How Much Does it Cost to Start a Business?

Money sitting on a table.

Ready and determined to start your business? While many limited liability company (LLC) formation providers claim to offer “free and transparent” services, most of the time those services end up costing several hundred dollars on top of state fees. We believe in making entrepreneurship accessible for everyone. That’s why we provide a great deal of free resources that will simplify the LLC formation process and help you choose the best and most cost-efficient route.

From our straightforward guides to our in-depth reviews of reliable formation services like ZenBusiness, we make starting a business affordable and easy.

Overview of the Cost of an LLC, the Best LLC Service, and Where to Begin

Form the LLC Yourself Using TRUiC's Free Guide—You Pay State Fees

If you use TRUiC’s free LLC formation guide to form the LLC yourself, you only need to pay the state fees, which vary from $50 to several hundred depending on your state. Full details on state fees can be found here.

We designed our guide in a way that sets you on the right path to launch your business. We break everything down into simple yet essential steps. It also covers the financial information you’ll need such as taxes, banking, business credit cards, and more.

Use a Business Formation Service Provider to Form Your LLC—It Really Doesn't Get Cheaper Than $149

You should expect to pay at least $149 to use a service provider to start your LLC even when the service is advertised as “free.” This is because these providers offer additional services or packages tailored to your specific needs which can add up the LLC cost quickly. Below is a list of services that you can do yourself to save money:

  • Employer Identification Number (EIN) - You can easily apply for an EIN directly from the IRS website. It’s free and should only take a few minutes.
  • Registered Agent - You can be your own registered agent if you meet a specific criteria.
  • Operating Agreement - Most LLC formation services will provide a basic LLC Operating Agreement which may or may not be right for you. And they will charge you for this. Instead, you can create your own by using our free Operating Agreement tool.

Although you can do all of the work listed above yourself, it might be best to pay for convenience, experience, and expertise these business formation services will provide. This will ensure there are no mistakes made when forming your LLC.

Based on the overall quality, our choice for the best LLC service is ZenBusiness. The business formation company is completely clear to their customers about what they offer.

Here’s what you can expect with ZenBusiness:

$39 + State Fees

ZenBusiness can form your LLC, and provide you with one year of registered agent service, an Operating Agreement, and a Worry Free CPA Assessment. After the first year, a registered agent service will cost $119.

However, for other services such as applying for an EIN, etc., you are probably better off using our free guides to help you.

$149 + State Fees

Most people interested in starting their business will choose this package. In addition to forming your LLC and including a year of registered agent service, you’ll also get:

  • Faster processing time
  • Worry-Free Compliance
  • Domain Name
  • Free Employee Identification Number (EIN)

If you use a “free” or “low-cost” service, you will end up paying a lot more for the above services. Continue reading to find out why.

Don’t Be Fooled By Services Promising “Free”

Picture this: You’re ready to start your LLC, so you decide to do some research and stumble upon a business formation service ad. Keywords like free and low-cost catch your eye. This particular company claims to only charge $29 total to help form your LLC in approximately 3-4 weeks.

You decide to take the plunge and choose this service to help you launch your business. You figure since it’s such a great deal, you don’t mind waiting for a few weeks. You take the necessary steps on the company’s website, send in your state fees, sit back, and relax.

One week goes by. Then two. Three. Four. You become a little anxious during the fifth week. At this point, your LLC was supposed to be formed already. Not to mention, the service has been holding onto your money the whole time. There’s really no turning back.

You spend another few weeks communicating back and forth with the company’s customer support. It turns out that there were several issues after your order was placed and they failed to notify you in a timely manner.

The business formation service also failed to provide transparency about what exactly they were offering; you’re bombarded with additional costs (on top of state fees) such as a registered agent service (not free in the first year), Operating Agreement, EIN, and so forth.

You end up spending over $300. And wasting several weeks of your time. You were supposed to have a positive entrepreneurial beginning, but now you’re only discouraged.

Sound disappointing? Don’t worry! We’ll explain how to spot those hidden LLC costs and avoid an experience like this.

Note: The business guides, tools, and other resources throughout our website will also help you make informed decisions.

Essentially, these additional costs are the main reasons you will be charged even if the LLC formation is advertised to be free:


Reasonable Speed

So-called free or low-cost LLC services will take several weeks to process your order. If everything goes right the first time, you will get your LLC formed in 3 to 4 weeks. But if any issue arises—such as a name availability conflict—it can take an extra several weeks.

Most people would not want to deal with not knowing if and when their LLC will be formed—especially after already handing over the state fees ($50 to several hundred dollars) to the business formation service provider. Service providers realize this and charge you inflated prices to process your order in a reasonable time.


Privacy

Most LLC service providers offer a registered agent service as well. Registered agents are useful because they protect your privacy and remind you of annual filing requirements to keep your LLC in good standing with the state. LLC formation services charge for a registered agent service, but usually provide a full year of it for free.


Useful Add-Ons

Business formation services offer the option to add an EIN and Operating Agreement. Again, you can cut costs by applying for an EIN through the IRS for free or creating your own Operating Agreement using our free legal templates.


Upsells

LLC formation service providers offer a variety of unnecessary items to upsell you on, such as corporate seals.

Takeaway

In conclusion, service providers can be helpful when starting your LLC. However, only purchase the products that are necessary for your specific business needs and feel free to use the business tools we provide here on Startup Savant.

You Might Also Like...