Many of my entrepreneurial readers have asked me, “Is LegalZoom good for incorporation?” They asked me to review Legalzoom.com services for S-Corp (subchapter S corporation) and C-Corporations for their new business formations.
Let’s start with the basics and review what corporation is and what it does for your company.
S CORPORATION DEFINITION
The Wikipedia defines an S corporation as, “United States federal income tax purposes in Chapter 1 of the Internal Revenue Code”. Most S-corps do not pay taxes; instead, the corporation’s gains or losses are “passed through” to the corporations’ shareholders. You as the business owner is the shareholder.
It’s important to realize that legal entities such as a company are formed at the state level. Additionally, the S corporation is the same legal entity as the C company at the state level. Both are the exact legal entity- the company.
The distinguishing feature of S or C is a national income tax idea. Please know that both corporation types begin as a company. A company once formed under state law is taxed as a C corporation by default.
Afterwards, this company can decide to have a C corporation elect to become an S corporation under the Internal Revenue Code.
This election is achieved by first ensuring that the company and its owners, the shareholders, meet the IRS rules. Then the legal documents are completed and filed along with the S corporation election form.
LEGALZOOM S-CORP REVIEW AND SERVICE OPTIONS
LegalZoom provides two levels of S Corp services. It has a prepare only choice where they prepare the legal form to your corporation and then give you instructions on how to document it. Presently, this service is a $45 add-on to the LegalZoom Economy and Standard Packages and is included in the Gold Incorporation Package.
The second S corp service which LegalZoom provides is a complete legal service S Corporation election service in which they do it all for you which includes the filing with the Internal Revenue Service. As of the date of the review, this service costs $80 (0r is a $35 add-on to the Gold package).
If you’re wondering about the trustworthiness of the service, there’s no need to worry. Believe it or not, the getting of an S-corp status is very common among small businesses of all sizes.
So, you can be certain that LegalZoom.com has perfected the procedure for efficiently and correctly obtaining an S corp status because of its over one million satisfied small business customers. It’s quite significant that you entrust this requirement to a trustworthy and proven incorporation services supplier. Some crafty entrepreneurs try to save money and do it themselves. This is a foolish idea that will not save much money and waste a lot of time. Furthermore, you probably will make mistakes that could cost you thousands in the future.
After all, the failure to timely or properly obtain the S-corp standing according to IRS rules can later lead to significant penalties and taxes.
Bear in mind; the S-corp once correctly obtained permits a company and its shareholders to prevent the double taxation of C corporations. These significant savings goes into your pocket, and overtime will be substantial- don’t risk losing this correct or later finding out that the tax advantage wasn’t able because of an improper S corp election.
Let LegalZoom S Corp election service offer you peace of mind and protection from excessive taxation.
Check out my guide on how to start your business right with tons of useful tips I learned by successfully starting, building, and selling multiple companies.