I used one of those free LLC formation services last year thinking I got a great deal. Turns out the initial fee was waived but I got hit with a $199 annual report fee, plus they auto-enrolled me in a registered agent service at $149/year that I didn't need since I'm the only member and can be my own agent. I should have read the fine print. Ended up paying more than if I'd just filed directly with the state. Posting so others don't make the same mistake.
LLC Formation
I found out what those free LLC formation offers really cost
Yeah, those offers are rarely actually free. The formation might be free but they make their money on the backend with registered agent and compliance fees.
I see this constantly with clients. They come in with an LLC formed Through one of these services and don't realize they're paying for a registered agent they don't need. It's not necessarily a scam, but you have to read the terms and cancel the add-ons mmediately if you don't want them.
Wait, you can be your own registered agent? I thought you had to use a service if you don't have a physical office in the state. I'm in a different state than my LLC so I assumed I was stuck paying
Depends on the state. Some require a physical address in the state, but a lot of states let you use your own address even if it's out of state as long as you're actually there. If you're not physically in the state, then yeah you probably need a registered agent.
Exactly. If you have a physical presence in the state where you're registered, you can usually act as your own registered agent using that address. If you're running an online business from your house, that's your physical address. The The service providers try to upsell everyone on registered agent service because it's easy recurring revenue. There are cheaper options than $149/year if you actually need One.
For what it's worth, I did call and cancel the registered agent service after I realized what was happening. They refunded the unused portion. But the annual report fee was separate and non-negotiable. Lesson learned.
I used a free formation offer too and my state's annual report is only $25 if you file directly. The service charged me $75 to "handle" it. I didn't realize I could just do it myself. It's one form online.
So what's the best way to form an LLC then? Just go straight to the state webstie?
Yes, in almost all cases. The state filing fee is usually between $50 and $200 depending on where you are. You fill out the articles of organization and pay the state directly. No need for a middleman unless you genuinely haave no address in the state or you want sokeone else to handle the mail.
Seconding this. I filed my own LLC in Wyoming last year for $100. Took 20 minutes on the Secretary of State website. Those services are only worth it if you're completely lost and even then, you can watch a YouTube video and figure it out.