Choosing an Online LLC Formation Service – Avoid the 3 Biggest Pitfalls

The most efficient way to get a limited liability company formed for a new business is to use an online LLC formation services company. As Internet use has become so widespread and very mainstream for business activity, many businesses have started that provide affordable (and sometimes not so affordable) document preparation and filing services.

As you do your research and comparisons, make sure that you address the biggest 3 pitfalls so you can avoid surprises, problems and long delays. best registered agent services

Pitfall #1: Teaser Rate Services Fee

When it comes to forming an LLC with a service, the services fee is the first thing you will want to look at. The first is the cost for them to provide this service. Beware of teaser introductory rates. Many of these sites will offer a base service for a very low price, but when you look at the details, there will be added fees processing costs, administrative fees and elevated shipping costs.

In many cases, with the base services fee, the online company will not prepare your filings for several weeks. This is of course just a ploy to get you to upgrade to their higher fee package. Most business owners who are at the point where they need to organize their LLC do not have the time to wait the 4-8 weeks or longer that some entry level services require.

Pitfall #2: Timing for LLC Formation Completion

It is surprising how many online LLC formation services do not state their turnaround times clearly on their websites. Again, this is because for many of the low priced providers or the entry level packages, their turnaround times are too long to be acceptable.

It is essential for starting any business that you not conduct any business activity until your LLC has been formed and you can conduct all business in the name of your limited liability company. Before you purchase any formation service, confirm the turnaround times and make sure it meets with your business needs.

Also, when comparing services, the timing is as important as the costs. For example, if one company charges $200 for a 7 day turnaround time and another company charges $130 for a 30 day turnaround time, this is not an apples to apple comparison.

Pitfall #3: Marking Up the Filing Fee

The services company will need to not only collect its service fee from you but will also need to collect the state filing fee which it will need to send in with the document filing to your state of formation. This fee should be the same with all services as the state does not vary its fees.

You will find that many online LLC formation companies mark up the state filing fee. This is deceptive to me and you should not do business with any company that engages in this practice.

When you are looking at multiple providers and see a fee difference, this will be a flag of concern. Now, before you jump to conclusion, the state can charge extra fees and payments under certain circumstances. For example, in California, a mail-in filing currently costs $75 and will take 6-8 weeks while a personally delivered counter filing will cost $85 but reduces the processing time down to 2 weeks. Many online LLC formation services companies recognize that most small business owners starting their business cannot wait 6 weeks or longer so their filing automatically assumes the counter filing.

The important point here is to look for the breakdown of the stated filing and processing fees going to the state. Some will be legitimate but unfortunately, many services companies include unwarranted mark-ups.