The US LLC formation industry generates over $2 billion per year. Companies like LegalZoom, ZenBusiness, Incfile, and Northwest charge $79 to $599 or more to form your LLC. What do they actually do for that money? They fill in a one-page form on the state’s website and click submit. The same form you could fill in yourself in ten minutes.
What state filing actually costs
Every US state has a public online portal where anyone can file Articles of Organization to create an LLC. The state charges a filing fee. That fee ranges from $35 (Kentucky) to $500 (Massachusetts), with most states falling between $50 and $150. That is the actual cost of forming an LLC. Everything else is markup.
Wyoming: $100. New Mexico: $50. Delaware: $90. Florida: $125. Colorado: $50. These are not estimates. These are the exact amounts the state charges. You pay them directly on the state’s website. No intermediary required.
What formation services actually do
When you pay a formation service $299 or $599, you are paying them to enter your name, your LLC name, and a Registered Agent address into the state’s online form. That is the core service. Everything else is either an upsell (Registered Agent, compliance monitoring, EIN filing, operating agreement templates) or a repackaging of free information (formation guides, compliance calendars, business name searches).
The operating agreement templates that services sell for $99 to $199 are generic documents. A single-member LLC operating agreement is a standard legal template that any business attorney would tell you is straightforward. Many states do not even require one to be filed.
The EIN application that services charge $79 to $149 for is a free IRS service. You can apply online at irs.gov (if you have an SSN) or by fax using Form SS-4 (if you don’t). The IRS charges nothing.
The Registered Agent upsell
Every LLC needs a Registered Agent with a physical address in the state of formation. This is a real requirement and a real service. But the pricing is inflated. Registered Agent services cost formation companies roughly $10 to $20 per year per client to provide. They charge $100 to $299 per year. The margin is enormous.
Some services offer “free” Registered Agent for the first year, then auto-renew at $199 or more. Others bundle it into a “premium” formation package where you cannot see the breakdown. The pattern is consistent: use the formation as a loss leader, then make the real money on recurring upsells.
The compliance monitoring upsell
Many services sell “compliance monitoring” or “annual report filing” for $99 to $199 per year. What does this involve? Sending you an email reminder before your annual report is due, and optionally filing a one-page form with the state. The annual report itself is typically a one-page form confirming your LLC’s address and Registered Agent. Most states charge $0 to $100 for the report itself. The service charges $99 to $199 on top of that for filling it in.
Why the prices are so high
The LLC formation industry spends heavily on Google Ads, SEO content, and affiliate marketing. LegalZoom spends over $100 million per year on marketing. ZenBusiness, Incfile, and Northwest spend millions on Google Ads bidding on terms like “form LLC” and “best LLC service.” These costs are passed to you in the form of inflated pricing.
The industry also benefits from information asymmetry. Most people forming their first LLC do not know that the state portal is public, that the form is simple, or that the EIN application is free. The services position themselves as necessary intermediaries for a process that is, for most people, straightforward.
What you actually need
To form a US LLC, you need four things: a name, a Registered Agent, the state filing fee, and ten minutes. After formation, you need an EIN (free from the IRS), an Operating Agreement (a standard template works for most single-member LLCs), and a bank account. None of this requires paying $599.
There are legitimate reasons to use a formation service: if you want someone else to handle the paperwork, if you are filing in an unfamiliar state, if you need a Registered Agent and want to bundle it with formation. But the price for that convenience should be $30 to $50, not $299 to $599.
What we do differently
freeLLC exists because we got tired of watching this industry overcharge people. Our DIY path is completely free. We show you exactly how to file with the state yourself, give you a free Operating Agreement, and guide you through the EIN application. If you want us to handle the formation for you, we charge $49, not $599. We make money on optional services (Registered Agent at $49/year, compliance at $149/year) at prices that are fair.
We do not hide the DIY option. We do not pretend that LLC formation is complicated. We do not sell you things you do not need. The state portal is public. The form is simple. You can do this yourself.
Ready? Start your LLC with freeLLC — the DIY path costs $0.