A question that we get asked after reading our state entity formation guides is whether they should form an LLC themselves, use a formation service or hire an attorney. As with most things in life, there are pros and cons to every decision, and this one is no different. Let’s look at the options.
Doing it Yourself
You are likely here because you read our guide on how to form a Limited Liability Company yourself. If you haven’t, be sure to read the guides to forming an LLC in each state.
The process of forming an LLC is something many people can do without much difficulty. The basic process involves visiting the Secretary of State’s website, finding an available business name, filling out the Articles of Organization (also called a Certificate of Formation or Certificate of Organization depending on the state), and paying the state filing fee. Some states are easier than others, and it’s very common to come across terminology and steps that aren’t familiar. This usually leads to concerns of whether the entity formation was done right. Forming an entity is a big step in starting a business, and it is helpful to know it was done correctly, which leads us to using a formation service.
Using a Formation Service
Many people are apprehensive at spending money to hire an attorney to form their LLC but still want some assurance the formation process is being done correctly.
There are several formation services that can do this at a fraction of the price of an attorney (and sometimes at no cost at all). A formation service simplifies the process and helps walk you through forming an LLC. These services do this day in and day out, so they know the process and are available to answer any questions you may have along the way.
In addition to simplifying the formation process, one of the overlooked benefits of using a formation service is they provide alerts when reports are due, such as the annual report. While the state will also send you notifications, many times, it’s through the mail only. It’s nice to also have an email alert, as the extra notice helps make sure this important renewal doesn’t fall through the cracks. The formation company also keeps copies of the formation paperwork and, in some cases, offers a free registered agent for a certain period of time.
The cost of the formation service is very reasonable for the value they provide. Prices vary by company and the level of service you want but are usually between $0 – $300, plus state fees, depending on the services requested.
Using a service lets you focus your time on the dozens of other things you need to get done and the assurance that it has been done right.
Who is the best LLC formation service?
To tell you which LLC formation service is the best is hard to do without knowing what services you need and how much you want to pay. For the most part, all the formation companies do a really good job making it easy to form an LLC. Some services offer a great free formation package, while others provide premium add-ons.
We went through the process of forming an LLC on the more well-known services in the industry and include an overview of what they offer, pricing, ease of use, and customer reviews.
You can start with our overview of the top LLC formation services or check out each company individually.
FileNow
Incfile
IncAuthority
Legalzoom
Swyft Filings
ZenBusiness
Hiring an Attorney
Hiring an attorney to help with your formation is another way to form an LLC. An attorney is going to usually give the most personalized service but is the most expensive too. Attorneys will normally charge between $1,000 and $1,500 to form a corporation or LLC.
Paying for an attorney is your best bet if you want to be completely hands-off in the process, are developing a new product, or operate in a potentially dangerous industry. The attorney is going to advise you based on the industry and personal situation to help identify all the potential issues you may face.
Next Steps
Regardless of how your Limited Liability Company is formed, there are several additional steps that will be needed, such as registering for an Employer Identification Number (EIN) from the Internal Revenue Service, getting any business licenses and permits, appointing a registered agent, and possibly creating an LLC Operating Agreement.
Wrapping it up
As you can see, there are a variety of ways to get your LLC formed from doing it yourself, using a formation service, or hiring an attorney. While you can do it yourself, with the recent pricing battles from the formation companies, several of which lowered their starter package (which is fine for most people) to free, there really isn’t the need to do it yourself. If your business or personal affairs are fairly complicated, it may be worth spending on legal advice and hire an attorney.
