2020's Best LLC Service - Details, Cost, Pros & Cons
Looking to form a Limited Liability Company (LLC)? You need a Registered Agent Service for preparing and filing all your tax and legal documents.
We reviewed the best LLC service available on the market today providing comprehensive:
✓ Breakdown of services
✓ Notable pros and cons
✓ Alternatives
✓ FAQs
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Best LLC Service Companies At A Glance
1. ZenBusiness
Cost-effective plans for small business
Simple and fast online application process
Basic plan incl: RAS, bylaws, CPA assessment
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For the most affordable and feature-rich LLC formation service, you can’t go wrong with ZenBusiness. The ZenBusiness basic LLC package provides everything you need to get your business up and running, including article filing, an operating agreement, registered agent service, and even a free CPA assessment. For simple peace-of-mind LLC formation, contact ZenBusiness today.
Read full reviewApplication Process
Formation Speed
LLC Service
Support
2. MyCompanyWorks
Fast turnaround time
Free handbook to help guide your business
Dedicated features to ensure legal compliance
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MyCompanyWorks has served over 60,000 happy customers since its formation almost 20 years ago. With an A+ accreditation from the BBB and 4.5/5 star ratings across multiple review sites, you can rest assured MyCompanyWorks provides top quality service. Get your company registered within 24 hours with free online tracking and delivery plus a 100% money-back guarantee if you’re not satisfied.
Read full reviewApplication Process
Formation Speed
LLC Service
Support
3. Northwest Registered Agent
Free Registered Agent Service for 1 year
Highly affordable basic LLC formation service
Use Northwest’s address as a Registered Agent address
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Northwest provides some of the best LLC filing services in the United States, with dedicated personal support — no automated phone systems or emails. Get one year free Registered Agent Service with all the group’s packages and use Northwest as your business address to keep your business more secure.
Read full reviewApplication Process
Formation Speed
LLC Service
Support
4. IncAuthority
Excellent customer service
Simple, basic, free company formation
Top-quality range of benefits for premium plan
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IncAuthority has been helping register American businesses for over 30 years and has processed over 130,000 corporations and LLCs in that time. For a simple, free LLC formation, IncAuthority can solve all your issues with a quick and easy online submission. Its wide range of premium features will address the needs of even the most complex business necessities.
Read full reviewApplication Process
Formation Speed
LLC Service
Support
5. Swyft Filings
60-day money-back guarantee
Free 30-minutes tax consultation
Cheap one-day business formation
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For quick and simple LLC formation at the lowest possible cost, it’s difficult to beat Swyft Filings. Swyft Filings will confirm your company name and file your articles of incorporation all within one-business-day — far quicker than most providers and at half the price. If you need any additional tax or business services, Swyft Filing’s Premium package has got you covered.
Read full reviewApplication Process
Formation Speed
LLC Service
Support
6. IncFile
1 year free Registered Agent Service
Free basic LLC filing with fast processing
5-star ratings across independent review sites
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IncFile is one of the top LLC formation services in the US, having served over 250,000 happy customers in the past 15 years. Get a company set up for free within one business day with just the state filing fees to pay, plus you’ll get one free year of IncFile’s Registered Agent Service. With the additional Gold and Platinum packages, you can access all the business services you need.
Read full reviewApplication Process
Formation Speed
LLC Service
Support
7. CorpNet
A family-owned company with personalized customer service
Cost-effective LLC formation when compared with other providers
Excellent customer feedback
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CorpNet is a family-run, highly trusted business that has been proven by the high quality of its customer feedback. Join the CorpNet family and let them sort out all your business legal and compliance requirements without any worries or hassle. For as little as $79, CorpNet can have your LLC incorporated and your business needs met.
Read full reviewApplication Process
Formation
LLC Service
Support
8. Rocket Lawyer
Fully-featured monthly subscription plan
Top-quality legal compliance and services
On-call lawyers available for questions and reviews
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Sort out all your company’s legal worries with a membership to Rocket Lawyer, your very own legal defense team. With a Rocket Lawyer monthly plan, you’ll have instant access to legal advice whenever you need, plus any document reviews. Every membership includes free company incorporation and filing service and discounts on a Registered Agent Service and hiring a lawyer.
Read full reviewApplication Process
Formation Speed
LLC Service
Support
9. BizFilings
Highly rated and well accredited
Basic company formation for $99.00
24/7 compliance monitor and guidance tools
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BizFilings is not just an LLC formation service — they will help guide your business to success with a wide array of interactive tools and resources covering everything from tax compliance to business licenses. Get Bizfilings complete package for 24-hour incorporation processing, with a tax EIN, operating agreement, compliance DVD, and Registered Agent service included.
Read full reviewApplication Process
Formation Speed
LLC Service
Support
10. MyCorporation
4-tiered packages with expansive options
Established company with a good reputation
MaintainMyBiz feature for simplified document filing
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MyCorporation provides a wealth of services for businesses getting started, including filings, compliance, licensing, trademarks, and copyrights. Get your LLC setup today for as little as $99, including name availability search and all state filings. Premium customers get access to MyCorporation’s extended services, including a Registered Agent, annual reporting, and MaintainMyBiz document filing system.
Read full reviewApplication Process
Formation Speed
LLC Service
Support
11. Harbor Compliance
A strong team of experts on hand to help with licensing and documentation
Personalized service
Guarantee of approval for non-profit 501(c)(3) applicants
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HarborCompliance’s team of specialists will take the load off your daily business activities and ensure all your compliance needs are met and your paperwork is complete. As a BBB accredited business with an A+ rating, you can rest assured your business is safe in the hands of Harbor Compliance.
Read full reviewApplication
Formation
LLC Service
Support
Best Online LLC Formation Service - Our Methodology
Below are our best online LLC formation service reviews, with the top 15 out of the hundreds of companies that are available online. The list covers a broad scope of providers for both small and large businesses with a variety of budgets and requirements.
In our quest to find the best LLC website, we considered the following factors:
✓ Services provided
We took into consideration how each vendor can help your company progress beyond just the formation of an LLC. Services like an EID, operating agreement, and business licensing are all necessary to run a company efficiently.
✓ Individual packages
Most LLC companies have 3 or 4 differently priced packages that offer various products with faster processing times and better service. We examine how these packages compare to find the best LLC service value.
✓ Cost-effectiveness
We weighed up the value for money of each package and the vendor’s overall cost-effectiveness.
✓ Independent reviews and ratings
Independent reviews are vitally important to get an accurate view of how the company performs in real life, beyond all the hype and marketing. That’s where we consider the company’s reputation and LLC services ratings, as well as how it responds to complaints.
✓ Additional services, discounts, and bonuses
Finally, we see if there is anything else that the company offers to make it stand out from the competition. This can include free benefits like educational material, additional customer support hours, or access to professional legal services.
At a Glance
- Simple and fast online application process
- Basic package: RAS, bylaws, CPA assessment
- Cost-effective plans for small businesses
- One of the cheapest LLC services
- Best LLC website hosting and email services
- Free Registered Agent Service for 1 year
- Processing can take longer than indicated
Overview
ZenBusiness is one of the cheapest LLC formation services available, although its most affordable plan can take a while to process. The plans increase in price quite a lot as the progress, so this is ideally a choice for somebody who isn’t in a rush. The company is very new, formed in 2015, but already has a good reputation with its customers.
Like most LLC services, ZenBusiness has a tiered package system ranging from basic to premium. All packages include name availability search, articles of incorporation, filing, and verification.
Plans & Pricing
Starter package — $49.00/year
- Standard filing service
- Registered agent service
- Operating agreement
- Real-time chat support
- 100% accuracy guarantee
- CPA assessment
- 2-3 weeks to process
Pro package — $179.00/year
- Everything in the starter package
- Employer ID number (EIN)
- Banking resolution
- Compliance
- 5-8 days processing time
Premium package — $299/year
- Everything in the Pro plan
- A business website, domain and email address
- 2-4 business days to process
All prices exclude state filing fees.
Additional Services
All plans include a free CPA assessment, credit card offers, online document management, and a business guide. There are no fees or penalties for cancellation, simply call support to confirm your decision.
Addons costs of individual services:
- EID: $70
- Banking resolution: $30
- Website: $100
At a Glance
- Dedicated features to ensure legal compliance
- Free 22-page handbook
- Fast turnaround time
- Excellent customer service
- BBB-accredited
- Fast turnaround even on the basic package
- Slightly more expensive than the average LLC Registered Agent
Overview
MyCompanyWorks provides LLC formation services with three packages which all include:
- name search to check if your company name is available
- preparation of articles of incorporation
- organization minutes
- operating agreement
- unlimited support
- same-day processing
Additional services include federal tax ID, seal and membership certificate, business forms, tax guide, web hosting, Registered Agent Service, business license compliance, tax consultations, and funding consultations.
It’s best for very quick and affordable company formation with some bonus features like a 1-hour tax consultation.
Plans & Pricing
Basic package — $79.00
- Unlimited name searches;
- Prepare and file Articles of Organization
- Organizational minutes
- Personalized LLC operating agreement
- Unlimited customer support
Entrepreneur package — $199.00
- Federal tax ID
- Seal and member certificates
- Business forms
- Tax guide
Complete package — $279.00
- 1-year free Registered Agent Service
- 1-year free web hosting
- Business license compliance
- Tax consultation
- Funding consultation
Additional Services
- EIN — $45
- Premium add-on — $99 (Annual report service, business entity monitoring, compliance, forms, 5GB storage)
All prices exclude state filing fees.
MyCompanyWorks has good LLC services reviews online, scoring an average of 4.5 out of 5 stars on independent review sites and is BBB accredited with an A+ rating. It offers a 100% money-back guarantee, free delivery, online order tracking, and a step-by-step startup wizard.
The unique and proprietary ComplianceLock feature provides notifications of compliance due dates, generates meeting minutes, and monitors your company status to ensure you stay compliant.
- Fast processing time
- No hidden fees
- Excellent customer service
Some customers mentioned paperwork taking longer than expected but overall, all reviews are positive.
At a Glance
- Free Registered Agent Service for 1 year
- Highly affordable basic LLC formation service
- Dedicated personal customer support representative
- Use Northwest’s address for your Registered Agent address
Overview
Despite its name, Northwest Registered Agent actually provides full business formation services and, of course, includes a 1-year free registered agent service with all its packages.
The company provides a three-tiered service for the formation of LLC companies in the United States. All packages include the preparation and filing of articles plus lifetime customer support. Additional services include an operating agreement, EIN, and expedited service.
After the first year, the registered agent service is $125 per year which is comparatively cheap and naturally, the service is excellent. One added bonus is that you can use Northwest’s local office as your business address if, for example, you work from home and want to keep your personal address private.
Plans & Pricing
Basic Package — $49.00
- Article preparation and filing
- Customer support for life
- One-year free registered agent service ($125 thereafter)
- Six-day processing
Deluxe Package — $149.00
- Everything in the basic package
- Operating agreement
- EIN
- Four-day processing
Premium Package — $199.00
- Everything in the deluxe package
- Same-day processing
All prices exclude state filing fees.
Additional Services
Northwest also does corporation formation for the same price but with $125 for state filing fees.
Nonprofit state filing fees are $50 but take 22 days.
This family-run company has dedicated customer service via phone, with no automated answer machines or no-reply emails. They charge no late fees and never bug customers with sales or marketing calls.
At a Glance
- Top-quality range of benefits for premium plan
- Excellent customer service
- Simple, basic, free company formation
- One of the longest-running LLC incorporators (1989)
- Mostly 5-star reviews on Trustpilot
- Full-service packages are expensive
- No guarantee — all sales are final
Overview
IncAuthority is another service that provides free LLC incorporation, including name check, preparation, and filing of articles, online document delivery, tax planning, and a one-year Registered Agent Service. For simple company formation, this is a great offer but if you want anything extra, the cost is comparable to other providers.
Plans & Pricing
Starter —$399.00
- Business name availability check
- Preparation and filing of Articles of Organization
- Online document delivery
- Operating agreement
- Meeting minutes
- EIN
- Tax consultation
- Free Registered Agent Service for 1 year
Executive — $499.00
- Everything in the Starter plan
- Business license report
- LLC Websites domain
Tycoon — $799.00
- Everything in Executive
- Express processing
- Credit building services, including bureau registration and business launchpad
All prices exclude state filing fees.
Additional Services
Customer support for all packages is available during business hours or by email. The Registered Agent Service is $99 per year after the first year.
Add-ons includes:
- EIN — $49
- Operating agreement — $89
- Express processing — $49
At a Glance
- 60-day money-back guarantee
- Free 30-minutes tax consultation
- Cheap one-day business formation
- Good customer service
- Best LLC service in California
- Good online reputation
- The basic package is limited
- A few complaints mention hidden fees
Overview
Swyft Filings is an LLC formation service for small businesses and entrepreneurs. It offers a very cheap basic business formation package with a one-day turnover time, which is far quicker than most providers. Some nice added features include a free tax consultation, compliance alerts, and a free domain name. However, for any additional services like an EIN or registered agent service, you’ll need the standard or premium packages which are considerably more expensive.
Swyft Filings has only been around since 2012 so it’s relatively new but it has good LLC services ratings from independent review sites. Customers appreciate the speed of service and high-quality customer support. Swyft offers a 60-day money-back guarantee for unsatisfied customers, minus state fees, and shipping.
Plans & Pricing
Basic package — $49.00
- Check company name availability
- Prepare and file Articles of Organization
- Lifetime customer support
- Next business day processing
Standard package — $149.00
- All basic package services
- EIN
- Operating agreement
- Banking resolution
- Organizational minutes
Premium package — $299.00
- All standard package services
- electronic document delivery
- digital LLC kit
- Free website hosting
All prices exclude state filing fees.
Additional Services
To add services to the basic package will cost:
- Registered Agent Service — $149 / year
- EIN — $70
- Operating agreement — $35
- Organizational minutes — $25
- Digital LLC Kit — $99
Orders must be placed before 3 pm for same-day processing.
At a Glance
- Free basic LLC company filing with fast processing
- 5-star ratings across independent review sites
- 1 year free Registered Agent Service with all packages
- A+ rating on BBB
- Next business day processing
- Very limited free package
- Customer service can take a while to respond
Overview
IncFile offers a very attractive free LLC filing service (excluding state fees) for next-day business incorporation. Although it seems too good to be true, most companies will find they need to add on extras. In this way, it’s a bit of a marketing ploy to attract customers but that doesn’t mean it isn’t good value for money. Even the full-service package comes in at a decent price compared to other providers.
Incfile also includes a very generous one-year free Registered Agent Service and one-hour free tax consultation, which is why many believe its the best LLC service for startups with limited capital. Not only that, but IncFile is also a BBB-accredited company with an A+ rating, so you know you’re in good hands.
Plans & Pricing
Silver package — $0.00
- Name availability check
- Prepare and file Articles of Organization
- Set up a business bank account
- Unlimited phone and email support
- 1-year free Registered Agent Service ($119 / year recurring)
- Next business day processing
Gold package — $199.00
- Everything in the Silver package
- EIN business tax number
- Preparation and Filing of IRS Form 2553
- Operating agreement
- Banking resolution
Platinum package — $349.00
- Everything in the gold package
- Business contract templates
- A domain name and email
- Expedited state filing time
All prices exclude state filing fees.
Additional Services
- EIN: $70
- IRS Form 2553 preparation: $50
- Operating agreement: $40
- Banking resolution: $35
At a Glance
- Cost-effective LLC formation when compared with other providers
- Excellent customer feedback
- A family-owned company with personalized customer service
- A+ rating with the Better Business Bureau (BBB)
- Highly rated with mostly 5-star reviews across multiple sites.
- Free Corporate Compliance Tool
- No low-cost basic LLC formation service
- Additional shipping cost included without an option
Overview
CorpNet is a long-running business formation service that has helped to create over 100,000 businesses in the past 20 years. CorpNet is rated highly across many independent review sites with many customers praising the excellent service. Although the pricing is not bad, customers should take into account the mandatory $29 shipping fee which is uncommon amongst the best LLC service providers.
Plans & Pricing
Basic package — $79
- Name availability check
- Filing articles of organization
- FREE Corporate compliance tool
- 15-20 days processing
- 60 day Registered Agent Service
Deluxe package: $199
- Everything in the basic package
- Federal TAX ID (EIN)
- Print delivery
- 1 year of Registered Agent Service
Complete package: $249
- Operating agreement and minutes
- Customized LLC kit and company seal
All prices are exclusive of state filing fees.
Additional Services
- 24-hour processing : $49
- EIN: $69
- Operating agreement: $69
- 100% money-back guarantee
At a Glance
- Fully-featured monthly subscription plan
- On-call lawyers available for questions and reviews
- Top-quality legal compliance and services
- 7-day free trial plus company formation
- Lots of additional legal services
- Highly rated by online reviewers
- Expensive if you choose the Premium service
- Registered Agent Service not included in membership (25% off)
Overview
Rocket Lawyer is a legal services provider that includes company formation amongst its many services. For this reason, it is particularly helpful for companies that feel they may require extra legal advice along with other business services. The company has been helping customers with legal guidance since 2008 and is highly rated by independent review sites like Trustpilot (4.6/5).
Plans & Pricing
Seven-day free trial — $0.00
- Unlimited legal documents
- Document defense
- Free incorporations for new members (25% off thereafter)
- Automatically upgrades to premium if not canceled.
Premium — $39.99 / month
- All the free trial services
- 25% of Registered Agent Service
- Discounts on legal services
- Free 30-min legal consultation
LLC Only — $99.95
- LLC formation and easy legal documents
- Quick online sign-on
All prices exclude state filing fees.
Additional Services
- Monthly premium members have access to Ask a Lawyer, an on-call service to ask questions to a real lawyer at any time. Non-premium members can order this service at $49.99 per question.
- Document Defence is available for non-premium customers at $9.99 per document. It provides a review of any document by an on-call attorney.
- Registered Agent Service — $149.99
At a Glance
- Highly rated and well accredited
- Basic company formation for $99.00
- 24/7 compliance monitor and guidance tools
- BBB-accredited with an A+ rating
- Convenient formation and license wizard
- Company reminders
- mandatory Registered Agent Services which must be canceled manually
- Above-average cost for basic LLC formation
- No money-back guarantee
Overview
BizFilings has been helping entrepreneurs create LLC companies since 1996 and is a subsidiary of a larger legal services company called CT Corporation. It is expensive compared to the competition, with the most basic $99 package including only article filing and preparation without any extras.
Plans & Pricing
Basic package — $99.00
- Name check verification
- Prepare and file Articles of Organization
- 24/7 business monitoring compliance tools and document library
Standard package — $299.00
- Prepare and file Articles of Organization
- Operating agreement
- Organizational binder
- One business day processing
Complete package — $359.00
- Standard Package
- EIN
- Compliance DVD
All prices exclude state filing fees.
Additional Services
- Federal Tax EIN: $79
- Operating agreement: $39
- Business License application pack: $99
At a Glance
- Established company with a good reputation
- MaintainMyBiz feature for simplified document filing
- 4-tiered packages with expansive options
- Over 1 million customers served
- A+ rating on BBB (not accredited)
- Customer service is easy to reach
- Lack of information on processing times and refunds
- Slightly more expensive compared to competitors
Overview
MyCorporation provides a range of legal services beyond simple LLC formation, including trademark and copyrights services as well as nonprofit and corporation filing. With 20 years of experience providing legal form assistance, MyCorporation is well established and has an A+ rating on BBB. Their website lacks clear information on some points like processing times and refunds but overall appears well structured and professional.
Plans & Pricing
All packages include unlimited customer support and special offers for payroll processing, logo design, domain name, bank accounts, CRM, and website design. All prices exclude state filing fees.
Basic package — $99.00
- Name availability check
- Preparation and filing of Articles of Formation
- MyCorp Vault Document Storage
Standard package — $124.00
- Everything in the basic package
- Annual report service (1 year free)
Deluxe package — $244.00
- Everything in the standard package
- Registered agent service (1 year free)
Premium package — $324.00
- Everything in the Deluxe package
- Free year of MaintainMyBiz (1 year free)
Additional Services
The 1-year free services will subsequently cost the following and can also be bought separately:
- MaintainMyBiz: $250/year
- Registered agent service: $120/year
- Annual report service: $99/year
Other available services include:
- EIN: $79.00
- Rush filing: $100.00
- Operating agreement: $59.00
- Compliance package: $129.00
*MyCorporation is currently offering a free EIN tax ID for any business that registers with them.
At a Glance
- Proprietary software for compliance tracking
- A strong team of experts on hand to help with licensing and documentation
- Personalized service
- Guarantee of approval for non-profit 501(c)(3) applicants
- A high degree of compliance support
- Not the best LLC formation company price-wise
- No online application
Overview
HarborCompliance works slightly differently to your average LLC formation service, offering a direct phone conversation rather than an online form. The company is focused on offering personalized service and purpose-built software to help guide companies through the necessary government loopholes. It offers only two plans, both of which are fairly comprehensive but expensive.
Plans & Pricing
Formation package
- Name availability check
- Articles of Organization
- Operating agreement template
- Federal Tax EIN
- Registered agent service
Compliance package
- Everything in the formation package
- Company kit
- S-corporation or C-corporation tax election
- Initial report
- Publishing
All prices exclude state filing fees.
Additional Services
Registered Agent Service: $99/year (mandatory but can be canceled anytime)
What to consider when choosing an LLC formation service?
With so many services on offer, it is important to consider several aspects and do an LLC services comparison of the following factors:
- Market experience
- High client volume
- Prices and inclusions (eg: Registered Agent)
- Customer reviews and feedback
- After-sales service and customer support
- Ease of use
- Timing of filing
- Range of additional services offered
Services and fees:
Initial fee: range from around $39 for one year (full package plus state fee and registered agent).
Additional services and fees:
LLC services reviews reveal the following average costs of LLC formation:
- Renewal of registered agent fee range from $119/year
- Assistance with annual report/deadline dates from $119/year
- Amendments to Articles of Organisation from $100/year
- Publication of LLC’s formation (if required): $200/year
- Arranging EIN compliance from $70/year
- Legal Services from $40/month
Discounts:
Advanced use of automation often allows for faster service and the cost-savings are passed on to the customer as a discount.
Legal services plans often have discounts on attorney fees and other legal services.
How to start an LLC?
Step 1: Name availability check — choose your name or ask the company to do an initial check.
Once you have chosen a name for your LLC, first check the availability of this name in your state. This can be done using the State Name Search Guides or when you file an LLC online.
Step 2: Fill out the required online questionnaire.
Each state may have slightly different requirements. An online questionnaire is available on the website which will assist you in finding out what you need to start up your LLC.
Step 3: Preparation of Articles of Organization and filing them with the Secretary of State.
Articles of Organisation must be filed to register your new LLC in your state. It is a document outlining your LLC ownership, organization, management responsibilities, members, shares, distribution of profits, and dissolution of the LLC.
✓ The Process of Filing:
Visit the Secretary of State website and check what information is required:
- The name and address of the LLC
- The Registered Agent
- The start date of the LLC
- The purpose of the LLC
- Management of the LLC, for example, the members or a paid manager
✓ How long does the LLC process formation take?
After receiving Articles of Organisation it can be as few as 3 business days depending on the state but the average is 7-10 business days. Examples:
- Florida takes 5-7 business days
- Arizona is roughly 22-27 business days
✓ Is there an option for rush processing?
Most LLC formation services offer options to speed up the process but this is also dependent on the state. In Florida filing, in person can take 30 minutes and in Arizona, an extra $35 fee can shorten it to 7-12 days. In Delaware, customers can pay an extra $50 for the next day, $100 for the same day, $500 for two hours, and $1,000 for one hour. However, irrelevant of time, the best state to incorporate LLC is always your home state.
When should I register an LLC?
The most common reason to form an LLC is to limit your personal liability and protect your assets, such as your home. If real estate properties are held in an LLC they cannot be seized to settle claims.
A well-formulated operating agreement clearly states the responsibility and rights of each member, voting power, percentage interest, and meeting schedules. This can help negate potential disagreements or disputes between owners and members.
In an LLC business, losses are reflected on a member’s personal tax return so they can be used as deductions against other income. You can register an LLC anytime, but the best time is probably before the start of a new year. This means you make a fresh start and will make taxation simpler. If you file mid-year you will have to make two different tax submissions.
What are the benefits of an LLC?
- It’s easy to set-up by yourself
- It protects your personal assets should business debts or a lawsuit be incurred
- Since profit and loss is reflected on each member’s personal return, there is no tax return for the business itself
- Double taxation does not apply in an LLC
- Legal registration as an LLC increases the business’s credibility
- Less administration and paperwork than a corporation
What is the difference in the structure of LLC and Corporation (INC)?
Corporation:
A corporation is owned by shareholders who purchase shares in the business. Useful for a business needing outside investors and shares are easy to transfer. It requires a rigid management structure, a Board of Directors, and officers responsible for the daily running. Multi-tasking is common and one person might simultaneously be a shareholder, officer, and Director.
LCC:
If you are a sole proprietor, personal and business debts are considered the same, putting personal assets such as a house or automobile at risk. This can be avoided by forming an LLC that legally separates business and personal debts. Each LLC member owns a percentage of the company and is involved in the day-to-day activities. A single proprietor would own 100% of the shares, three members may own different percentages, etc. However, this percentage is not as easily transferable as shares and sometimes the LLC is dissolved if a member leaves.
What is the tax flexibility?
A Corporation is a separate taxable entity. Federal tax is payable on profits and if dividends are paid to shareholders (not tax-deductible) then double taxation is applied.
An LLC has the benefit of pass-through income taxation meaning that double taxation (personal and business) is avoided. Each member declares their share of profit and loss on their individual tax returns rather than through corporate tax.
In the case of an unincorporated association, like non-profit clubs or resident’s associations, there might be a need to file and pay tax as an LLC in the case of donations.
How are they formed?
The Small Business Administration website offers assistance on forming companies in the US with an LLC company list.
Corporation:
- Choose the state
- Choose a business name
- Appoint directors
- File articles of incorporation
- Write a shareholders’ agreement
- Appoint a board of Directors and hold a meeting
- Issue stock
- Obtain business permits and licenses
- Register for tax
- Open a business bank account
LLC
- Choose the state
- Choose a business name
- Choose a Registered Agent residing within the same State
- File your LLC Certificate of Formation with the State
- Prepare Articles of Organisation
- Get an EIN (Employer Identification Number) free through the IRS website
- Open a business bank account
IRS tax forms related to LLC formation:
- IRS Form 1040: U.S. Individual Income Tax Return
- IRS Form 1065: U.S. Return of Partnership Income (Form K-1)
- IRS Form 2553: Election by a Small Business Corporation
- IRS Form 8832: Entity Classification Election (Corporation or Partnership)
Best LLC Service At A Glance
MyCompanyWorks – Best LLC Formation For Fast Turnaround Times
NorthWest Registered Agent – Best Rated Customer Support
IncAuthority – Best-Rated LLC Service With Free Option
ZenBusiness – Cheapest LLC & Registered Agent Service
SwyftFilings – Most Affordable One-Day Turnaround LLC Filing
IncFile – Best Free & Fast Formation In NYC
CorpNet – Best Family-Run, Highly Trusted LLC Service Business
RocketLawyer – Best For Startups With Extensive Legal Advice Needs
BizFilings – Best LLC For Nonprofit
MyCorporation – Best LLC Service For Copyright Assistance
Wrap Up
When looking for the best company to form LLC, you shouldn’t just go with the cheapest option available. There are several important steps and factors to consider which, if done right from the start, could save you a lot of money in the long run. For tax purposes, it is vitally important that you file the correct forms with the IRS.
Costs vary from state to state and depend on your business requirements but you should expect to pay around $300 for a full LLC package with all the necessities. Ideally, you should seek professional advice if you are uncertain of what you need because mistakes can be difficult and costly to rectify later.
FAQs
What is the cheapest state to form an LLC?
Nevada, Wyoming, and Delaware are hyped as being the best and cheapest but in the US best LLC service is in your home state and is the most economical in the long run. An LLC in Wyoming may be cheaper to set up but if you live in California you would have to pay filing fees in both and register as a foreign LLC in your home state. Taxes also need to be paid wherever you are earning so you could end up paying tax in both Wyoming and California.
Can you create an LLC yourself?
Yes, all the information and forms are available on-line. Check your chosen state’s requirements and fees on your Secretary of State’s website. Follow the step-by-step guide above and make sure you have ALL the necessary documentation and Articles of Organization. Before filing with the state, ask a member or shareholder to check the paperwork. It’s a good idea to schedule formal procedures like meetings and annual reviews to protect your LLC status.
Do you need a lawyer to set up an LLC?
No, you don’t need a lawyer since all legal requirements are self-explanatory. However, you may want an attorney to check your documents if you have any doubts. Once you have created your LLC as above you can prepare all the necessary documents and file them with the state. The best LLC service vendors usually include some form of legal consultations or representation.