One of the most crucial steps you will take when you are starting your small business is the formation of the business entity. While you can operate your business as a soul proprietorship, or as a partnership, it is generally considered smarter to consider incorporating a business or creating an LLC (limited liability company). This greatly limits your personal liability, and allows you certain tax benefits that you would otherwise not be entitled to.

The traditional way to getting incorporated or form an LLC was to obtain the services of a lawyer and pay hundreds of dollars an hour for them to draw up the necessary documents to form your business entity. This all changed in the mid-1990′s with the advent of online business entity formation services. Since then, several companies have started to offer you a much more affordable alternative to a traditional lawyer when it comes to business incorporation.

There is a major difference between a traditional lawyer and one of these online business entity formation services for setting up a LLC. A lawyer can, and will, give you legal advice, where the online services act only as legal document assistants. The online firms make it very clear that they are not acting as your attorney and can only provide self-help services at your specific direction. In other words, you need to be sure about what type of business formation you need because you are on your own when it comes to legal advice.

Before you decide to use one of the online business entity formation services, you need to do your research to figure out what business entity is right for you. Fortunately, there is plenty of information on this subject. All of the online business entity formation services have educational material on their sites, and we live in the Google age where all kinds of business entity formation information is available at your fingertips. And there are plenty of good old-fashioned books on the subject.

If you really, absolutely don’t feel comfortable doing the research yourself about figuring out what business entity is right for your business, you can always hire a lawyer. Yes, this is a more expensive (sometimes considerably more expensive) option, but at least you will be ensured (hopefully!) that your business entity is the correct type for your situation.

Once you do decide that an online business entity formation service is the way to go for your particular situation, it is time to see what services are available to you. This is where Business Service Reviews comes in. After all, we review the business services you need for your small business so that you don’t have to.

There are a three big players in the online business entity formation service space. They are LegalZoom, BizFilings and The Company Corporation. Nolo is a well-known online source of legal books and documents that also offers a creating an LLC and corporation formation service. However, their service is powered by The Company Corporation, so we don’t do a separate review of Nolo’s service.

There are a few things that separate the three big online business entity formation services. It comes down to price and what you get for the money. All three services do the same basic thing. They provide you a means to form either an LLC or a corporation without having to fill out any of the government forms or doing any of the legwork yourself. You fill out a simple, online application with the correct information and the services take it from there (after you give them money, of course).

Yes, the services do the exact same thing that you can do yourself. The problem is that if you aren’t in the business of creating business entities everyday, you most likely will not know where to start, what forms to fill out, where to deliver them, etc. The online business entity formation services take all of the headache and hassle out of forming your business entity and free up your time to tackle the myriad of issues that you have to deal with before your business can get off the ground. You are paying for convenience, the saving of your time, and to make sure the job gets done right. Sometimes you cannot put a price on any of these.

In the form a limited liability company section of Business Service Reviews, we have comprehensive reviews of the aforementioned three big providers of online business entity formation services. The reviews concentrate on LLC formation packages, as we feel that this is the best choice for most small business owners. However, all three online business entity formation services also offer corporation formation packages.

As you read the reviews, you will see that the basic price for the LLC formation package really doesn’t vary too terribly much. What sets the three providers apart is what you get standard in the packages, versus what is an optional fee. Once you start comparing apples-to-apples, you will see some fairly large monetary differences.

We rank LegalZoom the highest out of the three, with BizFilings coming in a close second. We rank The Company Corporation a distant third, as their price really gets expensive when you start doing a direct comparison of the services.

What we really like about starting an LLC with LegalZoom web-based legal documentation service is that they offer a completely customized package that is tailored to your exact company, while maintaining a comparable (if not the best) price. BizFilings legal documentation service comes close when starting an LLC, but does not offer the same level of customization that LegalZoom does.

Another thing that you will notice as you read the three LLC formation service reviews is that there can be vast differences in the state required filing fees that one service will charge over the others, for the same state. We are not sure how a state required fee could vary, as they should be the same regardless of what provider you choose to go with. It seems as though the providers are using these fees as a profit point, or each provider could have different expenses when it comes to the state filings. It is something to ponder, however.

Here are a couple of examples of the state fee differences that we mentioned:

If you choose to form an LLC in Arizona, LegalZoom will charge you $85 for the required state filing fee. BizFilings will charge you from $50 to $101, depending on if you want expedited service or not. And The Company Corporation will charge you $265.

If you choose to form an LLC in Wisconsin, LegalZoom will charge you $130 to $155 for the required state filing fee, depending on if you want expedited service or not. BizFilings will charge you from $135 to $185, depending on if you want expedited service or not. And The Company Corporation will charge you $225.

As you can see, the state filing fee can vary greatly between the three online business entity formation service providers, but LegalZoom and BizFilings are generally fairly comparable, where The Company Corporation tends to be higher (sometimes much higher).

In summary, while all three of the online business entity formation services offer essentially the same result, you will find, after reading the LLC formation service reviews, there are some noticeable differences between the three. Take some time to review which online business entity formation service is right for you.

Out of the three online business entity formation services we reviewed, we really like the whole package put together by LegalZoom. They seem to know what you, the small business owner, need to make the formation of your business entity a smooth, customized experience. In fact, we chose LegalZoom when we created our LLC several years ago and we haven’t regretted this decision.

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