The main difference between LegalZoom and Nolo is that Nolo offers downloadable software options, while LegalZoom offers legal and business services.
Compare LegalZoom vs Nolo before using their business formation and legal services. See how these two companies compare.
LegalZoom Vs Nolo – Business Formation Service
When you form a nonprofit, a corporation, or a limited liability company, certain paperwork needs to be filed with appropriate authorities. You can always do all the work on your own but many people choose to focus on more important stuff as there are several LLC formation services that can help with the paperwork. However, there are several business formation services, and choosing the right one can be tricky.
Here at Go Vitru, our goal is to help entrepreneurs start their own businesses. This is why we have gone through (with a fine comb) the features offered by many popular and reputed formation service providers. We have compared their services across several metrics including turnaround time and pricing. In this article, we will take a close look at the formation service provided by LegalZoom and Nolo, and compare their features.
LegalZoom vs Nolo
When comparing these 2 services head to head, we would rate Nolo ahead of LegalZoom. LegalZoom costs a lot more as compared to Nolo but has slower turnaround times. As far as the formation packages are concerned, both these services offer something very similar.
However, LegalZoom asks for a lot more money for similar formation packages (in many cases, almost double the cost). Since there isn’t much to choose between LegalZoom and Nolo when it comes to other key metrics, we find no reason to recommend LegalZoom over Nolo.
It is also important to understand that both LegalZoom and Nolo have pretty long turnaround times. Also, both these services are known to internally delay orders to almost force customers to choose their more expensive options.
As far as the standard packages are concerned, Nolo is a better option when turnaround times don’t concern you. However, if you are looking to save time when forming a corporation or LLC, our recommendation is to choose some other company.
Both LegalZoom and Nolo performed similarly in most key metrics. There are better services out there and this is why our recommendation is to look at other alternatives.
This article is focused on the comparison between LegalZoom and Nolo, but you should check out our articles on the Best Incorporation Service and Best LLC formation Service in order to get a comprehensive view of all the alternatives available to you.
If you’re in the beginning stages of your business formation journey and are looking for more general information, you should check out our article on starting an LLC.
Pricing Comparison – Nolo vs LegalZoom
Most small business owners are hoping to get their business formation work done at the lowest cost and this is why pricing is often the determining factor for choosing a service. After all, you would want to save as much money as possible when you are just getting started.
Direct pricing comparison among business formation services is not as straightforward as it should be. The services offered by most of these companies are similar in nature but the pricing structure of their packages is completely different which means straightforward pricing comparison is a bit tricky.
If this is the first business you are forming, you might not be able to recognize many of the products offered by these services which means it will be difficult for you to gauge the true value of different packages. This is why our review takes into account the contents of the service along with its cost in order to make a fair comparison.
You will come across the terms, Full Formation and Basic Formation once you take a good look at the breakdown of different packages. Here is what you should know about each:
The basic formation service typically covers all the necessities of creating a new business entity. At the minimum, it should include the creation of a draft of an operating agreement for starting an LLC or creating corporate bylaws if you want to form a corporation along with Articles of Organization filing.
The standalone registered agent service typically provides you with one year of service.
A full formation package typically includes everything you get as a part of the basic package along with a registered agent service for one year. Most new business owners typically need a registered agent service.
Packages Offered – Nolo
Currently, Nolo provides 3 different LLC formation packages at various price points. For their basic package, you will have to pay $49 whereas the standard package costs $149. For their express package service, they charge $299. These prices do not include the state processing fees which means you will need to pay them in addition to these charges.
Their basic package is the cheapest option but it provides only the bare minimum necessities of incorporation or LLC formation. This package includes an availability check for a business name as well as drafting of Articles of Incorporation or Organization.
Whether you choose the standard, basic or express package, you won’t get the registered agent service as well as the corporate bylaws/operating agreement. We consider both these services essential for the creation of a new business. You can buy these services additionally with a price tag of $50 for the operating agreement. Their registered agent service costs $150 per year.
When it comes to the standard package, you get two additional services in addition to the basic package. They will help you prepare an IRS application to get an employer identification number. They also provide a set of business contract templates and legal forms (30 in number). In our opinion, you don’t need these services.
When you opt for the express package, you get priority rush filing along with a corporate seal and binder in addition to the standard package. The company claims that their priority rush filing service includes filing of incorporation or formation documents within a business day and in most cases, a filing response is received within 2 to 3 business days.
However, rush filing isn’t offered as an add-on for the other packages. You are forced to buy the express package if you want rush filing.
Packages Offered – LegalZoom
With LegalZoom, you get 3 options for packages, similar to Nolo. Their packages are named economy, standard and express gold.
The economy package will cost you $79 for formation or $149 for incorporation. The standard package is priced at $329 whereas you will have to pay $349 for the express gold package. Keep in mind that you will have to pay state filing fees on your own in addition to these charges.
If you want them to draft corporate bylaws for forming a corporation or an operating agreement for forming an LLC, you will have to pay an additional $99. Similar to Nolo, you don’t get the registered agent service with these packages though you can buy that for $299 per year.
We consider both the operating agreement/corporate bylaws drafting and registered agent service to be essential for any business and ideally, both should have been a part of the economy package.
With the economy package, LegalZoom provides an availability check for your business name as well as drafting and filing of the Articles of Organization. The economy package also includes a quick standard review of the documents submitted by you for any errors or omissions along with a guide for what to do next.
With the standard package, you get a seal, a corporate binder as well as 20 share certificates. These are nice to have but there is no legal requirement for these in any state.
Their standard package does include expedited processing for incorporations. However, this expedited processing is a misnomer.
What they mean is that your order will be expedited internally and not with the state authorities. In short, your order will get a priority in their internal queue which isn’t something for which you should have to pay extra.
In our opinion, formation services shouldn’t ask for an extra fee for internal expediting. Expedited processing isn’t mentioned on the LLC packages but it would be safe to assume that the turnaround time for LLC formation remains around 15 business days.
When it comes to the express gold package, you get rush processing with the Secretary of State as well as express shipping. Rush processing means submitting the required documents to the Secretary of State. For LLCs, this package includes VIP processing.
In simple terms, it means that the total turnaround time gets reduced to around 10 business days whereas it would have taken around 30 business days with other plans. However, even this turnaround time isn’t that fast when you consider the competition as there are formation services with a turnaround time of just 3 days or even less.
Turnaround Time Compared
In our opinion, turnaround time is one of the most important factors when it comes to choosing a business formation service.
Reputed formation services typically process filing as early as possible. In most cases, it is processed the same business day. Many such reputed services also offer the additional option of expediting the processing with the state with payment of additional state fees in order to further reduce the turnaround time.
Turnaround Time – Nolo
It isn’t their strongest point. When you pay for their standard basic package, you will have to wait for 4 to 5 days for them to file the necessary formation documents with the Secretary of State. If you want the process to happen quickly, they require you to choose their most expensive package which will internally expedite your order.
What makes things even worse is that a turnaround time of 7 to 10 days is expected even when you choose to pay for priority rush filing. On the other hand, there are many competitive services promising significantly lower turnaround times for expedited formation. The standard turnaround time advertised by Nolo for their packages without rush filing is 2 to 3 weeks, which is on the average side.
It won’t be wrong to say that turnaround time isn’t Nolo’s strength. Also, they do not offer rush filing as an add-on for their basic standard package and you are forced to choose their most expensive option for rush filing.
There are services such as the Northwest Registered Agent that promises to file the necessary paperwork in a single business day without the need to pay an additional fee.
Turnaround Time – LegalZoom
Needless to say, LegalZoom doesn’t fare any better on this parameter. Your filing is likely to take a full 30 days when you choose their basic economy package.
Similar to Nolo, clients need to buy the most expensive option offered by LegalZoom in order to expedite their order with the respective Secretary of State. Even when you pay for expedited processing, the turnaround time is 7 to 10 days.
When you pay the expedited processing fee, your order is expedited internally. In simple terms, when you pay for their basic package, you are paying them to delay filing your documents.
Customer Satisfaction
We include customer satisfaction as one of the parameters when comparing formation services in order to help our users better understand what they can expect when dealing with one of these services in the real world. For measurement of customer satisfaction, we check the reviews and customer feedback on reputed third-party platforms such as Better Business Bureau or Trustpilot.
For objectivity, we consider the total number of reviews along with the average customer rating of the service. We also take a close look at individual reviews in order to get a better understanding of the overall customer satisfaction regardless of the reviews being positive or negative.
An important thing you need to know when you are considering either LegalZoom or Nolo is that these companies do not exclusively deal with business incorporation or LLC formation. This is why many of the reviews on these platforms are from customers who have used various other products and services offered by these companies. However, these reviews are still important as they give you a good idea of the reliability and trustworthiness of the company.
Customer Satisfaction – Nolo
When it comes to online customer reviews, Nolo does not farewell. On Trustpilot, they have less than 100 reviews with an average rating of 1.4 out of a maximum of 5. On Sitejabber, they do a bit better with an average rating of 3.8 out of a maximum of 5. However, a vast majority of the reviews on these platforms are regarding the lead gen service offered by Nolo for attorneys.
When it comes to the business formation services offered by Nolo, we were able to find only 2 reviews and both these reviews were positive. You can’t draw any significant conclusion from just 2 reviews.
In our opinion, a company as big as Nolo should have a lot more reviews. Also, most companies care about their online reputation and quickly respond to negative customer reviews. However, Nolo doesn’t seem to care as there are no replies to the negative reviews on the above-mentioned platforms.
Customer Satisfaction – LegalZoom
LegalZoom fares much better when it comes to online customer reviews. On the Better Business Bureau website, you will find upwards of 2000 customer reviews with an average rating of 4.1 out of a maximum of 5. Their overall customer reviews look respectable but things don’t look that rosy for the business formation service offered by them.
Even though they have a lot of satisfied customers and a high rating on these platforms, there are many reviews by customers who had significant issues with their services. For instance, 28% of reviewers on Trustpilot have given them a single star.
There are also a number of customers who have experienced serious issues with their services such as customer service problems, unexplained delays, and difficulties in canceling the ongoing services.
However, it would be right to say that overall, LegalZoom has a good rating and a significant number of their clients are satisfied with their services.
Help & Support
Ideally, there shouldn’t be any need for you to contact a business formation service again after buying a package. The formation service should take care care of all the filing needs without requiring you to chase them. However, mistakes happen and if you need help regarding a problem, it shouldn’t be difficult to reach out to competent customer support.
We have reviewed many formation services and the better ones among those are known to have experienced and knowledgeable staff on the customer support desk. The customer support staff in these services isn’t there to provide legal advice but they will patiently answer any queries you might have or help you with any specific issues.
Another factor that separates good services from others is that they offer multiple methods to get in touch with customer support. Also, they quickly reply to your messages and may also be available outside the standard office hours.
We try to recommend formation services to our users where they don’t have to experience any errors or delays. This is why we take into account the availability and competency of customer support staff when comparing various formation services.
Help & Support – Nolo
It’s fairly basic and their support section definitely needs an urgent update. They have a number of “Contact Us” links and each link is meant for a different purpose such as customer service or technical support. There are several FAQs in their help section but most of these answer queries for unrelated services.
You will have to dig through a few links to find the page where you can leave a message. Also, there is no email address or phone number for customer support on their website.
The only option available to you is to leave a message and pray that customer support gets back to you. Ideally, there should have been a lot more contact methods for you to get in touch with customer support.
They also offer customer support only during standard business hours which is between 8 a.m. to 6 p.m. PT.
Help & Support – LegalZoom
LegalZoom fares better as you can leave their customer support a message or call them. Also, their “Contact Us” page is easily accessible. You can also email them at support@legalzoom.com.
They also offer extended customer service hours. You can reach their customer support desk between 7 a.m. and 4 p.m. PT on weekends as well as between 5 a.m. and 7 p.m. PT on weekdays.
There is a well-developed help section on their website which includes a huge library of articles along with plenty of FAQs.
Should you choose LegalZoom or Nolo for business formation service?
We don’t recommend any of them for business formation service.
Nolo is a bit ahead of LegalZoom when compared directly but there are multiple issues with their service. They aren’t cheap and there are better options when it comes to turnaround times.
We aren’t impressed by Nolo’s customer service and there isn’t much helpful information on their website. Also, we were not able to find a significant number of customer reviews for their business formation service.
When it comes to LegalZoom, their high pricing is a major negative factor. Among various business formation services, they charge some of the highest fees without including the essential elements of business formation. The registered agent service offered by the company is prohibitively expensive as it costs almost 3 times the alternatives.
LegalZoom’s high costs aren’t justified with their turnaround times as you will have to wait almost 30 days with their standard package and they also charge money for the internal expedition.
Business formation isn’t a specialty service for both these companies as they are more associated with providing legal documents and certain other legal services.
We recommend choosing a more specialized business formation service. One of the options you could consider is ZenBusiness.