Are Formation Companies Worth the Money?

When forming your new business, you have a few options. You can hire a business attorney, which can be expensive and time-consuming. Another option is to do DIY company formation and research it yourself. This can be daunting and can look like you need a legal degree. You can file your business documents yourself without a lawyer. An alternative option is an online formation company or another online service.

There are many formation companies online, but are they worth the money?

What are Formation Companies?

When you start a business, there are several business entities to choose from. These include a corporation, a Limited Liability Company (LLC), a C corporation, S corporation and non-profit. You also have to apply for a business with a fictitious business name, which is when you choose a business name other than your given name. You might also wish to register a trademark with the United States Patent and Trademark Office (USPTO).

Who are the Main Formation Companies?

Many companies are offering online formation services. Popular companies providing this service include LegalZoom, Swyft Filings, and Incfile. Many of the popular companies offer to help you form your new company with various business entities available, including LLC, S corporation, C corporation, and non-profit.

Formation companies offer various services at a basic level and will file your business formation documents in the relevant state. Many formation companies sell additional services like LLCs, S corporations, etc. With some of these companies, you can select a legal advisor to talk you through your formation options. Most formation brands include information on their websites, like checklists for which business entity to choose and blogs with further information.

How Much Do Formation Brands Charge?

Formation companies have a range of payment options. Some offer an initial low price, but you pay for add-ons or additional services. Some of the formation companies offer packages for you to select from. 

With some providers, it is possible to incorporate for free or as little as $50. LegalZoom offers an LLC registration for $0 plus a state filing fee and a corporation for $149 plus a state filing fee. LegalZoom charges $259.00 yearly for a registered agent. Swyft Filings offers a basic package at $0 plus your state filing fees, while their premium product is $299 + state filing fees. IncFile offers free processing fees for your formation while you pay the processing. However, their services are charged as additional.

It is worth noting that depending on the business structure you plan to go for, basic plans may be limited for you and not cover everything you need. These basic plans usually include the basic formation of your business for your state. They don’t, for example, include guidance on the preparation of bylaws or minutes. Or the forms for your EIN, your Employer identification number, which is essential for hiring staff and getting a business bank account. 

Advantages of Formation Companies

There are some advantages of formation companies. These can be listed as below.

• Can save you money in comparison to hiring an attorney.
• You might not be aware of which further services you need.
• Lots of information on their websites.
• They can be very efficient.
• Documents will be checked to ensure no errors.

Disadvantages of Formation Companies

But there are also significant disadvantages of formation companies. These can be summarized as.

• The basic service might not be enough.
• Costs can increase with add-ons.
• An agent can incur additional costs.
• It can feel impersonal.
• You might not know what other services you need.

A Better Way for Company Formation?

You might wish to try forming your company yourself, but there are many aspects to consider, this can be time-consuming. For example, where do you register, and how? Where do I go for paperwork? What address can I use? There are many other questions to consider when forming a business. 

The Legal Stepz courses inform you of everything you need to know about and do for business formation. This includes obtaining your taxpayer identification, forming an LLC, or whether you qualify to be an S corporation. There’s a lot to consider when forming a business. The workbook and accompanying video will help you start your business with ease. It is an affordable option as well. 

Final Word: Are Formation Companies Worth the Money?

Formation companies offer a way to form your business online instead of hiring a business attorney or DIY company formation. There are lots of options and various packages to choose from. Depending on the type of business you wish to set up, you might need to purchase additional services. You might find that you have not included everything you need to do. Legal Stepz courses will walk you through the process so you can be sure you have done all the aspects of business formation required for your business. Try a Legal Setpz course today!