LegalZoom Reviews: How Their Tax ID (EIN) Service Works

Starting a business in today’s fast-paced economy requires more than just a great idea—it demands proper legal and financial groundwork. One of the most critical steps for any U.S.-based business is obtaining an Employer Identification Number (EIN), a unique identifier issued by the IRS. LegalZoom, a well-known online legal service provider, offers an EIN service designed to simplify this process. But how does it work, and is it worth the investment?

Why an EIN Matters in 2024

The Rise of Remote Work and Digital Businesses

With the explosion of remote work and digital entrepreneurship, more people than ever are launching side hustles, freelancing gigs, and full-fledged startups. An EIN is essential for:
- Opening a business bank account
- Hiring employees or contractors
- Filing taxes as a business entity
- Applying for business licenses and permits

Without an EIN, many of these foundational steps become nearly impossible.

Increased IRS Scrutiny on Small Businesses

The IRS has ramped up enforcement on small business compliance, particularly around tax reporting. An EIN helps separate personal and business finances, reducing audit risks. LegalZoom’s service ensures that businesses get their EIN correctly the first time, avoiding delays or rejections.

How LegalZoom’s EIN Service Works

Step 1: Choosing the Right Business Structure

Before applying for an EIN, you must decide on your business structure (LLC, corporation, sole proprietorship, etc.). LegalZoom provides guidance on which entity best suits your needs, a crucial step since the EIN application varies by structure.

Step 2: Filling Out the Application

LegalZoom streamlines the IRS Form SS-4 process by:
- Asking simple questions in plain English
- Auto-filling the application based on your responses
- Reviewing submissions for errors before filing

Step 3: Submission and Processing

Once submitted, LegalZoom handles communication with the IRS. Processing times vary:
- Standard Service (Free): 4-6 weeks
- Expedited Service ($79+): As fast as 5 business days

Step 4: Receiving Your EIN

Upon approval, LegalZoom emails your EIN along with a confirmation letter. They also provide additional resources, such as:
- Next-step checklists for new businesses
- Tax filing reminders
- Compliance tips

LegalZoom EIN Reviews: Pros and Cons

What Customers Love

✅ Convenience – No need to navigate IRS.gov’s confusing interface.
✅ Error Reduction – LegalZoom catches mistakes before submission.
✅ Speed (With Expedited Option) – Faster than DIY for busy entrepreneurs.

Common Complaints

❌ Cost – The free IRS application makes some question the added fee.
❌ Upselling – Some users report aggressive marketing for other LegalZoom services.

LegalZoom vs. DIY: Which Is Better?

When to Use LegalZoom

• You’re unfamiliar with tax forms and want peace of mind.
• You need the EIN quickly (expedited option).
• You prefer a guided, all-digital experience.

When to Go Directly to the IRS

• You’re comfortable with government paperwork.
• You’re on a tight budget (IRS applications are free).
• You don’t mind waiting 4-6 weeks.

Final Thoughts

LegalZoom’s EIN service is a solid choice for entrepreneurs who value convenience and accuracy. While it’s not free, the time saved—and the avoidance of IRS headaches—can be worth the cost for many. As the gig economy grows and tax regulations tighten, having a reliable way to secure an EIN is more important than ever.