The US Small Business Administration states that if a business is an LLC it will need to register itself as such in the states in which it conducts business. Most states have slightly different requirements for LLC registration and staying on top of these different requirements can be difficult. This is especially true for a business which operates in multiple states or for a business which requires multiple LLCs in different states. While it is certainly more straightforward to establish an LLC than a corporation, the formation process still comes with its own nuances which can potentially cause an LLC incorporation to be rejected because of mistakes in the paperwork. To avoid this, many entrepreneurs choose to use LLC formation services which take care of the process of LLC formation on behalf of the entrepreneur. This is typically accompanied by a small fee which is often mitigated by the convenience and peace of mind which these services provide.
Due to the popularity of LLC formation service providers a great deal of companies have been established to tap into this lucrative market. The wide variety of LLC formation services have led to increased competition in the market which has prompted companies to increase the competitiveness of their service offerings. This has subsequently led to certain LLC formation services growing at a faster rate than the market. As a result some LLC formation services have experienced growth which may have come at the expense of one or more of their competitors.
Major LLC Formation Services
There are several major players in the LLC formation service market and these companies have established themselves through a combination of reliable service delivery, competitive pricing and solid customer service.
ZenBusiness
ZenBusiness is one of the biggest LLC formation companies having incorporated over 300,000 businesses in the US since 2015. They charge $39 for LLC incorporation which is also their most basic package. This also includes a year of free registered agent service as well as an accounting consultation session. ZenBusiness is able to provide reliable and quick business formation services thanks to their usage of technology in their business. They have been able to automate much of the LLC incorporation process which saves a great deal of time. They have also been able to automate some of the ongoing compliance requirements to further increase the level of service which they are able to provide.
LegalZoom
LegalZoom is one of the most well known LLC formation services providers on the market thanks to their long track record and competitive use of marketing. LegalZoom offers very long hours for customer support which are some of the longest in the industry. They do however charge more than many of their competitors and try to provide upsells during the ordering process. If a customer is not pleased with the services which they have received they have 60 days in which to get their money back from LegalZoom. This is on a no questions asked basis which makes their service more customer friendly.
Incfile
Incfile’s claim to fame in the LLC formation market is that they offer the service of forming an LLC for free. This is in addition to a free year of registered agent services. Incfile also has a strong track record from customers with over 10,000 positive reviews of their services available online. They offer a one business day turnaround on their formation services which is faster than many of their competitors. The business does have higher tier packages on offer which they do charge for but these packages come with additional benefits such as an EIN and an operating agreement.
Doola
Doola is a relatively new player in the LLC formation market and they are making a name for themselves through consistent service and strong customer support. They claim to be able to save their customers as much as 40 hours of time when it comes to business formation as well as 23 hours of time with annual tax returns. Doola is also upfront about their pricing and does not have any hidden fees for their services which other LLC formation services sometimes have. They also offer continuous support to their customers even after the process of LLC incorporation has been completed.
Will Provider Growth Keep Up With Market Growth?
The LLC formation services market has become increasingly competitive due to the lucrative nature of the business and the popularity of the LLC as a business entity among entrepreneurs. There are many major players in the market and all of these companies have a certain edge which helps them stand out from the crowd. The recovery of the economy in the wake of the pandemic has also led to an increase in business incorporation which LLC formation services have been able to profit from.
An interesting lesson can be learned from research in the insurance industry – and perhaps this is also common sense for most analysts: Industry growth alone is not the only factor investors will weigh when considering these companies: the question now is to what extent competitor growth will outpace industry growth – and for those who seek to take market share from established providers – what tricks do they have up their sleeve? The Doola API sounds like an interesting play for market share, but we are yet to see how Zen Business will respond to that.
