By Susan Woodrow
Table of Contents
Find The Best LLC Filing Service For You And Your Business With Our LLC Filing & Formation Service Comparison
For entrepreneurs interested in forming an LLC (Limited Liability Company) S-Corp or Corporation, there are 3 main options to take
Option one – Do it yourself by researching the requirements in your state and filing the proper documents and hope you do everything correctly.
Option two – Hire an attorney to do much of the work for you.
Option three – Use one of the affordable online document filing services to get you through the process.
For those interested in using a filing service to form an LLC, this is a review and comparison of our picks for the 7 best LLC filing services for business formations and incorporations in 2021.
7 Best LLC Filing & Formation Services 2021
#1 ZenBusiness (100,000+ Formations)
#2 Northwest Registered Agent (‘Skip the State Fees’)
#3 Incfile (500,000+ Formations)
#4 BetterLegal
#5 Swyft Filings
#6 Inc Authority
#7 Rocket Lawyer
Starting Prices For Each LLC Formation Service
#1 Best LLC Filing Service
$49 + state fee
Texas Company
4000+ Trustpilot Reviews, Score ‘Excellent’
Worry-Free Guarantee
Business Formation & Registered Agent Service in 50 States
Business Website Included! (Premium Plan)
LegalZoom vs ZenBusiness (Top Plans)
😲$1037 vs $299 🙂
Visit ZenBusiness
#2 Best LLC Filing Service
$225 + state fee (Northwest Can Pay State Fees For You Upfront)
Washington State
Business Formations & Registered Agent Services in 50 States
The Leading Registered Agent Service
‘Skip the State Fees’ Northwest’s Affordable VIP Plan
Visit Northwest Registered Agent
#3 Best LLC Filing Service
$0.00 + state fee
Texas Company
Business Formations & Registered Agent Services In 50 States
500,000 Businesses Formed Since 2004
Incfile Video (24 Seconds)
Visit Incfile
#4 Best LLC Filing Service
$299 + state fee
Texas Company
Business Formations & Registered Agent Services in 50 States
One Flat Price
Visit BetterLegal
#5 Best LLC Filing Service
$49 + state fee
Texas Company
Business Formations & Registered Agent Services in 50 States
Visit Swyft Filings
#6 Best LLC Filing Service
$0.00 + state fee
Nevada Company
Business Formations & Registered Agent Services in 50 States
Visit Inc Authority
#7 Best LLC Filing Service
$468/yr or $39/mo
San Francisco Company
Business Formations & Registered Agent Services in 50 States
Visit Rocket Lawyer
ZenBusiness (Editor's Choice)
Pricing For 'Most Popular' Formation Plans
Prices For The 7 Best LLC Formation Services With One-Year Registered Agent Service Included
ZenBusiness (Editor's Choice 2021) ⭐⭐⭐⭐⭐
Employee Identification Number (EIN) Included
$249 $199+ state fee
Northwest Registered Agent (Editor's Choice 2021) ⭐⭐⭐⭐⭐
$225 + state fee
'Skip the State Fees' Northwest Affordable Monthly VIP Plan
Incfile (Editor's Choice 2021) ⭐⭐⭐⭐⭐
$149.00 + state fee
Employee Identification Number (EIN) Included
500,000+ Business Formations Since 2004
BetterLegal
Employee Identification Number (EIN) Included
$299 + state fee
Swyft Filings
$249 + state fee
Inc Authority
$325.00 + state fee
Rocket Lawyer
$220.99 + state fee
How To Create An LLC
LLC stands for Limited Liability Company. It’s a type of business entity that’s similar to a corporation. Like a corporation, an LLC provides some personal liability protection to its owners, who are known as “members.”
One reason people choose to form an LLC is that an LLC is more flexible than a corporation in the way it is managed and taxed. Another attractive reason is the way profits and losses can be allocated among its members.
9 Steps To Create An LLC
Step 1: Select a State
Step 2: Choose a Name For Your LLC
Step 3: Choose a Registered Agent
Step 4: Prepare An LLC Operating Agreement
Step 5: File Organizational Paperwork With the State
Step 6: Obtain a Certificate From the State
Step 7: Obtain an EIN (Employer Identification Number)
Step 8: Obtain a Business Bank Account
Step 9: Register To Do Business in the Other States (Optional)
What Is An LLC Operation Agreement?
The operating agreement of a Limited Liability Company (LLC) allows owners to structure working and financial relationships between co-owners so that it suits the business.
In an operating agreement, the co-owners should establish each owner's ownership percentage share in the LLC, their share of profits, their responsibilities and rights, and how an owner leaving will be handled.
Why an Operating Agreement is Required?
Although most states do not require that LLCs have operating agreements, it does not make sense to try and operate an LLC without one in place, even if the company has a sole owner.
Operating agreements help guard the limited liability status, prevent management and financial misunderstandings, and makes sure the business is run according to its own rules rather than default rules administered by the state.
7 Best LLC Filing Services Reviewed
#1 ZenBusiness
#1 Best LLC Service
Headquarters: Austin, Texas
Our Favorite LLC Website For 2021
ZenBusiness Has Completed Over 100,000 LLC Filings & Formations In The Past 3 Years
File & Form an LLC Online With ZenBusiness!
ZenBusiness is our favorite for best LLC service in 2021. Created by Ross Buhrdorf, former HomeAway CTO, ZenBusiness started in large part as an alternative to LegalZoom.
The goal of ZenBusiness was to be the best in business formations, offering many services that helped people with all types of legal matters for their business.
LLC formation has become one of its prime services. By offering different packages, ZenBusiness has managed to exploit a gap left by LegalZoom, which other companies in the field are now taking advantage of.
From their website,
Who is ZenBusiness? We are a small business that is excited about helping other entrepreneurs realize their dreams of creating and growing a successful business. By making business formation easy and affordable, we hope to foster a small business community where owners can connect on a local and national level and help each other grow.
Based in Austin, Texas, ZenBusiness also offers a worry-free compliance guarantee with their Pro and Premium LLC formation plans.
A nice feature for business owners to have, knowing ZenBusiness will take care of every legal form and annual report as part of their services.
And if they miss something which causes a fine, they will pay the fine.
ZenBusiness LLC Service Price Comparison
ZenBusiness Has An 'A La Carte' Option
| Service | Pricing |
| Registered Agent Service | $119 per year |
| Worry-Free Guarantee | $129 per year |
| Employer ID Number (EIN) | $70 one-time charge |
| Business Filing | $49 |
Example of a Texas State Fee & Pro Plan
Texas $300 state fee + $199 Pro Plan = $499
Incorporating A Business In Delaware
Delaware State Fee $89
Pricing: ZenBusiness offers three different pricing packages for creating an LLC.
Starter Plan: $49 per year, plus the state fee
- Standard filing service
- Formation in 1-3 weeks
- Name availability search
- State filing plus verification
- Articles of organization
- Personalized dashboard
- Registered Agent
- Operating agreement plus bylaws
- Phone and chat support
Pro Plan: $199 per year, plus the state fee
- All Starter services, plus
- Formation in 5-8 business days
- Worry-free guarantee
- Employer ID Number or EIN
- Expedited Filing
Premium Plan: $299 per year, plus the state fee
- All of the Pro services, plus
- Rush filing service
- Formation in 1-3 business days
- A business domain name, website, & email address
- Domain name privacy
- Formation in 3 to 5 business days
Each plan comes with extended customer support hours 7 days a week
ZenBusiness PBC (Public Benefit Corporation) was founded to help those who wanted to create an LLC to do so with ease. For those who want to start small, you can upgrade to bigger packages if you desire.
The reputation that ZenBusiness has built up over the years is considerable. They appear at the top of our list and other listings for the best LLC services.
We think ZenBusiness is the best LLC and incorporation creation service for 2021, and we aren't the only ones who think they are one of the best LLC services online today, just check out their user reviews on Trustpilot.
If you need to form an LLC this year and/or need a good registered agent service, we think ZenBusiness is one of the best LLC services available for 2021. Visit our ZenBusiness review or our comparison LegalZoom vs ZenBusiness.
ZenBusiness Website Builder
The ZenBusiness 'Premium Plan' Includes a Business Website, Domain Name, and Website Dashboard
A website can also be added to the Pro Plan or Starter Plan
Website $100/year
Domain Name $25/year
ZenBusiness offers all customers a personalized dashboard to set up and customize their domain name and website at any time from a computer or mobile device.
The ZenBusiness website builder comes with several templates to choose the style and design that you want, hosting, a personal domain name, and business email.
✅ Set up your domain name
✅ Select a website template
✅ Customize your content and designs
✅ Generate new leads and customers
✅ Take payment from your website
ZenBusiness Customer Reviews April 2021
Visit Trustpilot
ZenBusiness vs LegalZoom Comparison (Top Plans)
LLC Filing, Formation, Employee Identification Number EIN (Tax ID), Operating Agreement, One-Year Registered Agent, State Compliance, Express Shipping
ZenBusiness $299 + state fee
VS
LegalZoom $1037 + state fee
$349. LLC Filing
$249. One-Year Registered Agent
$159. Operating Agreement, EIN
$69. Compliance Calendar
= $1037 + state fee
LegalZoom Verified Trustpilot Reviews March 2021
ZenBusiness LLC Formation and Incorporation Service
Customer Support: Phone or Chat, Monday – Friday, 8 am – 8 pm Central time or Sunday from 10 am – 7 pm Central time
Form A New Company With ZenBusiness LLC Services
#2 Northwest Registered Agent
#2 Best LLC Filing Service
Northwest Registered Agent
Headquarters: Spokane, WA
One Of The Few LLC Websites With Offices In All 50 States!
https://northwestregisteredagent.com
Form An LLC Online With Northwest Registered Agent LLC Services
From their website,
At Northwest Registered Agent, you'll find an in-depth assortment of business services, free legal forms, and how-to guides, each one created with the single purpose of helping people start and operate businesses.
That's what we believe a registered agent should be—a real business solution that makes doing business easier and better.
Whether you're seeking registered agent service in any US jurisdiction, want to start a company, looking for a free LLC operating agreement, want simple instructions on how file an annual report, or even want to do something obscure like learn how to reinstate a corporation, Northwest Registered Agent is here to guide you.
Northwest is our #2 best LLC service. One of the most familiar names in terms of registered agent and LLC formation services, Northwest Registered Agent, has become one of the largest companies of its type in the country.
In business for over two decades, the company is well-known for its high-quality customer service, reasonable pricing options, and a lack of pushing sales.
Skip The State Fee
Pricing: Northwest Registered Agent offers two primary services, LLC formation, and registered agent services. As the name implies, they are primarily known for their registered agent services. However, they also have an LLC formation service, which many take advantage of.
Monthly Plan: Northwest pays your state fee upfront and spreads it out into monthly payments. The Texas formation fee is $300, but for just $54 a month, you get a business formation and registered agent services for one year.
This is mostly because those who start up a business and need LLC formation will probably need a registered agent as well.
Registered Agent: $125 per year
Keep in mind that registered agents and LLC formation are not combined; they are separate services. With this purchase, your business will have a registered agent that is required by law in all 50 states. This means that the state has a legal way of contacting you for sending forms, notices, and the like. You can act as your own agent, but that can be problematic.
LLC Formation: $100, plus the state fee
LLC Formation + Registered Agent = $225 plus the state fee
This service is a one-time fee, which means that all aspects of LLC formation filing are performed with just one payment.
Keep in mind that this service also includes a free year of registered agent services. But after that, it is $125 per year.
This means that you enjoy a significant discount for your first year of registered agent services if you include it with your LLC formation service.
Each plan comes with personalized customer support
One advantage that Northwest Registered Agent offers if you use their registered agent services is that your personal information is kept private. This means that your business address for receiving notices and junk mail is through Northwest Registered Agent, and not your home address.
This can be most advantageous for many types of businesses.
If you need to form an LLC this year and/or need a good registered agent service, we think they are one of the best LLC services available for 2021.
Northwest provides unique and personalized customer support by 'Corporate Guides'
Phone 509-768-2249
They have offices in 50 states
Create an LLC online with Northwest
#3 Incfile
#3 Best LLC Filing Service
Incfile
Headquarters: Houston, Texas
Incfile Is A Formation Website With Over 20 Years Experience
Incfile Customer Reviews On Shopper Approved
First Year Registered Agent Services Free
Get One Year of Registered Agent Services Free!
Incfile's Silver LLC Formation Package Is Free! + state fee
Free Registered Agent Service 1st Year!
Incfile's Gold Package Includes An Employee Identification Number (EIN)
The Platinum Package
The multiple price packages are excellent, and the selection of services is also good. If you need to form an LLC this year and/or need a good registered agent service, we think they are one of the best LLC services available for 2021. Visit our Incfile review for more details.
Each LLC plan comes with responsive customer support.
Incfile's Customer Support: Phone support available Monday - Friday from 9 am to 6 pm CST
Create an LLC Online With Incfile LLC Services
#4 BetterLegal
#4 Best LLC Filing Service
BetterLegal
Headquarters: Austin, Texas
One Simple Formation Price With This LLC Website From Texas
Fast & Inexpensive Formations
If you want straight talk, no upsells, and a quick business formation, BetterLegal is the one for you. There are no confusing packages here, BetterLegal has one formation package that gets the job done.
On their website, they claim to set up your business in 10 minutes, get your paperwork filed the same day, "so you'll have your business within 2 business days" "and receive your documents in 3 business days"
BetterLegal is headquartered in Austin, Texas, and has been in business since 2016. Their Trustpilot reviews go back almost 3 years and they have a combined rating of "Excellent"
The BetterLegal Price & Plan
BetterLegal charges a flat fee of $299 (+ state fee) for LLC and Corporation formations. This price includes the preparation and filing of the Certificate of Formation, an Operating Agreement, and an Employer Identification Number (EIN). They can set you up with a registered agent for $10. per month or $90/year.
Each plan comes with solid customer support.
LLC Formations
Incorporations
BetterLegal Trustpilot Reviews
BetterLegal's Trustpilot reviews are great and they have an A+ rating from the Better Business Bureau.
At the time of this writing, the BetterLegal website does not show any customer support hours or phone access, only email and physical address.
To contact BetterLegal, email them at email@betterlegal.com, or send a letter at: 1003 Rio Grande St, Austin, Texas 78701.
Form a New Business With BetterLegal LLC Services
#5 Swyft Filings
Form an LLC online with Swyft Filings LLC Services
#5 Best LLC Filing Service
Swyft Filings
Headquarters: Houston, Texas
Another Texas LLC Website Offering Tremendous Value
https://www.swyftfilings.com
Form an LLC
Want to create an LLC online quickly? Swyft Filings is the one for you. While Swyft Filings is relatively new, having been formed in 2012, they have managed to carve a niche in the online LLC formation service niche.
They have done so in large part by creating a simple set of services with three pricing packages. Plus, they offer a 100% satisfaction guarantee and focus on providing reliable customer service.
The emphasis of Swyft Filings is to provide fast, proper service when it comes to LLC formation. This means that their customer service operations are geared towards that endeavor.
Pricing: You’ll find three basic pricing packages, Basic, Standard, and Premium.
Basic: $49, plus state fee
- Preparation and filing of Articles of Organization
- Lifetime customer support
- Name Availability verification
- 12-month Free domain name
- ComplianceGuard alerts
- 30-minute Business tax consultation
Standard: $149, plus the state fee
- All from Basic package, plus the following;
- EIN or Federal Tax ID number
- LLC operating agreement
- Organizational minutes
- Banking resolution
Premium: $299, plus the state fee
- All from Standard package, plus the following;
- Business website
- 90 days of hosting
- Digital corporation kit
Each formation plan comes with high-quality customer support.
You can upgrade to different packages if you choose, depending on the needs of your business. This means that you can select what works best for you at a price that fits your budget. If you need to form an LLC this year and/or need a good registered agent service, we think they are one of the best LLC services available for 2021.
Swyft Filings LLC Formation and Incorporation Service
Customer Support by Phone or Chat: Monday - Friday 9 am - 6 pm
Based: Houston, Texas
Create an LLC with Swyft Filings LLC Services
#6 Inc Authority
#6 Best LLC Filing Service
Inc Authority
Headquarters: Reno, NV
Affordable LLC Website
Inc Authority offers a basic LLC setup service for FREE, just pay the required state fees. It's a friendly way to get you in the door and let you experience their service before adding additional features.
If you need to form an LLC this year and/or need a good registered agent service, we think Inc Authority is one of the best LLC services available for 2021.
Customer support is available 5 days a week by phone or email.
Here's what is included with the free plan.
Many people may choose to start with one of their three main packages.
Why Free Business Formation?
From their website, Inc Authority explains why they provide a FREE but limited business formation service.
WHY ARE WE GIVING AWAY FREE* CORPS AND LLCS?
AT INCAUTHORITY.COM, WE WANT TO EARN YOUR TRUST AND THEN YOUR BUSINESS FOR LIFE.
By giving away FREE* corporations and LLCs, it means you will have more money in your pocket to make your business succeed.
When you incorporate with IncAuthority.com, our staff is here to support you in creating your business and protecting your assets. Count on IncAuthority.com to help you grow your business and protect your family's future.
The Startup Specialists with Inc Authority
Support Staff
Inc Authority LLC Formation and Incorporation Service
Customer Support: By Phone or Chat, Mon-Fri: 8 am-5 pm PST
Create an LLC Online with Inc Authority LLC Services
#7 Rocket Lawyer
#7 Best LLC Filing Service
Rocket Lawyer
Headquarters: San Francisco, CA
Rocket Lawyer Is An LLC Formation Website That Also Provides Legal Services
Form A New Business With Rocket Lawyer LLC Services
Founded in 2008, Rocket Lawyer is one of the more popular online legal technology companies on the list.
Designed to help small to medium-size businesses along with individuals, the purpose of the company is to provide online legal services that include everything from incorporation to legal documents to estate plans and more.
Although the company covers a broad range of interests in terms of the legal documents and assistance they provide, the main target is entrepreneurs and those just starting up small to medium-size businesses.
Initially, the company charged for all its services individually but added a monthly subscription fee to cover most of what they offer, which helped to grow their business exponentially.
Pricing: There is only one monthly pricing service, which makes Rocket Lawyer different than most in the field.
Premium: $39.95 per month, plus the state fee
Each plan comes with personalized customer support.
If you are not a premium member, you will have to pay for each service that they provide. Premium membership includes the following;
- Access to Legal Documents
- Attorney Services: Ask questions, get 30-minute consultation, access to documents
- Business Incorporation Filing: Free for the first incorporation, 25% off for future incorporations
You can hire Rocket Lawyer as a registered agent for 25% off their standard fee. Plus, you can hire an attorney for 40% off their usual price.
Keep in mind that if you only need a specific service from Rocket Lawyer, such as LLC formation, then it is a one-time fee. However, you might want to consider the premium service as it offers plenty of features for a price that is comparable to similar services provided by different companies.
Otherwise, you can pay a one-time fee for the various services if you choose not to go Premium. If you need to form an LLC this year and/or need a good registered agent service, we think Rocket Lawyer is one of the better LLC services available, but not near the top of our list for 2021.
Rocket Lawyer LLC Formation and Incorporation Service
Customer Support: Phone Support Monday-Friday, 6 am-6 pm
What about LegalZoom? How come they aren’t at the top of this list?
LegalZoom happens to be a well-known and busy online legal services business. This is attributed to the company’s large-scale advertising campaigns and strong brand recognition. We like LegalZoom's extensive variety of online legal services.
With that said, we think their features and rates aren’t as impressive as other LLC filing services.
Business Structures Compared
Corporations, S-Corps, Non-Profits, LLCs, and Sole Proprietorships
If you get hit by the idea of starting your own business, you’ll need to choose which kind of business structure your company should use. Which business structure is right for you can depend on how you plan on operating the business.
Different business types can affect how you handle taxes and liabilities that can affect you and your company as a whole.
Each kind of business structure has its pros and cons. You should assess your options and choose the right one that suits your vision and dreams.
Once you’ve picked a business structure that you’re happy with, you can make it a part of the business plan.
What are Corporations?
The first thing to know about corporations is that there are a few different subtypes. A corporation owned by shareholders is called a C Corporation. The shareholders choose who they feel would be a suitable board of directors to manage and oversee the business.
The board of directors has to make decisions that benefit their corporation and match the ideals and ideas of the shareholders.
The main benefit of choosing a corporation is that owners have a limited amount of liability when it comes to company debt. Corporations can also enjoy lower tax rates as profits are shared.
It’s also quite simple to transfer the ownership of a corporation if it comes down to that.
The key downside of a corporation is that there’s much paperwork involved, and running the business is generally more expensive.
It can also take longer to come to a unanimous decision because there are so many people on the board of directors, and all of them (or at least most of them) have to agree.
What are S-Corporations?
S-Corporations have different financial processes. They distribute the income of the business to the shareholders for taxation. One key benefit for shareholders with an S Corporation is the single layer of tax.
There are still drawbacks to having an S Corporation, however. For a start, the laws around these corporations can be challenging to understand and navigate. Owning an S Corporation is likely to involve working with an attorney or an accountant. There could also be stock restrictions in place. Another downside is that officers and shareholders may be limited to “reasonable” salaries.
What is a Non-Profit?
Non-profit businesses are formed to serve some benefit to the public. This can include community foundations and private foundations. Non-profit organizations are afforded a tax-exempt status as laid out by Internal Revenue Code Section 501(c)(3). Non-profit organizations can be made for all kinds of missions, but most of them are some human service organizations.
Their tax-exempt status is the obvious benefit of owning a non-profit business. Any founders or directors of a non-profit organization also get to make the most of limited liability for any company debt.
The downsides of this kind of business are that there’s much paperwork involved in launching and operating a non-profit organization.
They also have high costs, and the public will always scrutinize the income and expenses to ensure a non-profit appropriately handle their money.
What are Sole Proprietorships?
A sole proprietorship is easily one of the simplest kinds of business to create. This kind of business sees one person write out a business plan and then go on to form, own, manage, and control their business. A
s the name implies, you are in charge of everything and all the profits are yours. That also means that any losses are also your responsibility.
The advantages of operating a sole proprietorship are that they are easy to manage, decisions are made easier, and there’s a lot of flexibility. The downside is that you are wholly liable for any business financial problems. You also have to pay personal taxes on the net profits of the business.
What are General Partnerships?
General partnership businesses are companies owned by two people (or more). This kind of business structure allows for partners to provide funding to start up the company. All partners are responsible for managing the company. Partners may choose to create an agreement that outlines their specific role for the company.
It’s easier to start a general partnership than other types of business. They have fewer start-up costs as multiple people provide financing. As is the case with a sole proprietorship, the partners in a general partnership are all responsible for any business debts. Partnerships can also reach an impasse or fall apart if the people involved don’t work well together.
What is an LLC?
An LLC is a “limited liability company.” These are a sort of combination between a corporation and a partnership that operates as a single legal entity. The people involved with an LLC have the same single taxation enjoyed by partners of a partnership.
Forming an LLC is an attractive choice for entrepreneurs because individual members have a limited liability over business debts. These companies can also be created without the endless paperwork required for a corporation. The downside to starting an LLC is that it can be more expensive than sole proprietorships or a partnership.
An LLC or Limited Liability Company is a business formation that was created back in the 1970s as an alternative to a corporation. It is described as a cross between a sole proprietorship, partnership, and corporation. The basic premise behind an LLC is that the member or members of the LLC cannot be held personally responsible for tax debts, company liabilities.
Even if the business is forced to file bankruptcy, the members are shielded from having to spend their own money to cover any debts or payments. LLCs are not subject to corporate tax; the owner or owners simply list the profits and or losses on their personal income taxes.
Each state has its own regulations on business formations, for info on how to start an LLC in Texas, for example, visit our article how to form an LLC in Texas.
LLC vs Corporation
Image Credit ZenBusiness
All LLC businesses are viewed in two different ways as a legal entity and tax entity. Each of them is handled in a unique way in order to ensure that both parts are taken care of. As a legal entity, this is how the courts and different levels of government view a company.
The tax entity part of a business is how it is seen by the government and how the tax bill is determined. Here are some details to better describe both legal entities and tax entities
Tax Entity
Setting up your business as an LLC, even if you are a single individual, has its distinct advantages, and how it is taxed is one of them. You can set up an LLC as a single person (sole proprietorship) or multiple-member (partnership) and then taxed accordingly.
There is an additional option that the IRS offers, which makes it possible to request to be designated an S-Corporation or C-Corporation. Just by simply filling out more paperwork, while you can choose the option of an S-Corporation or C-Corporation as an LLC, it is made difficult and cumbersome by strict guidelines to qualify for.
If you decide to look into the S-Corporation or C-Corporation option, you must file the paperwork to be designated an S-Corporation, by filing an IRS form 2553 and if your business qualifies it will be taxed accordingly. If you file an IRS form 8832 and qualify, it will be taxed as a C-Corporation.
As a C-Corporation, there is an additional amount of taxation or double taxation called the corporate tax. This type of tax does not get levied against an S-Corporation.
Establishing your business as an LLC helps you to shield you from paying a corporate tax on profits. It is seen by the IRS as a pass-through entity for tax purposes and therefore you as the owner are considered self-employed.
As such, you only pay individual tax and in the case of a multi-member LLC, each person would be taxed separately. As far as taxation goes, it is very important that you weigh all of your options and consider them very carefully before you make any decision that involves taxes.
How To Form An LLC
There are a few different kinds of business entities and structures, including Corporations, S-Corps, and Limited Liability Companies (LLCs). If you are interested in forming an LLC or want to know how to create an LLC, then follow these easy steps.
Step One: Name the LLC
The first thing to do when forming your LLC is to give it a name. It should comply with the State rules regarding company names. You can find those rules on the Secretary of State website for your state. While the rules can vary between states, here are some principle guidelines;
- The name will be unique and different from other LLCs operating within the state. You should have no problem checking the state database for your name. It’s also possible to reserve a name so no one else can claim it. This reservation costs a fee and is only available for a limited time, however. This does help ensure that your company can use the desired name once all the paperwork has been filed. Once again, though, a reserved name can’t breach the trademark of another business.
- Most of the 50 states require the company name to have included “LLC” "L.L.C." or a similar moniker. Which terms and abbreviations are considered appropriate can vary by state. You can find the rules for your state on the state website.
- The company name can’t include terms such as “insurance,” “corporation,” and “bank.” Once again, different states can have their own rules on this.
Step Two: Choose a Registered Agent
All states require an LLC to have a registered agent for the service of process. That means that an agent has to work with your LLC and physically accept the legal papers on your behalf in the event they are issued. There’s no need for this agent to be an individual person, however. It could be any resident of the state where you do business or a business entity that has registered to do business in the state. What matters is that the agency/resident has a physical address within the state of operation.
Step Three: File Articles of Organization
You’re now ready for the third step, filing paperwork with the state so that the LLC is legally recognized and can begin operation. This is sometimes referred to as “filing articles of organization” and is also called “certificate of formation” depending on the state. The process doesn’t change much between states and names, however. You have to supply information about the LLC to the state and pay the filing fee. You will generally be asked for necessary information such as the name, address, and ownership of the LLC.
This is also when you provide the registered agent for the business. This is the person/entity responsible for accepting legal paperwork should your company be used. The fees for filing this paperwork are nominal, but they can vary between states.
Step Four: Create the Operating Agreement
While an operating agreement isn’t always required by law, they serve the same purpose as the bylaws or partnership agreement for a corporate entity. They outline the rules of ownership and operation of the business. Here’s what should be in this operating agreement;
- What percentage of the business each member holds
- The voting power, rights, and responsibilities of each member
- How the company allocates profits/losses
- The means of management and the rules outlining meetings and votes
- “Buy-Sell” provisions that outline the procedure to be followed if a member wants to sell their interest becomes disabled or passes away.
Step Five: Apply for EIN and Review the Tax Requirements
Your LLC requires an IRS Employee Identification Number (EIN) unless you are a single-member LLC and don’t have any employees. It is simple enough to obtain this EIN. Just complete the form on the IRS website.
Many limited liability companies and corporates have to register with their Comptroller of Public Accounts. Many states also require that LLCs file annual reports with their Secretary of State.
There may be other requirements you need to adhere to as well, such as having to file annual franchise tax reports. Make sure to check the website for the Comptroller of Public Accounts for your state to stay updated on the latest requirements.
Other Considerations
Notice of Intent, Business License, Business Bank Account, and Business Credit Card
Notice of Intent
While the notice of intent isn’t a requirement for all states, some will require that you publish a notice in the local newspaper stating that you intend to form a company.
You need to do this several times across several weeks to obtain an “affidavit of publication” through the filing office for your state. Check with the rules on LLC formation for your state to see if you have to do this.
Business Licenses
You will be required to obtain a state license or local license to legally operate within some industries, such as a liquor license. The kind of business you run and where you are working will determine whether you need a permit or not. Check with the Department of Licensing and Regulation for your state to see what licenses you need.
State Fees For Each State
State Fee + ZenBusiness
Check State Filing Fees On The ZenBusiness Website
Step #1: Click your state
Step #2: Click the red "Start Now" or "Get Started" button, enter the 'Business' type, 'Your State', and then scroll to view the total cost of your state fee + ZenBusiness. It's free to find your state's LLC filing fee.
| Alabama | Iowa | Nebraska | Rhode Island |
LLC Filing Services FAQ
What does LLC stand for?
LLC stands for limited liability company. An LLC is a business entity. There are various reasons why a business may choose the be an LLC, including reduced liability exposure. The rules regarding LLCs are different in each state, but most states require an LLC to include the words limited liability company, LLC, or L.L.C. at the end of the company name.
What does the LLC filing process entail?
Using an LLC service online takes away a lot of the hassles that come with the process of forming a business. With such services, you simply need to list the name of your company, where it’s located, and the industry it operates in. You’ll also have to provide some information about yourself, as well as your business’ registered agent.
Are online LLC filing services officially recognized?
They sure are. There are a number of reputable organizations providing LLC online formation services, most of which are on the list above.
Although we have opinions about who provides the best features and pricing, all LLC filing services we talk about here are completely trustworthy and legitimate.
Will my privacy protection be greater if I use an online LLC service?
In some regards, utilizing an LLC service protects your privacy, particularly if you opt to have the company act as a registered agent.
Here’s the reason – if you play double duty as a registered agent, then your personal mailing address will usually end up being a public record.
The use of a registered agent offers you privacy, as you can use the business address of the agent rather than your own. In doing so, you will also reduce the amount of junk mail you receive.
Do online LLC filing services come with any risks?
Actually, the opposite would be true – having an LLC formed by yourself comes with risks. When an LLC filing service is used, you can take comfort in knowing that the company will be correctly formed.
These specialists form countless LLC’s every day and have the experience and knowledge to file a business entity compliantly.
Is the cost of LLC registration in my state included with LLC formation service rates?
It is not. There are various LLC formation costs in every state. Therefore, the fee charged by your state will need to be added to the price points listed. In several states, $40 is the cost. In other states, though, the fee might be hundreds of dollars.
Is the formation service provided by IncFile truly free?
Surprisingly, it is. At one time, the company charged just under $50 for a base package. They have since refined things so that the LLC formation process can be done for free. The only thing you’ll need to cover is the filing fee charged by the state.
Aside from that, the package comes with all the features you expect, such as registered agent service, next-day processing, and lifetime alerts. IncFile has two other company formation packages that come with quicker processing times and more features. These packages are priced at $149 and $299.
How can I get an LLC set up on my own?
There are a few steps to take if you wish to form an LLC by yourself. The most crucial aspect of this whole process is the preparation and filing of the Articles of Organization – a document that formalizes your LLC in the state you do business in.
The required information differs per state, but generally, you have to present them with fundamental details about both you and the company. You’ll also have to name your company, have a registered agent designated, get an EIN (federal tax identification number), have an operating agreement created, and much more.
What is the cost of getting an attorney to launch my LLC?
Based on your LLC’s nature - in addition to any legal requirements requested by the state - there are a lot of variables to consider. For the most part, it will probably cost a minimum of $1000 to have an LLC formed by an attorney. You might end up paying up to $3000, if not more.
Should a name be reserved before I use an online service to launch an LLC?
It is worthwhile to have the name of an LLC reserved in advance if you find yourself in a couple of situations. The first one would be if you aren’t prepared to have your LLC formed, yet you’d like to ensure that the name you choose isn’t taken when you’re ready to proceed. Alabama and other states will ask you to reserve a company name prior to the start of forming an LLC. Advance name reservations are necessary for most entrepreneurs and start-ups.
Is an Employee Identification Number (EIN) worth the extra money?
This question comes down to personal preference. The IRS allows you to obtain an EIN at no cost. You simply need to fill out a form to get one. Having said that, it may be more convenient for an LLC service to obtain one for you since they have the necessary information to get one already. Further, it’s convenient to keep your LLC documentation and your EIN confirmation together.
What do registered agents do?
Registered agents are needed to have an LLC formed. An agent can be a business entity or person responsible for acquiring essential government documentation.
For instance, if a lawsuit is filed against your company, a Service of Process will be issued by the state to whomever your registered agent is. The agent then informs you about what they received before forwarding it to you.
Although you have the right to take on the role of a registered agent, you are highly encouraged to use a professional service instead. This service can safeguard your privacy, keep you abreast of important deliveries, and minimize junk mail.
However, some LLC services, such as IncFile, Northwest Registered Agent, and ZenBusiness, do not charge you for this service during your first year with them. In your second year and every year after, you can expect to pay between $99 and $125 for this service, which can be canceled anytime.
Can an LLC be the perfect business entity?
One company’s needs aren’t the same as another’s. As such, we can’t make blanket statements like these.
For several small businesses and organizations, an LLC serves as a flawless business entity. However, for more complex or larger companies, a corporation may provide benefits that LLCs can’t.
In general, we are lenient towards LLCs, more so than general partnerships and sole proprietorships, since the latter two do not come with any protection of personal assets.
Pros and Cons of Online LLC Services
Pros
- Whether you understand the legalities involved with launching an LLC or not, it won’t matter. Online LLC services help you save effort and time by handling such processes on your behalf.
- Many LLC filing services give users a dashboard to update you on relevant government deadlines, and to remind you to file documentation on time.
- If you would like to ask a question or have concerns, LLC websites display several email and phone support systems you can reach out to. On the other hand, if you do this process by yourself, you’ll need to get in touch with the state you’re doing business with indirectly. Getting a reply will take a lot longer.
- Each one of these online incorporation services can help you save a lot of money (in contrast to having an attorney hired to get your LLC formed).
Cons
- If you’re able to, some money can be saved by launching an LLC by yourself.
- Alternatively, an attorney can bring specialized insights to the table, something you won’t receive from your average internet incorporation service.
At some point, your LLC will flourish, catapulting your success, and lining up your pockets. It doesn’t matter if that happens three weeks from now or three years from now – you have the drive to execute your vision.
You’re going to need to spend some money along the way, and having an LLC formed will be one of those expenses.
Upfront expenses to launch an LLC are not steep, but based on the region you reside in; they can certainly take a toll on your bank account. Each state of the country has procedures of its own when it comes to the formation of an LLC. They might set you back 50 bucks or hundreds of dollars.
Don’t let start-up costs creep up on you. Familiarize yourself with the required fees charged by your state.
Use this guide to navigate your way through formation costs in your state. Use it as a reference for ongoing compliance costs, yearly reports, and franchise taxes. That way, you’ll know what kind of costs to expect to start and maintain an LLC. In doing so, you will be able to move ahead progressively.
What kind of LLC filing service fees can I expect?
There’s nothing you can do about fees for LLC formation. Every state charges one, whether you’re doing things on your own or with help. While taking the DIY approach may be cheaper, and will also exhaust your time.
If your schedule is hectic, but your budget is somewhat flexible, consider hiring an attorney or paying for an online formation service to deal with the LLC particulars on your behalf. Be mindful that these options will simplify things for you, but they come with extra costs, the most expensive of which will probably be hiring an attorney.
No matter what state you’re in, the main cost that comes with launching an LLC is the Articles of Organization filing fee. A number of states refer to this documentation as the Certificate of Formation. In spite of the name differences, the same result is accomplished by both of these forms.
Nebraska, New York, and Arizona will also ask you to publish evidence of the formation of an LLC in a regional publication. Your company will not become official until an ad is published in a pre-approved newspaper.
Residents of New York will have to cover the standard fees charged by a newspaper, in addition to $50. In Nebraska and Arizona, only the publication’s ad costs will need to be paid for.
In a number of states, only the start-up cost needs to be paid for. As such, once your formation documentation has been filed, you will be able to move ahead with whatever step comes next. Remain alert, though, since you’ll need to monitor specific maintenance fees, some of which will be ongoing.
What is the cost of maintaining an LLC?
Much like with your automobile, an LLC will operate seamlessly for a long time if it is maintained right. A number of states charge maintenance or reporting fees to maintain the good standing of your business.
The most typical of these fees is the one charged to have a yearly report filed - a document that provides the state with updated information about your business. Some states also have a franchise tax imposed – a yearly fee raised against your business's net worth.
Every 12 months, your LLC may modify its contact info or structure. These maintenance documents help the state remain informed. If your registered agent has changed, if you moved, if you’ve renamed your LLC, or any other significant alterations have happened, they need to be reported. Note: you must still file this document even if no changes have been made.
Be mindful that tax requirements and reporting differ per state. Therefore, it is prudent to review the following list to determine the amount to budget for every year.
Should I use an online LLC filing service to create a new business entity?
If your budget has some flexibility, and you wish for things to get filed correctly the first time around, think about hiring an LLC filing service to have your business formed and maintained.
Companies like these specialize in LLC formation – to the point where the work involved is second nature for them. LLC creation services can streamline and simplify this process.
Some LLC filing services handle annual maintenance filings (such as yearly reports) and can serve as a registered agent. This takes the burden of Service of Process, due dates, and similar duties off your shoulders.
Now that some extra lines have been added to your budget for LLC formation, you are prepared to deal with the expenses that come with getting a business started. Fortunately, you won’t have to break the bank to have a business entity formed and maintained. There is only a handful of fees to concern yourself with.
The pressure associated with making payments like these is sufficient. You can bypass having it compounded with due dates and deadlines by delegating these responsibilities to an online LLC filing service. You can do these things by yourself, too!
Because formation necessities can differ substantially for each state, it is prudent to review our comprehensive guides, which are state-specific. In doing so, you will have the ability to handle the process of formation confidently.
Should I Form An LLC For An Online Business?
In most cases, this is up to the business owner to decide. Depending on the state that you do business in, there may be business permits and licenses required for certain types of businesses, but usually forming an LLC or incorporating a business is not a requirement for an online business.
Visit this Incfile post or this website for additional info on creating an LLC for an online business.
Can Non-Residents Own An LLC Or Corporation?
Yes, a non-resident can own an LLC or C Corporation in the U.S. but a non-resident is not allowed to be a shareholder (owner) of an S Corporation. This is what Incfile has written on the subject, it's from their website.
There are no citizenship or residence requirements for ownership of a C Corporation or an LLC. The S Corporation however does not allow nonresident aliens to be shareholders (owner), but any US citizen or resident alien may be a shareholder (owner). You would, of course, require an in-state street address for the state to forward official legal and tax correspondence including service of process, known as the registered agent address, but neither residency nor citizenship is required for ownership of a C Corporation or an LLC.
For info on additional formation services, visit our Stripe Atlas review.
Compare registered agent services by visiting this list of the top 7 best registered agent services in 2021.
Need more products and services for small businesses? Check out this list of the best places to order business checks online.
Additional LLC Formation Service Articles
What is an LLC Operating Agreement?
Incfile Review 2021: Pros, Cons & Alternatives
LegalZoom vs. Inc Authority: Which Is A Better LLC Service?
Inc Authority Review 2021: Is It Really Free?
