Legal-Zoom vs Inc-File Vs Using A Lawyer For A NY LLC
By: Dandoush Rose
January 25, 2023
We get it – extra cash can be hard to come by when you’re trying to get your new business off the ground. It can be tempting to cut corners to save a few filing fee dollars, and unfortunately that leads too many entrepreneurs into the trap of relying on automated legal services like LegalZoom. While these services may offer unbeatable prices, we all know the old saying – if something seems too good to be true, it probably is.
What happens all too often is that you end up spending the money you saved, and then some, trying to fix the problems these automated services create, when the mess could have been avoided by simply hiring an experienced attorney in the first place. One of the problems we see most often is when clients rely on LegalZoom to create their New York Limited Liability Company (LLC), only to realize later that they’ve failed to comply with the New York LLC publication requirement.
New York’s LLC Publication Requirement
A quick Google search on how to startup an LLC in New York City will tell you that the state has a very straightforward publication requirement and filing fee structure. Many entrepreneurs know about it going in because, while it is mandatory, it’s also one of the most widely unpopular New York LLC laws.
The publication requirement is laid out in section 206 of the NY Limited Liability Company Law, which dictates strict formatting and content guidelines, but essentially the law mandates that any new LLC publish an announcement of its formation in two different newspapers, one daily and one weekly, for six weeks, within 120 days of forming. What isn’t obvious from the face of the law is the cost involved – for LLCs based in New York City, the publication bill can add up to nearly $2,000 in some cases.
Where the problem comes in with automated websites like LegalZoom and IncFile is that clients often mistakenly believe that the publication costs are included in the quoted LLC formation package, when in reality they’re not. You’re paying them simply for the paperwork that you could file yourself online with the Department of State. When you incorporate through LegalZoom, the publication requirement still falls on you.
The consequence for failing to comply with the publication requirement is the suspension of your company’s permission to “carry on, conduct or transact any business” in the state. Getting a letter from the Secretary of State a year after formation informing you that you’re not authorized to do business comes as a complete shock when you wrongly believed that LegalZoom handled everything for you. In short, your attempt to save money at the outset can lead to costly surprises down the road.