Creating an LLC is the simplest and easiest way to form a legal business, protect your assets and get ready to bring your entrepreneurial ideas to life. When it comes to forming a company, you have a couple of choices:
You can create and file the business yourself
You can use a professional company formation provider
Here at Incfile, we help thousands of entrepreneurs start new businesses every year. Although we’re a company formation specialist, we understand that some business owners will want to form an LLC themselves. In this post, we’ll discuss the benefits and drawbacks of using a business incorporation service as opposed to filing for your LLC on your own.
We’ve also got a simple, practical guide to filing your own LLC, which you might find helpful to review when reading through the rest of this article.
Benefits of Filing an LLC Yourself
There are a couple of advantages to creating an LLC yourself:
You save money on the cost of an LLC filing service
You learn the details of how to file an LLC
Benefits of Using a Professional LLC Filing Service
If you use an incorporation service, you’ll take advantage of several areas:
You can enter all your information online in one place, saving you time and effort
The service will prompt you to fill in everything accurately, reducing the risk of errors or rejections
You can get useful supplementary services
You can track your order online
If you file through Incfile, you get a Registered Agent free for a year
Let’s dig into the various steps of filing an LLC, and show how it works if you’re filing yourself or using a professional incorporation service.
Gathering Information, Searching for a Business Name and Providing an Address
Obtaining and Filling in Your LLC Formation Document
You will need to file an official document to create your LLC. Depending on the state you’re filing in, this document is known as your “Articles of Organization,” “Certificate of Formation” or something similar.
Filing an LLC Yourself
You will need to:
Find the state agency responsible for forming an LLC
Locate the correct form on their website
Download the form
Fill in the form (online, as a fillable PDF or by hand)
Using an LLC Filing Service
You will need to:
Choose the state where you want to create your LLC
Fill in your information online following their step-by-step process
If you own a startup, you'll likely be asking yourself if and when you should file an LLC. While an LLC does help your company avoid the dreaded double-taxation, that doesn't mean it's always the smartest move for your company.
For startups, we often recommend they file a C Corp instead of an LLC for several reasons. If you plan to see your company grow, you will start to face issues when compensating employees in equity, as well as tax difficulties if your startup is filed as an LLC. Filing as a C Corp will help you seek out investors and issue stock as well.
Ultimately, the choice between filing yourself or using a professional formation service comes down to cost versus time and convenience. While it’s less expensive to file yourself, you will still need to pay state fees. Plus, it can take time and effort to download all the right forms, fill them out correctly and file them with the necessary agencies.
Although you’ll pay a little more for a professional formation service, you get the peace of mind of knowing your submissions will be filled out with complete information and are much less likely to contain errors. Depending on the formation service you choose, you could also track your order online — and with Incfile, we’ll give you a Registered Agent service free for a year.
Paul is a freelance writer, small business owner, and British expat exploring the U.S. When he’s not politely apologizing, he enjoys hats, hockey, Earl Grey Tea, mountains, and dogs.