What to Look for in an Online LLC Formation Service Company
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How to Find the Right Online LLC Formation Service for Your Business
While many small business owners know they need to set up an LLC for their new business, the shopping for a proper service to help them with this can be very confusing.
As the Internet has become mainstream for selling products and services, it has become the main method for purchasing a document preparation and filing service to create an LLC for business owners.
If you research the Internet generally, you will see many businesses offering these services and their stated prices range from unbelievably low prices to insanely high, lawyer like prices.
What makes things worse is that when you try to compare them and start reading the fine print, the breakdown of the services and the key components of what is included vary tremendously.
I wrote this lens to help you focus on what is most important and what, at a minimum, you must insist upon when purchasing an LLC formation service online.
As the Internet has become mainstream for selling products and services, it has become the main method for purchasing a document preparation and filing service to create an LLC for business owners.
If you research the Internet generally, you will see many businesses offering these services and their stated prices range from unbelievably low prices to insanely high, lawyer like prices.
What makes things worse is that when you try to compare them and start reading the fine print, the breakdown of the services and the key components of what is included vary tremendously.
I wrote this lens to help you focus on what is most important and what, at a minimum, you must insist upon when purchasing an LLC formation service online.
LLC Knowledge Is a Must
LLC Formation Requires Keeping Up with LLC Laws, Regulations and State Processes
Having a properly formed LLC for your business is essential to ensuring you have limited liability protection, tax and other benefits.
The worst thing you can do is not take this step seriously and choose a substandard company to handle this very important first step for your business.
Unfortunately, with the rapid growth of LLC formations, quite a few companies have popped up that have no experience in the LLC or in state business filings and have no interest in learning what is required to do this business. But, for some crazy low price, they will take your money for this. You do not want your business to be the guinea pig for some lowly paid employee trying to learn what is needed for your LLC.
While the process for creating an LLC is not rocket science, it does involve knowing and understanding the llc formation requirements and laws of your state of formation. These laws and regulations can change each year so the company must make a commitment to keeping up.
In addition to the official laws, there sometimes are additional unofficial requirements and processes that state agencies require of for filings. A reputable company will have this knowledge as a result of doing many filings in a state and as a result also having relationships with the employees of the state that handle these filings.
As a result, a reputable and experienced online LLC formation services company must charge a sufficient amount to cover the costs of having qualified and well trained personnel, foolproof filing processes and systems and educational and professional updates and reviews of state laws and processes.
If a company is charging only $30-$50 for this service, you should be concerned about the quality of their service. I have heard horror stories about business owners using such companies and having to deal with the delays and complexity of rejected filings with a state or even worse, a filing which contain all the wrong information about their LLC business.
At a minimum make sure you are only considering businesses that have and evidence knowledge and expertise in the limited liability company and the filings required for their formation.
The worst thing you can do is not take this step seriously and choose a substandard company to handle this very important first step for your business.
Unfortunately, with the rapid growth of LLC formations, quite a few companies have popped up that have no experience in the LLC or in state business filings and have no interest in learning what is required to do this business. But, for some crazy low price, they will take your money for this. You do not want your business to be the guinea pig for some lowly paid employee trying to learn what is needed for your LLC.
While the process for creating an LLC is not rocket science, it does involve knowing and understanding the llc formation requirements and laws of your state of formation. These laws and regulations can change each year so the company must make a commitment to keeping up.
In addition to the official laws, there sometimes are additional unofficial requirements and processes that state agencies require of for filings. A reputable company will have this knowledge as a result of doing many filings in a state and as a result also having relationships with the employees of the state that handle these filings.
As a result, a reputable and experienced online LLC formation services company must charge a sufficient amount to cover the costs of having qualified and well trained personnel, foolproof filing processes and systems and educational and professional updates and reviews of state laws and processes.
If a company is charging only $30-$50 for this service, you should be concerned about the quality of their service. I have heard horror stories about business owners using such companies and having to deal with the delays and complexity of rejected filings with a state or even worse, a filing which contain all the wrong information about their LLC business.
At a minimum make sure you are only considering businesses that have and evidence knowledge and expertise in the limited liability company and the filings required for their formation.
6 Most Important Factors to Compare When Choosing an Online LLC Formation Service
If you focus on these factors and compare each service you are considering with these factors in mind, you will better be able to choose which one will work best for you.
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Determine Actual Service Fee. The biggest marketing tactic employed by so many online LLC formation services companies (even the best ones) is that they offer teaser rates to get you interested. But, in many cases when you read the details, the entry level package will take too long to form or their are other hidden costs and fees added before all is said and done.
Another added cost that some companies tack on is a shipping cost. I know of one that charges $30 for shipping because they send you documents by overnight. This is obviously marked up. Key point is to take all these added fees into account when comparing prices. - Turnaround Time to Complete LLC Filing. Many companies are not upfront or do not make it easy to figure out what the estimated turnaround times are for their filing services. But, as you dig deeper, you will see that there will be expedited services upgrades for faster timing. Some even have several levels of turnaround times and with each one, the price can double or even triple when all is said and done. First, you need to determine when you need your LLC completed. Then compare only the packages of each provider that meets your specific timing needs. This makes it easier when comparing.
- State Filing Fees Collected. Every filing service will require that you also pay them the filing fee that they will need to submit to the state with your formation documents. Some companies have deceptively marked up what they call state filing fees to squeeze more money out of you. If you see a filing fee that is more than one stated by another provider, look for the breakdown of the stated filing fees. Some are legitimate as some states charge for things that can speed up a filing (credit card processing, online submissions fees or additionally required expedited filing and processing fees). But if you find a company is marking them up without explanation, move on to the next one.
- Customer Service. I would always insist on only using a company that offers some customer service. You will want to be able to call them or submit a support ticket to ask questions or get the status of your filing.
- Compliance Guarantee. This one is important because this service will be no good to you if the formation is defective or faulty. Insist on doing business with an online LLC formation company that provides you with assurances and a guarantee that your filing documents will meet your state's LLC formation requirements.
- Beware of Unnecesary Add-Ons. Many of thees companies will offer you a bunch of additional unrelated items like free software subscriptions for a limited time (which turn into paid ones later). These are marketing promotions in disguise. Assess those separately as in most cases you can get these offers without having to buy LLC formation services. I would even be wary of free forms and a free operating agreement. Anything FREE when it comes to legal documents are usually worthless and not worth using in your business. If they charge for these, then there is likely more value.
The LLC Expert Formation and Liability Protection Packages
Designed to Meet the Needs of the New LLC Business Owner
The LLC Expert, LLC is a leading provider of online LLC formation services. I created the company after speaking and gathering information from hundreds of new business owners.Our goal is to provide the fastest and most professional service for forming an llc at an attractive price. All backed with both a compliance and a satisfaction guarantee. No one can beat our turnaround times or expertise in the LLC.
O course I am biased as I am a co-founder, but I recommend you look at the others and choose a service that you feel will best meets your needs. I have included a list of a few other top online services that we have reviewed.
Leading Online LLC Formation Services Providers
Here is a short list of the top online LLC formation services companies.
- The LLC Expert
- The LLC Expert specializes in the limited liability company. They offer an LLC Formation and Liability Protection Package. You get expert customer service, the fastest turnaround times in the market and both a compliance and satisfaction guarantee. Plus, they provide an excellent eBook about how to maintain your LLC.
- Business Filings Incorporated
- This is one of the largest providers of LLC formation services. They have excellent and well informed customer service representatives and are always up to date on formation requirements of every state. The only downside is that their entry level packages usually come with unacceptably long turnaround times so consider one of the upgraded packages.
- Legal Zoom
- Legal Zoom is a provider of many legal document and online services and LLC formations is one of them. While their specialized knowledge in LLCs and formation are second to the other two, Legal Zoom has committed customer service teams and has formed many LLC and incorporations nationally. As with The LLC Expert, they are backed by lawyers.
An LLC Formation Service is Not the Substitute for a Lawyer
IMPORTANT NOTE:
A LLC formation service accomplishes one thing- forming an LLC in a specific state by filing the proper documents.
They serve this purpose well and are worth the reasonable fees versus spending the time to learn how to do it yourself and questioning whether you did it right or hiring a lawyer for this administrative step.
Do not ever mistake this service as a lawyer service. Hire a lawyer if you need professional advice on business structuring, taxes or other matters.
They serve this purpose well and are worth the reasonable fees versus spending the time to learn how to do it yourself and questioning whether you did it right or hiring a lawyer for this administrative step.
Do not ever mistake this service as a lawyer service. Hire a lawyer if you need professional advice on business structuring, taxes or other matters.
by BizLawyer
I am a business lawyer by training and an entrepreneur at heart. I teach small business owners about important business planning matters needed to pro... more »
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