I keep seeing Inc Authority advertised as a free LLC formation service, but I don't understand the business model. If they aren't charging for the basic filing, where does the revenue come from? Is it just upsells on registered agent services and compliance packages? I'm considering using them but want to understand the catch before I hand over my information.
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Inc Authority's free offer makes me wonder how the company actually earns money
They make money on the backend. The free filing is a lead magnet. You'll get calls trying to sell you registered agent service, EIN assistance, compliance, bookkeeping referrals. Some of it is useful, some isn't. Just be ready to say no a lot.
I used them years ago. Free filing but the registered agent was not free after the first year. That's where a lot of the money comes from I think. Also they push annual report filing help which you can do yourself.
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The sales calls were relentless for me. I ended up just filing directly with the state after the third Call. Not saying they're a scam but the free part is definitely not the whole picture.
Are they a registered agent themselves or do they subcontract? That could affect how much of the fee is actual cost vs markup.
I believe they use a third party for registered agent in some states, but I'm not 100% sure. Either way the first year free then renew at a higher rate is the standard play.
I looked into them last year. The free package includes the state filing fee waived in some states? No, that's not right. You still pay the state fee, they just don't charge their own service fee. So "free" means no service fee, not no cost at all. That confused me at first.
Right, the state fee is separate. And their upsell packages can be several hundred dollars. If you just want the bare bones LLC and are willing to do the annual reports yourself, it can work. But you have to be disciplined about ignoring the sales pitches.
has anyone actually used the free filing and then cancelled the registered agent? wondering if there are penalties or if you can can switch easily
You can switch registered agents in most states by filing a form. No penalty from the state, but Inc Authority might charge yu for the change if you go through them. I'd just file the change yourself with the secretary of state.
This is all helpful. So basically it's a lead gen operation. I guess that's fine if you know what you're getting into.
One more thing: they might also make money from affiliate deals with payment processors or business credit cards. Not sure about Inc Authority specifically but a lot of these free filing services do.
So the consensus is the free filing is basically a loss leader and the real money is in ongoing services and upsells. I appreciate the details about state fees and registered agent renewals. I'll probably just file directly with my state to avoid the sales pressure.
That's probably the simplest route if you're comfortable with the paperwork. The state websites are not always user friendly but it's doable.
Also check if your state requires an operating agreement or publication requirement. Some states have weird extra steps that the free services don't cover.