Free LLC service vs paid LLC service

Every LLC service says it's cheap. Some say they're free. None of them really are, because the state always gets its filing fee. The real question is what the service charges on top of that, and what you actually get for it.

Free services make money in two ways. They upsell you at checkout. And they renew your registered agent service in year two at a markup. Paid services charge more upfront, but they often bundle more into the package.

Over two years, the gap between the cheapest option and the priciest one is smaller than the marketing makes it out to be. Here's the actual math.

Quick comparison

What free actually means

When a service says free formation, it means their fee is $0. You still pay the state filing fee. That runs from $50 in Michigan LLC formation to $500 in Massachusetts LLC formation.

The service makes money somewhere else. Most founders miss that. Is Inc Authority really free breaks down how the free model actually works at one of the most popular providers.

How free services make money:

• EIN service ($50-$99) that you can get free from the IRS
• Expedited filing ($50-$100) that the state charges on its own
• Operating agreement templates we sell as premium add ons
• Compliance subscriptions, bundled into year two
• Registered agent renewals run $99 to $119 a year

If you turn down every upsell and switch registered agents in year two, free really is cheaper. Accept the upsells and the savings vanish. Don't pay for these LLC upsells covers which add ons are worth skipping.

Another thing to know: free services sometimes auto enroll you in a compliance subscription. It shows up as a small monthly charge you didn't notice. Hidden costs of LLC formation covers the charges that show up after checkout.

The free services

Inc authority

Inc Authority does free formation, you just pay state fees. First year registered agent comes included. After that it's about $99 a year to renew. They push upsells harder than anyone at checkout, so keep your eyes open. Our Inc Authority review walks through the whole checkout.

They'll also do your EIN for free if you ask. It's kind of buried in checkout, though. If you're weighing them against another free option, comparing Inc Authority vs ZenBusiness is a good place to start.

Zenbusiness

ZenBusiness does free formation, you just pay state fees. The dashboard is cleaner than Inc Authority's. Registered agent is included for the first year. Renewal in year two runs about $119. Their compliance tracking is actually useful when you've got a bunch of filings to keep straight. ZenBusiness review goes over the dashboard features.

Trying to pick between the two most popular free options? ZenBusiness vs Bizee breaks down how each one handles compliance and renewals.

Bizee

Bizee (formerly Incfile) gives you free formation, you just pay state fees. First year registered agent comes included. Year two runs about $119. Out of the three free options, they're the leanest. That's either a feature or a limitation, depends on what you're after. Our Bizee review breaks down their pricing and features.

If you're on a tight budget, best free LLC service ranks all the no cost options side by side.

The paid services

Northwest registered agent

Northwest charges $39 to form your LLC, plus state fees. Registered agent service comes with that price. Renewal runs $125 a year. They lead on privacy. They don't sell your data, and they push back on subpoenas. Northwest Registered Agent review digs into their privacy practices.

If you want to keep your home address off public records, registered agent vs virtual address breaks down the two services you need. And why they're not the same thing.

Legalzoom

LegalZoom charges $0 to $299 for formation tiers, plus state fees. Registered agent service runs $249 to $299 a year and isn't included. They're the most expensive option by a wide margin. LegalZoom review covers how the tiers work.

If you're wondering why they cost so much, why is LegalZoom so expensive breaks down the brand premium and marketing spend behind the pricing.

Rocket lawyer

Rocket Lawyer does things differently. They charge about $39 a month for a membership, and formation is included in that. It's a subscription, not an one time fee. if you're looking for legal documents on an ongoing basis, the membership can make sense. If you just need formation, it's expensive. Rocket Lawyer review covers how the membership works.

If you're weighing the two most popular premium options, LegalZoom vs Northwest Registered Agent breaks down the trade-offs between brand recognition and privacy protection.

Real cost over two years

This is where the marketing gets exposed. Here's what you actually pay over two years. We're using Michigan as the example because it has a $50 filing fee and a $25 annual report.

The gap between the cheapest and priciest option is $229 over two years. Real money, sure. But it's not the $1,000 difference the marketing suggests. And these figures assume you turn down every upsell. Most founders don't.

If you want the full breakdown by state, annual costs of owning a LLC covers the recurring fees. And every cost of starting a LLC covers the year-one charges.

The renewal trap

This is where founders get caught off guard. The registered agent service is free the first year. Then it auto renews at $99 to $119. You never agreed to anything past year one, but the card on file gets charged.

The renewal isn't a scam. Registered agents do real work. They accept legal service of process and forward your mail. You need that service every year, not just the first one. Registered agent vs business owner explains what the role actually involves.

But you've got options. You can switch to a cheaper provider. And if you have a physical address in the state, you can be your own agent. Can you switch registered agents walks through the process. In most states, it's just a simple form.

If you're paying for a virtual address too, the two can overlap. Physical office vs virtual address covers when you really need a separate mailing address and when the agent's address is enough.

Here's the thing. Free in year one doesn't mean cheap in year two. So budget for the renewal. How much does a LLC really cost in the first year covers the year one math, but year two needs its own budget line.

When free makes sense

Free services work for a certain kind of founder. If that's you, why pay more?

Choose free if:

• You're a single member LLC. Ownership is simple.
• You'll turn down every upsell. No hesitation.
• You'll switch registered agents in year two if you find a cheaper option
• You're comfortable reading checkout pages carefully
• You're bootstrapping. Every dollar counts.
• You don't need a lawyer or legal advice

Freelancers, consultants, and solo founders get the most out of the free model. Single-member vs multi-member LLC explains why the structure stays simple when you're the only owner.

If you're weighing DIY filing against using any service at all, DIY filing vs using a service makes the case for skipping both and going straight to the state. The free EIN process works the same way. EIN obtained by service vs DIY explains why paying for something that's free is almost never worth it.

When paid makes sense

Paid services make sense when the free model leaves you exposed. That happens in a few specific situations.

Choose paid if:

• You've got several members with complex ownership
• You need a custom operating agreement. Not a template.
• You're raising money from investors
• You want strong privacy protection
• You're setting up a Series LLC or some kind of specialized structure
• You want to talk to a lawyer or get legal advice
• You'd rather pay more now than deal with renewals later

The operating agreement is the biggest reason to pay. Templates cover the basics. They don't cover vesting schedules, buy sell triggers, or special allocations. Operating agreement template vs custom covers when the free option leaves you exposed.

Hiring a lawyer changes the math too. Online LLC service vs local lawyer breaks down when it makes sense to pay a pro $500-$2,000 instead of saving on the service fee.

Series LLCs are another case where free doesn't work. You need separate agreements for the parent and each series. Templates can't handle that. Series LLC vs standard LLC covers the structural complexity.

Which one makes sense for you

Here's the shortest version I can give you. Free costs less. Paid is easier. Neither one is a mistake.

If you're organized, you watch your budget, and you can say no to upsells, go with a free service and switch agents in year two. You'll save about $100 to $200 over two years compared to the paid options. Best value LLC service covers which free option gives you the most for the least.

If you'd rather not deal with registration yourself, pick a service that bundles a registered agent into the base price. Northwest is the clearest example. You pay $39 upfront, then $125 a year, and no surprise renewal notice shows up. Best cheap LLC service ranks the low cost options that still come with real support.

One thing to check before you commit. Some services hide the renewal price until after you sign up. Others are upfront about it. Which LLC upsells are actually useful covers which add ons are worth keeping and which ones to cancel.

If you're still deciding whether any service is worth the money at all, whether LLC services are actually worth paying for gives you the honest answer. For most simple LLCs, the state website works fine. The service is optional. Can you start a LLC yourself covers exactly how to do that without paying anyone.

If you do use a service, read the checkout page slowly. That's where the upsells live. Decline the ones you don't need. Your wallet will thank you in year two. The biggest mistake when choosing a LLC service is almost always paying for something you could have gotten for free.