r/smallbusiness • u/Business_Mine5453 • 3h ago
I compared what LLC formation companies charge vs. what things actually cost. The markups are wild.
I've been digging into the LLC formation industry for a project I'm building, and I wanted to share the numbers because I wish someone had told me this before I almost paid for all of it:
EIN filing: $50–$99 charged vs. $0 actual. The IRS gives you an EIN free in about 10 minutes on their website. There is no filing, no paperwork, no waiting period. Companies charge up to $99 to fill out a web form for you.
Compliance/deadline tracking: $99–$299/yr charged vs. $0 actual. This is just calendar reminders for your annual report. The deadlines are public record on every Secretary of State site. You're paying $200/yr for someone to email you a date.
Registered agent service: $125–$299/yr charged vs. $0 actual (for many people). If you have a physical address in your state and someone's there during business hours, you can legally be your own registered agent in most states. Half the people paying for this don't need to.
Operating agreement templates: $35–$149 charged vs. free templates everywhere. It's a standard document. The paid versions aren't meaningfully better than what's freely available.
I'm not saying these companies are scams — formation filing itself is a real service. But the upsells are priced on the assumption that you won't look up the alternative. So look up the alternative.
I ended up building free versions of all of these (cost calculator, EIN walkthrough, compliance deadline tracker with calendar reminders, registered-agent quiz) because I was annoyed. They're at aetherdynamics.net/tools if anyone wants them. No signup, no paywall — that was the whole point.
Happy to answer questions about LLC costs in specific states — I compiled the fee data for all 50.
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u/Engine_Mammoth 3h ago
It's because you're playing for someone's time. End of.
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u/MissplacedLandmine 2h ago
Fuck that still scammy those fuckers sent me a letter that looked like it was official to try to offer me $199 for an ein for my new llc?
Get bent. It was fucking free and took 5 minutes. Hell I already had it.
No fucking way their time is that valuable.
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u/basinbasinbasin 3h ago
lol, at registered agent. It could cost $500/year and I'd still pay it. The fact is some crazy huge number of small business owners operate out of their residence and the second they file for themselves is how you end up with google listings that track to people's houses. Looks very unprofessional and its a great way to get unwanted attention.
Beyond that, having the registered agent, adds an extra layer between you a many would be scammers.
I also pay the money for my hosting service to be listed as the registered owner on my website, but I guess call me crazy I like my privacy.
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u/ShepherdsWolvesSheep 3h ago
I did all this and still somehow started getting business credit offers to my house with my llc name on them?
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u/basinbasinbasin 3h ago
Well you filled out a form wrong or signed up for something, cause I don't get spam at my house and my business PO box doesn't even get spam. I have an LLC in WA and WY both and don't get crap sent to either of them.
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u/AffectionateCup7840 3h ago
The "compliance tracking" one kills me, it's basically a google calendar alert with a 200 dollar pricetag.
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u/TheElusiveFox 3h ago
I know this is a sales pitch... but as some one who has done it myself and used these (or similar) services in the past here is what I will say...
Doing all of this stuff on your own is super cheap, but its also super time consuming, requires you to either go in person or go to a bunch of different sites to fill out forms, and filling them out wrong can have a huge impact on you so the first time you do it its going to be fairly nerve wracking...
Downloading stuff like "free templates" for anything legal like contracts or operating agreements, user agreements, etc, tend to just mean you are wasting your time to look professional, as 99% of those agreements are NOT legally binding when put to the test, and have enough loopholes and clauses in them to get you in trouble if you bother to actually read them - if you actually care about these things, hire a local lawyer pay the thousand dollars and write a contract...
The thing about compliance deadlines is a lot of them change or update every year - Look at tarrifs, the rules have changed like a dozen times since Trump, and the deadlines for them change every month. this is stuff you want other people who are experts to tell you, you don't really want to be figuring it out when you get a legal demand letter from the government or the city...
I'm not saying you can't do this stuff yourself, or that you shouldn't, and I'm not saying its necessarily worth paying the premiums these specific services charge - I'm saying that people who pay have a big reason to pay, one of those reasons is often $1000 in fees to get shit done right is tiny when you are investing $100k or $1M into your new startup venture, or when you have more money than time to spend.
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u/Lumberyard_509 2h ago
Operating agreements are not "standard documents" any more than every LLC is formed under the same circumstances for the same purpose. Getting one off the internet is terrible advice, especially if the LLC has more than one member. You don't know what you don't know, so the average person has no way of knowing if the formbthey found does the job. Having AI draft one is no better if the user doesn't know what to tell the AI to include and what to look for in reviewing the output. If you have a business worth starting an LLC for, pay a local business lawyer to draft an operating agreement.
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u/BlackWindow144 2h ago
I get your point, but it is time vs money. People like me who own a LLC and don’t want to waste time, I love to spend so I can have time for other things that needs to be done
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u/BearyGear 3h ago
Yeah. The didn’t pay for any of these. But yeah, one could do lots of things that one pays for, going out to eat for example. Paying for a service. We all do it.
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