Preface
All-in-all, I’m a fan of using LegalZoom to open up my LLCs. I won’t always go this route though. When I have a little more money to pay an attorney or business manager to open the company for me, I’ll usually go that route — for the simple reason that I just don’t have to deal with any of it, and when something comes up I can just email one point person and be done with it.
I don’t always have the luxury of bigger budgets though, and so when I need to save money here, that’s when I use LegalZoom. It’s gonna be cheaper, but it’s also going to be more hands-on work for the producer. There are also some cons and things you need to watch out for. If you’ve never done this before, it might be really beneficial to walk through the process:
LegalZoom Pros & Cons
Pros
- It’s going to be cheaper than going through an attorney or business manager
- It’s nice to have an online portal where you can get all your information in one place
- It’s very easy to use, and they have lots of resources to help you understand the process
- They’re a big, dependable company, and if they screw up, they’ll take responsibility for it
- They’re available to you every day of the week with ANY questions or concerns you have
- They’re a one-stop shop that can essentially do EVERYTHING your business requires
Cons
- They are going to try and up-sell you on things you don’t need — that’s not a bad thing, you just need to be aware of it
- You won’t have one point person that is designated to you, it’s a big company, so you’ll always be on the phone with someone else
- You have to take everything their reps say with a grain of salt, and double check their facts — I once had a rep give me wrong information over the phone about when I have to file something, and I realized it when I double checked the filing instructions.
Getting Started
One of my favorite parts of Legal Zoom, is their knowledge center. It’s not very prominently displayed on the website, but this is the first place I would go before even starting the process with them. I’d highly suggest reading the articles they have on LLCs, because just skimming through these will make the process easier to digest. Keep in mind, it might feel overwhelming when you’re first getting started; take solace in the fact that lots of people go through this process, and it will eventually become much easier.
When you’re ready, you’ll need to sign up for the website, and click “Start my LLC”. It’ll go through a series of questions that you need to be ready to answer, such as:
- State where you’ll be forming your business
- What your business will be doing (you’ll probably select “Entertainment”)
- How many owners (it could be just you, a group of producers, or any arrangement you like)
- Whether it’s a new business (probably “yes”)
- Will your business have employees in the next 12 months? (I would select “I’m not sure”)
- The end of your business fiscal year (which I recommend you keep at Dec 31)
- You’ll need to enter a business address (make sure this is somewhere you check mail regularly!)
- The name of your business (keep in mind this will be in EVERY contract and invoice you create moving forward)
The Management of your Business
After the initial questions, they will ask some more detailed questions about the management of your LLC. This is important because they will need to draft up an “Operating Agreement” for you, and this is entirely dependent on, well, how you “operate” your business. Think of, for example, who will have the power to sign checks and agreements on the company’s behalf? Those are important details. They’ll ask you questions like:
- Name of Members of the LLC
- Who will manage the business? (a designated person? all members?)
- Who will be the Registered Agent? (see the below paragraph on this)
- Tax ID (you’re going to need this, so I highly suggest having LegalZoom do this for you)
What’s the deal with the Registered Agent?
I highly suggest you have LegalZoom be your Registered Agent. Basically the registered agent is the person designated to receive notices on your behalf, and the reason that’s so important is that they will notify you when you have to do any filings.
I like having LegalZoom be the registered agent because if you’re confused by any notices of filings, you can always call LegalZoom and ask them what you need to do, and someone will help walk you through the process! You can also just pay them a fee to do the filings for you. The price they quoted me to be the Registered Agent is $159/year. They might try to charge you more for a bundle with additional perks. If that’s the case, I recommend you call them and ask them if they can do it for $159/year without all the additional perks. You can tell them that other services like Paracorp can offer you a better price. I’m willing to pay a little extra to LegalZoom, in order to keep it all streamlined in one place. If you’re dealing with too many vendors, it can get very overwhelming very quickly.
Additional Services
Here come the additional services they will try to up-sell you on. Some of these I think are worth it, some of these I think are not. I’ll give you my thoughts on each, but you should really consider for yourself if it’s valuable to you.
Essential Compliance & Tax Preparation Plan
So there are two aspects to this: “compliance” and “tax preparation”. If you’re hiring LegalZoom as your Registered Agent (which is separate from this package), then they are already going to notify you when you need to do any filings to remain compliant. Then it’s up to you whether you will do the filing yourself, or whether your want to pay LegalZoom a fee to do it for you. The difference is that with this package, they will do the filings for you at no additional fee (it’s already included in the $320/year).
The second part is the tax preparation. I like to have all of my LLCs done by the same person that already does my taxes, so I have no need for the tax preparation. If you feel you’d like LegalZoom to prepare your taxes for you, then by all means, the $320/year is a good value. If, however, you’re going to have someone else do your tax preparations, then it’s probably not worth the yearly fee.
Attorney help
You’re going to be hiring a Production Legal team, so I’ve never seen the need for any LegalZoom attorney help. I would just click “no” and move on.
Business License Package
I never go for this either. They essentially compile information already available and send it to you in an email. It should be pretty easy for you to find out what local business licenses you’re required to register for, by either searching on Google or asking LegalZoom over the phone. That said, if it will make you feel more at ease the first time around, there’s no shame in buying this option.
Statement of Information
I’d recommend having LegalZoom do it. At least the initial filing. Then when it becomes due again, LegalZoom (if they are your registered agent) will notify you, and you can decide whether you feel comfortable filing the form yourself or whether you want to pay LegalZoom to do it again for you.
Business Advantage
Since you’re going to hire a production legal team, I see no use for any of the stuff they offer in this package. I would just click “no” and move on.
Bank Accounts & AMEX Cards, Domain Names
I would skip through these as well. You can walk into any bank with your company documents and open up a business checking account, and apply for a credit card — I don’t see the benefit of doing this through LegalZoom. If you ever need a domain name, you can do this through websites like BlueHost. I would just focus on using LegalZoom for what they do best: forming the company.
Once you’re set up
They’ll send you a neat binder with all your company documents that looks like this:
There are a few instructions you’ll need to follow on the first few pages, and then once everything is signed, I highly suggest you scan all the documents you receive and store this binder somewhere safe. You’ll need to email out these documents every once in a while (SAG-AFTRA, for example, will definitely ask you for these), so keep them organized in a digital folder along with all your other production documents.
Conclusion
I really like LegalZoom. I think they offer a great service, and I would highly suggest using them, especially when producing low budget features. Be aware of 30 day trials, because they will charge you when the 30 day trials expire, so I tend to just opt out of those from the get-go. Make sure you select all the services that you’ll need, and always feel free to call them with as many questions as you like. That’s one of the great things about them, they really do make it easy for first time business owners! Lastly, make sure that you’re budgeting for these expenses in your production budget! You can’t produce your film without incurring these expenses, so don’t forget to account for them!
