Every new business venture requires a dedicated approach. Even if you have some experience working with LLCs, it doesn’t necessarily mean the same rules will apply to your next project, especially if you choose different limited liability company (LLC) formation services.
General regulations can differ rather starkly depending on the industry as well. Not every provider that calls itself the best LLC service can handle the particularities of your business.
Moreover, the viability of LLC as a structure in each case is largely determined by the purpose of your entity. Understanding how the LLC structure applies to your business plan is fundamental to its success. This is regardless of whether you plan on doing it yourself, using one of the best LLC services, or hiring an attorney.
Benefits of LLC Formation
The LLC model remains one of the most advantageous structures for a wide range of businesses. Given how a good number of the best LLC service providers work, it helps to have a more general business occupation. However, these entities are pretty flexible and can suit almost any enterprise.
So why do so many people choose LLC formation above other forms of business incorporation as the best way to start a business? The key benefits of this structure often highlighted by professional services include:
- Lenient taxation system;
- Personal liability protection;
- Extended privacy protection;
- Easy dissolution and transfer of ownership.
An LLC company is often the first choice for anyone who wishes to avoid double taxation. Unlike C-corporations, LLCs, partnerships, sole proprietorships, and S-corporations classify as pass-through entities.
The company itself does not pay taxes. Instead, each owner reports their share of earnings and losses on their private return. Quite a few of the best LLC services also offer corporate system tax election. This mens you can operate as an LLC but choose taxation as an S-corp.
But if partnerships and LLCs enjoy the same tax privileges, why do so many entrepreneurs choose the latter? Unlike partnerships, the LLC is more versatile as a structure in terms of personal liability protection offered to all key members of the company.
What is also referred to as “the corporate veil” in the corporate world, these protections mean that the owners won’t be held liable for any debts incurred on the company itself. So, in the event of litigation, none of the owners’ personal equity can be legally sued to pay off the company debts.
The situation is different for professional limited liability companies that operate under licenses as issued by relevant boards. For instance, a medical professional or architect who is a member of a PLLC can be sued for professional negligence if the court ruling confirms they are fully responsible for the accident. Not all states support the PLLC model, but plenty of LLC formation services can help you start one in jurisdictions where such a structure is legal.
Of course, to enjoy liability protection, the owners must establish a clear division between personal and company assets. This can be done by:
- Opening a separate bank account;
- Registering the company at its own business address;
- Providing further proof in the operating agreement.
All these actions can be outsourced through the best LLC services in their field, specifically those that handle legal matters.
One of the lesser-known benefits of online LLC formation is the privacy this structure offers. This is especially important for sole owners who work from home and want to avoid putting their private addresses and other information in the public domain. Some LLC websites have special business address services for this exact reason. Perhaps the best LLC service for this is IncFile which provides a valid virtual address to small businesses that don’t have a physical office but need to conduct transactions.
Pros & Cons of LLC Services
If you aren’t sure how to approach the launch of a company, a good place to start is with business formation services. Researching your options is not too difficult because of the sheer number of LLC formation services out there.
To narrow it down, try focusing on lists of top LLC companies from trusted business sources. And even if you do not end up buying any of their plans, most of these LLC creation services have useful business formation guide sites available to anyone who wishes to learn more about the subject.
Some of the best LLC services operating today extend their support beyond simple business formation. Even the cheapest LLC formation provider will likely support the long-term maintenance of your company as well as help with tangentially related issues like trademarking.
Other benefits of incorporation services include:
- Preparing the Articles of Organization;
- Automating the filing process;
- Drafting an operating agreement;
- Assigning a registered agent for free or at discount;
- Providing a banking resolution and other materials for a checking account;
- Offering accounting/tax consultation;
- Handling tax ID and other IRS applications.
On the downside, plenty of cheap LLC formation providers tend to inflate their packages with unnecessary features while not offering much value for the price. Other common disadvantages include:
- Overpriced features that can often be obtained for free through direct filing;
- Upsells and unnecessary recurring charges;
- Poor turnaround times;
- Possible clerical errors;
- Lack of legal expertise.
But what makes a good provider worthy of its title as the best LLC service? Here, examine the key parameters for evaluating incorporation companies.
Choosing an LLC Service
Even the best LLC companies won’t all work as an ideal solution on an individual level. So even if a provider claims to be the best LLC service in the industry, it doesn’t mean your goals are in line with their policies.
Finding a perfect website for an LLC is a lengthy process, but a good way to highlight the best candidates is through studying your market sector. Many affordable company formation services tend to be general in nature. This can of course be a good thing, but it could be detrimental to businesses with specialized areas of operation.
You could start the assessment of your provider’s suitability with the following:
- Make a shortlist of the best candidates based on the recommendations from reliable business insider sources;
- Outline your startup budget and see how much you can spare on extra service fees;
- Compare business formation websites based on pricing, accessibility, and transparency;
- Establish which option has more valuable feature sets across the board;
- Make sure to carefully study their service and refund policy;
- If you want to avoid third-party charges, check their affiliate lists and pay attention to the fine print in the package description;
- Always check customer reviews on legitimate review platforms;
- Verify their customer support reliability.
One of the more popular LLC incorporation companies that handle very specific issues of legal nature is Rocketlawyer. They can also help you solve tax-related issues, help with financing, the establishment of corporations, licensing, real estate, and more.
Other famous industry names that often pop up on the best LLC formation services lists are Legal Zoom, Zen Business, and Mycompanyworks. All three of them more or less occupy the same price niche. However, each has its own advantages in terms of pricing and features to examine point-by-point with each of their formation plans.
