoom are good services and more than capable of doing the job, doola comes out in front.