How to Save Money Forming Your LLC
The least expensive way to create your limited liability company (LLC) is to form it yourself.
Following the steps in our How to Form an LLC guide is a simple process and you’ll only have to pay the state LLC registration fee.
If you’re unsure about forming your own LLC, or just want to make sure there’s no room for error, using an LLC formation service is also surprisingly affordable.
LLC formation services can help you start your business off on the right foot — often for less than $50.
This article will guide you through starting your LLC for the least amount of money possible — whether you do it yourself or use a professional service.
Least-Expensive Method — Form Your Own LLC
The obvious way to spend the least amount of money is to form your LLC on your own. This is a task that used to only fall into the hands of attorneys. They would charge hundreds or thousands of dollars to simply complete a standard form and file it with the state.
This isn’t to say attorneys don’t have their place in the business formation process. But, you shouldn’t have to take the bar exam to fill out some paperwork if you’re forming a standard LLC — especially something as simple as a single-member LLC.
Forming your own LLC is easy. TRUiC offers a step-by-step process to help you to form an LLC in any state. Simply choose your state below to get started. We also offer free business forms to ensure you stay compliant with state regulations.
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- Washington D.C.
- West Virginia
Keep in mind that your state will charge a fee to file your LLC formation document, so it won’t be “free” to form your LLC. But, you won’t have to pay anything beyond these state filing fees.
Advantages of Forming Your LLC Yourself
The big advantage of forming your LLC on your own is cost. If you want to keep expenses at a bare minimum, then this may be your best option.
Using an attorney will cost hundreds of dollars per hour to fill out simple paperwork, so you should only consult one if you have an extremely complicated business structure.
Using an LLC formation service will have an associated cost of around $40 to $300. While the cost of these services is much lower than hiring a law firm, it’s still more than doing it yourself. These service providers can also handle more difficult business structures.
If absolute minimum cost is your deciding factor, then forming on your own is the way to go.
Disadvantages of Forming Your LLC Yourself
The main disadvantage of forming your LLC on your own is privacy. If you want to keep costs at zero, then you’ll need to act as your own registered agent.
An LLC registered agent is an individual or entity that acts as your LLC’s main point of contact with the state in which you conduct business. Most states require LLCs to designate a registered agent.
Learn more about registered agents in our What Is a Registered Agent? guide.
Acting as your own registered agent is a viable option to some, and it’ll allow you to avoid the cost of hiring a registered agent service (usually around $120 per year).
The biggest downside to being your own registered agent is that your personal information will be publicly available online in your state’s business database. While this isn’t a major concern for some business owners, others either want or need to mask their personal identity for a multitude of reasons.
Formation companies generally offer free registered agent services for the first year if you use them to form your LLC. If you want to form your LLC on your own, but still want to hire a registered agent, you can choose from our review of the best registered agent services.
Another big disadvantage of handling LLC formation yourself is confidence. This may not be an issue for you if you’ve dealt with state forms and submissions before. If not, you may want to enlist professional help if you’re unsure you completed a document correctly or thoroughly researched your state’s requirements.
TRUiC’s free guides and forms make the formation process simple for anyone to follow. But, if you have any doubts or just want a second set of eyes on your filing, then we recommend you use an LLC formation service.
Spend Wisely With Professional LLC Services
If you decide to use a professional LLC formation service to help you form your LLC, you can still do so without breaking the bank. Most basic packages, which start at around $40, will have your business up and running within a few weeks.
LLC formation services also offer many upgrades, add-ons, and upsells. Read on to learn which are worth the investment and which you should skip.
LLC Service Upsells Worth the Money
Business formation companies generate most of their revenue from upsells. But, that doesn’t mean they’re all a bad value. Some of these additional services can improve the functionality of your business, remove additional barriers of entry, or speed the formation process to put you in business faster.
While this isn’t an exhaustive list, here are some of the most common upsells that almost always provide a great deal:
Registered Agent Service
Having a registered agent service gives you the freedom and flexibility to operate your business how you want. This is the most common — and the most valuable — upsell you’ll see from your LLC formation service.
If you choose a lower-level formation package, it could take two weeks or longer for your provider to file your LLC formation document with the state. Higher-level packages and à la carte expediting options will put your business at the front of the line and can reduce formation times by up to 90 percent.
Some states require LLCs and corporations to file yearly reports and other paperwork to maintain regulatory compliance. Having your formation company handle this task will reduce your administrative headaches while ensuring your business doesn’t miss important filing deadlines or pay any unnecessary fees.
Business License Search
New businesses often must do more than just form an LLC to operate legally. Having a team of folks research the different licenses you need on a local and state level will allow you to stay focused on getting your business up and running.
LLC Service Upsells You Can Skip
Most of the below items absolutely could prove valuable to your business. So why do we recommend you pass on them? You can get most of them for free with little effort or time investment — or you can find a better value with a third-party company. If you’re short on time and don’t mind spending a little extra to have a professional take care of these tasks, then some of these may be a viable option for your business.
Offers to register your domain name, set up a website, provide web hosting, or administer your business email are generally a poor value. While you should absolutely register your domain name at the same time — or before — you form your LLC, using a web service tied to your formation company can create future headaches for your business.
The main reason you want to separate your website from your LLC formation company is control. The web services they offer aren’t inherently bad, but attaching those services to your formation company removes future control from your business. If at some point you want to change your registered agent, will your website be a subject of debate? If you want to change your website provider, do you have the autonomy to do so? Keeping these services separate is the main reason you should seek web services elsewhere.
The second reason to use a separate web service provider is customer service. If you depend on your LLC company for website support, then you have a mismatch of priorities. By choosing a company that specializes in web services (we recommend GoDaddy) to set up your website, register your domain, and/or provide hosting, you’ll have a full team of people who understand the web and can help you achieve what you want with your website.
Find a Domain Now
Check the availability of your new business’ LLC name or domain name with TRUiC’s LLC Name Generator.
EIN (Tax Identification Number)
All LLC formation services will offer to obtain an Employer Identification Number (EIN) for your business. This makes sense because almost all LLCs and corporations need an EIN to operate. The only cost of obtaining an EIN number is time. The Internal Revenue Service (IRS) doesn’t charge anything to generate an EIN for your business.
To get a free EIN for your business, follow the instructions on the What Is an EIN? page.
Just like an EIN, most LLCs and corporations must have an Operating Agreement. You don’t need to file this document with the state so there’s no added value in paying your LLC formation company to provide this service.
Some companies offer legal forms like LLC resolutions, meeting minutes, and many other simple documents. You can find most of these documents for free on TRUiC’s Business Center.
You can typically find standard business supplies like check registers, record books, seals, and notary stamps for less money on the open market. Paying hundreds of dollars for a leather-bound record book is fine, but you could spend that money more strategically elsewhere.
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