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by Benjamin AronsonLooks like you passed on the idea of forming an LLC and decided that a nonprofit is the best decision for your dream.
If you’re looking for a helpful company to set up your nonprofit, maybe LegalZoom can help. In this review, we explore everything LegalZoom has to offer you and even found some great alternatives. Let’s see if LegalZoom is right for your nonprofit!
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Before diving into LegalZoom, we made it a point to create and follow a set of guidelines:
We kept those principles in mind while we were analyzing LegalZoom’s features, prices, customer support, track record, professionalism, and overall value.
Let’s take a second to understand where LegalZoom offers value to nonprofits, where they fail and if they’re the formation service for you!
Satisfaction Guarantee
LegalZoom is a formation company that always has the customer in mind. According to their satisfaction guarantee, if you felt that they weren’t helpful, you can get a return within 60 days of purchase.
Cost-Efficient Plans
LegalZoom’s formation plan is quick and streamlined, therefore they are able to offer an affordable and professional formation process. The three plans that are offered usually lack legal advice and attorney exposure so if that’s what you’re interested in they might not be the best service for you. That is how they are able to offer affordable plans.
Website Security
Using an online service when filing important documents can be a bit unsettling with all the Cybercrimes we hear today. LegalZoom’s website is protected by Norton Web Security, a service that scans for threats while keeping your company information safe.
Customer Reviews
LegalZoom has given service to over a million businesses and nonprofits. Unfortunately, there is a whole mix of reviews in the poor customer service/support arena. It’s important to note that they are a huge organization so take this con with a grain of salt.
You’re looking for a company that offers highly professional service and the ability to give additional legal advice if needed. It’s important to note that they will refund their fee within the first 60 days if a customer is not satisfied so there’s really not much of a risk here.
You’re looking for a cheap business service to take care of everything. LegalZoom’s nonprofit packages are diverse. They will file the necessary papers and support your business throughout the process but the base plan doesn’t cover everything, therefore you will need to purchase a more expensive plan.
For over two decades, LegalZoom has helped file more than 100,000 nonprofits! They offer a 100% satisfaction guarantee to ensure that the customer gets exactly what’s expected.
LegalZoom provides three nonprofit formation options Economy, Standard, and Express Gold. The costs of the formation range from $99 – $359 plus state filing fees. They also offer additional add services if needed.
The Economy package costs $99 + state filing fees
This package covers the most basic areas of formation and starts at $99 offering the following:
Estimated processing time: 35 business days
The package is best for:
For those looking to check off the general requirements, this could be a great package for you. If you are interested in a founders kit or you’d like your EIN filed, this wouldn’t be the best plan.
Add on services:
Down the line, you will most likely need additional services. A registered agent is the first requirement that your nonprofit will need as it is required by the state. They normally charge $299 per year. Once you get your organization up and running you will need to file for a Federal Tax ID (EIN), which LegalZoom offers in their Express Gold package.
The Standard package costs $239 + state filing fees
The Standard package covers everything mentioned in economy formation plus the following:
Estimated processing time: 20 business days
The package is best for:
Anyone looking for authoritative certificates. The Delux founder kit and corporate minutes forms are nice to have, but at an additional $139 we’re not so sure it’s worth the money.
Add on services:
As mentioned above, this plan covers “nice to have” items and you will most like need to hire an agent for service of process and get your EIN filed. If you’d like to start as your own agent that isn’t a problem, just make sure that you update the operating agreement when you decide to change your registered agent.
The Express Gold package costs $359 + state filing fees
The Express Gold package costs $359 + state fees and offers everything included in the Standard plus the following:
Estimated processing time: 15 business days
The package is best for:
Entrepeures that want the “one-stop-shop” bargain. If you’re in a hurry to get your entity files, the Express Gold plan is right for you.
Add on services:
The last thing to make sure your nonprofit is in good standing would be to hire a registered agent. That is the one service that is an addon. There are many LegalZoom alternatives like ZenBusiness, Swyft Filings, and Harbor Compliance that offer less expensive services.
If you don’t mind doing a little bit of work yourself, the Economy plan offers the most value for money. Most of the added services of the other formation plans arent don’t worth the added expense. Again, make sure you really look over what they offer to ensure you choose the best filing plan for your nonprofit. If you’re are in a real hurry, then absolutely get the Express Gold plan. They cover the main necessity and move you quickly towards company formation.
There are many alternative formation services that can help out with your nonprofit, and after analyzing a total of 7, we decided to share Incfile and Northwest because they offer a ton of value for a fair price.
Incfile has helped over 500,000 businesses throughout the formation process and they’ve been doing filing for more than 15 years. Incfile is one of the cheapest service providers out there, offering online formation services to your business or NPO for $0 plus state filing fees. Incfile also provides great customer support, online we found great feedback backed by countless Incfile reviews. Take a second to see our post on how LegalZoom vs Incfile compares
Northwest Registered Agent is easily one of the best nonprofit formation providers out there. Northwest like LegalZoom offers basic company formation which starts at $99. They may not be the cheapest, but their transparency and down-to-earth approach are very attractive. Northwest Registered Agent will form your entity hassle-free for $100 plus state fees. If you decide to hire a registered agent and get your EIN through them, the cost is an additional $175 ($125 and $50, respectively).
Yes, LegalZoom is trustworthy. They opened their doors back in 2001 and have helped over 4 million customers.
Check to see if a non-profit is legitimate by accessing a tool called the Exempt Organizations Select Check Tool. This is a database of nonprofit authorized organizations verified by the IRS.
The cost to file 501(c)(3) is $600 as of 2021. This is a flat cost that is irrelevant to the income generated by your organization. Make sure the papers are registered properly as this is nonrefundable.
A nonprofit organization (NPO) is an entity that operates to benefit the community instead of generating income.
If you intend to further a social cause instead of making money with a business, an NPO is an ideal vehicle to get you there.
An NPO (contrary to its name) is totally allowed to make a profit.
The only difference here (and what mostly defines a non-profit) is that you cannot distribute the profit to the founders or board of directors.
Initial cost – Though, as you can see it’s very cheap to form a nonprofit, making it tax-exempt can be costly. In many instances, the price is above $500 for filing the 503(c)(3) document but it varies with the state.
Compliance obligations – Just like a for-profit business, a nonprofit must comply with certain guidelines.
More strict regulations regarding the management – When it comes to how the board of directors and management operate, regulations can be stricter for a nonprofit.
Benjamin is the Co-Founder and CEO of FinancePond. He worked at a private accounting firm before he created FinancePond. Benjamin is an entrepreneur at heart and firmly believes in strong personal finance and investing education. He has a passion for finance and his goal is to cut out the fluff and make personal finance simple for everyone.
