Incorporate for Free or Form LLC for Free Scam

Some incorporation and LLC formation companies have recently been advertising that they will “incorporate your business for free” or “form your LLC for free”! Of course, most sensible people know that not only is this not true, they know that no business that wishes to remain in business would offer their services for free – even in our current economy. After being contacted by a few people who were taken in by this scam (and us having to clean up a few messes left by some inexperienced competitors), I thought I would investigate further.

So let’s take a closer look at these “incorporate for free” and “form an LLC for free” offers. After reviewing a few sites that are offering this, I found:

• Obviously this does not include state fees or publication fees. State fees can range from $20 to over $500. These companies conveniently don’t mention this in their advertising (except as a disclaimer).
• Most are embedding significant fees within the state fee. For example, the state fee in California is $70 for an LLC and $100 for a corporation – most I checked were charging anywhere from $85 to $115 for the LLC and $115 to $140 for the corporation. This is simply dishonest.
• They are all going to attempt to upsell you – they wouldn’t offer this without the potential to get actual money from you. Get ready for aggressive sales calls, emails and attempts to get you to buy things you don’t need (for example, a professional Registered Agent Service is not required if you live in the state where you form the company and are available during business hours). I would bet that most people who form a “free” company end up paying more than people who go with a company that tells the truth, is upfront and charges reasonable fees.
• None of them offered personalized Corporation Bylaws or an LLC Operating Agreement. Not having these documents is dangerous, exposing you to lawsuits, owner disputes and general lack of proper organization.
• Most are charging outrageous shipping fees which are conveniently not included in the “free” package. $29.95 for “Priority Mail” in one case. Priority Mail from the USPS is usually around $5 for corporate documents.
• Most are charging really outrageous “Rush” or “Expedite” fees. Some are $150 or more when I know for a fact that all they are doing is overnighting the documents to and from the state (typically around $50 – $60 in real costs).

So what’s the alternative? Obviously this article is written to convince you to try our services. We believe in being honest and here’s what we’ll offer you:

• Our service starts at only $79 + state fees.
• We only charge the real state fee which you can view on our online order forms.
• We never attempt to upsell you.
• Even our basic service includes personalized Corporate Bylaws or an LLC Operating Agreement.
• Shipping is always free, you can add overnight for $25.
• We don’t make money on “Rush” or “Expedite” fees. If it costs $25 to expedite a filing with the state, that’s what we charge you.
• Most importantly, we tell the truth. We would never offer a “free corporation” or “free LLC” as a sales tactic. We would never hide fees in the state fee. We never say “incorporate in 10 minutes” or other gimmicks – we tell you how long it will take to form your company right on Step 1 of our order forms.

I invite you to compare us to our competitors and decide for yourself.

This entry was posted on Friday, November 5th, 2010 at 2:33 pm and is filed under Incorporation, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.