Watch Out For LegalZoom
Posted: Thu Jul 03, 2008 11:43 pm
I used LegalZoom to form my USA-based PHP freelance company. Well, my new CPA I hired went over the paperwork. Here's all the problems she saw with it. She's fixing all of them and I'll be okay, but I wanted to share with you how terrible this organization is.
1. They made me into an LLP instead of an LLC. This was because they asked on a form how many owners I wanted to have, and I thought that in an LLC I could have me as primary owner, and my wife as a secondary owner, and it didn't matter -- that we would still be an LLC. Well, as it turns out -- no, that's not the case. So now I have to switch from an LLP to an LLC, and that will likely mean a new Federal ID will have to be generated.
2. They put themselves down on the state paperwork as the primary owners of my company, not me! It's a loose sort of thing, because in a sense I still own the company stock, but by some kinds of legal twists they make themselves out to be owners. So she's having LegalZoom scrubbed from my records. She says I'll be okay, but it's good that we caught this in case LegalZoom decides to play any monkeytricks with me.
3. They designate a third-party to file a single piece of paper on me as a "registered agent", and then receive all my paperwork from the state. They then forward that paperwork to me. Basically this registered agent is a bunch of bull and a worthless $150 to have to spend every year. The CPA will do some required annual paperwork for $20 in some cases, free in others, and $30 in other cases.
4. They charged waaaay too much money for their services. The CPA said she could have done it for 1/3 the fee that LegalZoom did, and could have done it in two weeks instead of the five week wait I had to go through with LegalZoom.
1. They made me into an LLP instead of an LLC. This was because they asked on a form how many owners I wanted to have, and I thought that in an LLC I could have me as primary owner, and my wife as a secondary owner, and it didn't matter -- that we would still be an LLC. Well, as it turns out -- no, that's not the case. So now I have to switch from an LLP to an LLC, and that will likely mean a new Federal ID will have to be generated.
2. They put themselves down on the state paperwork as the primary owners of my company, not me! It's a loose sort of thing, because in a sense I still own the company stock, but by some kinds of legal twists they make themselves out to be owners. So she's having LegalZoom scrubbed from my records. She says I'll be okay, but it's good that we caught this in case LegalZoom decides to play any monkeytricks with me.
3. They designate a third-party to file a single piece of paper on me as a "registered agent", and then receive all my paperwork from the state. They then forward that paperwork to me. Basically this registered agent is a bunch of bull and a worthless $150 to have to spend every year. The CPA will do some required annual paperwork for $20 in some cases, free in others, and $30 in other cases.
4. They charged waaaay too much money for their services. The CPA said she could have done it for 1/3 the fee that LegalZoom did, and could have done it in two weeks instead of the five week wait I had to go through with LegalZoom.