Whether you own an ecommerce brand, you’re a service provider, or a startup founder, it’s essential that you understand the ins and outs of forming an LLC. Luckily, there are several platforms available to help you make the right decision.
There are two main considerations when choosing which is the best LLC service for your company: time and money. Depending on how much you have of each, one platform may be more beneficial than another.
Read on to learn more about your options.
What you need to form an LLC
Before we dive into the details, you should know that forming an LLC (Limited Liability Company) is no small task. It can be a complicated process with many considerations involved. Some new businesses can get away with operating as a sole proprietorship or partnership. However, for those who want to protect their personal assets from liability or have the long-term potential to grow their business, forming an LLC is one of your best options.
That said, you’ll need to file a few business documents and pay the fees associated with your state’s requirements to form an LLC.
Let’s go over the six main documents you’ll need to form an LLC:
1. Internal Revenue Service (IRS) Form SS-4
The first step to forming an LLC is completing the IRS Form SS-4 and naming your LLC. You’ll use this information and the name you choose to fill out the rest of the LLC formation documents. Keep in mind that the name you choose must end in “LLC” or “L.L.C.” If you don’t follow this rule, your state may not recognize the LLC and may return your filing. You should also keep in mind your state’s naming restrictions for LLCs. Some states may have different naming rules for LLCs related to the type of industry you operate in. You should check with your state’s Division of Corporations to learn more about naming restrictions for LLCs in your state.
2. Name reservation application
Before you can form an LLC, you must make sure the name you want to use is available in your state. This is one of the first steps you should take in the formation process. When you reserve a name with your state, you’re simply letting them know that you plan on using the name and you have the right to use it. You don’t have to have all your LLC formation documents completed to reserve a name. While the name reservation application is not required in all states, it’s highly recommended. It can save you a lot of time and effort, especially if you have to change the name of your LLC after you’ve formed it.
3. Articles of Organization
After you’ve selected the name of your LLC and reserved it, the next step is to complete the Articles of Organization. This is a document that outlines the basic information about your LLC, such as the company’s name, the type of business, the ownership information (if you’re an individual forming an LLC or the manager and members if you’re forming an LLC as a group), and the address where your LLC will be located. You’ll also need to provide details about your company to your state’s Secretary of State office. This information is required for your state to recognize your LLC and give it a unique identification number.
4. Operating Agreement
An operating agreement is a document that outlines the responsibilities and expectations of members of an LLC. The operating agreement is not required to form an LLC. However, you should have an operating agreement if at least one member of the LLC is an individual. An operating agreement offers protection for owners of the LLC and helps establish their specific roles within the company. It can also help you avoid disputes among members and protect your personal assets from being used to pay off business debts.
5. Initial and annual reports
After you’ve formed your LLC and you’ve completed the forms, you must file initial and annual reports with the Department of State. The initial report is due within 90 days of forming your LLC. The annual report is due within 90 days of your LLC’s fiscal year. The initial report includes information about each member of the LLC, such as their roles in the company and their percentage of ownership within the company. It also includes information about your business, such as your business address and the industry you operate in. The annual report reiterates this information, but it also includes your financial information from the fiscal year.
6. Tax registrations
The last step in forming an LLC is completing tax registration forms and paying the corresponding state fees. You should check with your state’s Department of Revenue to see which tax forms you’re required to file as an LLC.
It’s important to note that the registration and fee requirements for forming an LLC vary by state. However, most states require the following:
- Taxes: Taxes vary depending on your state, industry, and revenue.
- Annual Fees: Annual fees vary based on state and business type.
- Business Licenses: Local business licenses and permits also vary based on your state, industry, and revenue.
- Workers’ Compensation: Required for industries that come into contact with employees.
- Insurance: Required for high-risk industries, such as construction.
You may also need a Registered Agent
If you are a non-resident of the U.S., then you will also be required to have a registered agent, who can act on behalf of your LLC within the country. The registered agent needs to be a U.S. resident or an authorized U.S. entity, that is legally able to conduct operations on behalf of your company. This can be a major setback for non-residents looking to form an LLC in the U.S. However, there are various services available online that can provide you with a registered agent for your LLC.
Now at this point, you may be realizing that forming an LLC involves a lot of clerical work and you’re not wrong. Making even a small mistake on any of the above-mentioned documents can disrupt the entire process and require you to start all over again. Fortunately, there are some reputable platforms online that specialize in helping people complete the paperwork to form their LLC.
Some of the most trusted platforms for forming an LLC include ZenBusiness, LegalZoom, and doola. Let’s take a closer look at each of these platforms. We’ll explain what each company specializes in, the costs involved with forming an LLC with each company, and what extra services, if any, each platform offers.
Forming an LLC with ZenBusiness
What is ZenBusiness?
ZenBusiness is a legal tech services corporation that was founded back in 2015 in Austin, Texas. The platform specializes in company registration and LLC formation services. The company has earned a great reputation in the business community and has an average review score of 4.9 on Forbes Advisor and 4.6 on Trustpilot.
ZenBusiness LLC costs
If you choose to form an LLC with ZenBusiness the current cost is $49 per year + state fees. The average order processing time is around 2-3 weeks. However, you should keep in mind that this is for a very basic starter package and does not include all of the legal documents required to form an LLC.
For example, if you require an operating agreement, that will cost you an additional $125. An EIN (Employer Identification Number) will cost another $99. A registered agent will cost you an additional $199 per year. As such the total cost of forming an LLC with ZenBusiness, assuming you need all of these services, works out to around $472.
Again, this is for the most basic service. If you wish to have your LLC formation expedited, then you will need to pay for one of the platform’s higher tiers which are significantly more money. However, if you do choose to pay the extra money, you can have your LLC formed in as little as a few business days, which may very well be worth it for you depending on your business needs.
ZenBusiness extra services
ZenBusiness can also help you set up a domain name and website for your LLC. This service starts from $100 per year for the website builder and $25 per year for the domain name. They also offer annual reports for an additional fee. The platform also has a payment and invoicing solution called ZenBusiness Money. For more details about this service, you can consult the ZenBusiness website.
Related reads: ZenBusiness vs Incfile: Which is best for LLCs?
Forming an LLC with LegalZoom
What is LegalZoom?
LegalZoom is one of the oldest and most trusted names in the legal tech services space. The company was founded back in 2001 in Glendale, California. To date, they have helped over 2 million businesses get started. Like ZenBusiness, LegalZoom specializes in company and LLC formation and registration services. LegalZoom has an average customer review rating of 4.5 on Forbes Advisor and 4.6 on Trustpilot.
LegalZoom LLC costs
If you choose to form an LLC with LegalZoom the current cost is $79 per year plus state fees, but the price can increase as you may need additional add-ons. The average processing time is around 20 business days with the most basic plan. Again, as is the case with ZenBusiness, this price is for a very basic plan that does not include everything you will need to form an LLC.
For example, if you need an operating agreement then LegalZoom charges you another $99. An EIN registration number will cost you an additional $79. If you require the services of a registered agent, then you will need to pay an extra $299 per year. Therefore, if you require all of these services, the total cost of forming an LLC with LegalZoom works out to be around $556 with the cheapest plan.
Like ZenBusiness, LegalZoom also offers an expedited service. If you pay for one of the higher-tiered pricing plans, you can have your LLC formed in as little as 2-5 business days.
LegalZoom extra services
LegalZoom offers a few extra services. Of course, these extra services come at a cost. But, if you wish to have everything handled on one platform, then it’s nice to know that these services are available.
Some of the extra services available with LegalZoom include:
- Articles of Amendment
- Annual Reports
- Business Licensing
- Patent Applications
- Trademark Registration
- Tax Preparation
- And much more
Related reads: Rocket Lawyer vs LegalZoom: Which is best for LLCs?
Forming an LLC with doola
What is doola?
doola is on a mission to help US and non-US founders turn their dream idea into their dream US business. The platform gives you access to business formation services for LLCs, DAO LLCs, and even C-Corps. doola also offers worry-free compliance services to help with your taxes and bookkeeping.
Thanks to our comprehensive services, fast turnaround times, great customer support, and best-in-class pricing, we have taken the industry by storm. doola was founded in 2020 in New York, NY and holds an overall customer rating of 4.9 on Trustpilot.
doola LLC costs
If you choose to form an LLC with doola the current cost is $197 per year plus state filing fees. The average processing time is around one week. Unlike the other two platforms, doola does not charge for all the extra services. This means that although you are paying a bit more for the initial fee the price is all-inclusive. As such, doola’s formation packages are significantly less expensive than both ZenBusiness and LegalZoom in the long term.
Some of the extra features included with doola are as follows:
- An Operating Agreement
- An EIN registration number
- A Registered Agent for one year
- An annual state report
- A virtual mailbox
Because all of these business services are included in the price, it’s hard to recommend using another company to form your LLC. This is especially true for non-residents, as the cost of a registered agent service is expensive on both other platforms, whereas it’s free for the first year on doola.
doola extra services
doola’s mission is to democratize access to wealth creation in the U.S. With doola banking, small business owners will have access to payments, bookkeeping, and legal services all in one place. That said, we also have an all-in-one service to help you get started selling on Amazon in the U.S. This service includes the formation of your company, an EIN number so that you can set up a U.S. business bank account, a U.S. phone number, and a chargeable credit card.
Final overview: ZenBusiness vs LegalZoom vs doola
All three of the companies that we’ve been looking at in this article are reputable, trustworthy, viable options for forming your LLC. That said, they are not all equal. If you have a big budget and you’re looking for a company that offers a ton of additional services, then LegalZoom is a great choice.
However, if you are just looking to set up an LLC with a peace of mind, then you can’t beat doola. Compared with the other platforms, doola has the best pricing, the best customer care (handled by a team of formation pro’s), and we are the go-to service for people looking to form an LLC, especially for non-residents and people forming their first company.