Best LLC Formation Services in 2026: Start Your Business the Right Way for Under $100

You can form an LLC yourself in most states for $50–$200 in state filing fees, no service required. The question is whether the time, research, and risk of making errors justifies paying a formation service $0–$299 to handle it for you. For most first-time business owners, the answer is yes — with one major caveat: the fine print on "free" LLC formation services often reveals ongoing costs that exceed a one-time do-it-yourself filing.

This guide explains what an LLC actually does (and does not) protect, how to choose the right state, what formation services actually provide, and how to compare them on total cost — not the headline price that excludes registered agent fees, state fees, and annual report charges.

What an LLC Actually Does (and Doesn't) Protect

An LLC (Limited Liability Company) creates legal separation between you personally and your business. If the business is sued or goes into debt, creditors generally cannot pursue your personal assets — your house, personal bank accounts, retirement savings — to satisfy business obligations. This protection is the primary reason to form an LLC rather than operating as a sole proprietor.

When LLC Protection Holds

• A customer slips and falls in your place of business and sues
• A vendor you owe money to pursues the debt
• A business contract dispute results in a lawsuit
• The business is unable to pay its debts and closes

When LLC Protection Does NOT Hold

• You personally guarantee a business loan (very common — banks require personal guarantees for small business loans)
• You commingle personal and business finances (no separate bank account, paying personal expenses from the business)
• You commit fraud or personal negligence that caused the harm
• You are a licensed professional (doctors, lawyers, accountants face different liability rules)

Choosing the Right State for Your LLC

You should almost always form your LLC in the state where you actually do business — not in Delaware or Wyoming, despite what you may have heard.

The Delaware/Wyoming Myth

Delaware and Wyoming are popular for large corporations and for their privacy provisions (Wyoming doesn't require owner names on public filings). But for a small business owner operating in Texas, California, or New York, forming in Delaware means: paying Delaware's filing and registered agent fees, then paying your home state's foreign qualification fee to legally operate there, and paying ongoing fees in both states. You end up paying two sets of fees with no meaningful benefit at the small business level.

Form in the state where you live and work. The privacy advantages of Wyoming matter when you have reasons to keep ownership private; for most small business owners, they don't justify the additional cost and complexity.

State Filing Fees (2026)

• California: $70 filing fee + $800 minimum franchise tax annually (one of the most expensive)
• Texas: $300 filing fee, no annual franchise tax for most small businesses
• Florida: $125 filing fee, $138.75 annual report fee
• New York: $200 filing fee + mandatory publication requirement ($300–$1,500+)
• Delaware: $90 filing fee + $300 annual franchise tax (worth it only for specific corporate structures)

Find your state's LLC filing requirements and fees through the SBA's state-by-state resource at sba.gov/business-guide/launch-your-business/register-your-business.

What a Registered Agent Does (and Why You Need One)

Every LLC must designate a registered agent — a person or company with a physical address in the formation state who is available during business hours to receive legal documents (lawsuits, government notices). You can be your own registered agent if you have a physical address in the state (not a PO box), but most formation services either include or charge separately for this service.

Annual registered agent fees range from $0 (doing it yourself) to $299/year for premium services. This is the hidden cost that makes many "free" LLC formation services expensive over time.

Best LLC Formation Services in 2026

1. Northwest Registered Agent — Best Overall Value

Northwest Registered Agent charges $39 for LLC formation (plus state fees) and includes one year of registered agent service free — then $125/year after. What distinguishes Northwest is that they do not upsell aggressively, their customer service is staffed by Americans rather than outsourced, and they publish their pricing transparently without requiring you to reach checkout to see the real cost.

Northwest Registered Agent at northwestregisteredagent.com. Privacy-focused: they use their address on your public filings so your personal address doesn't appear in state records.

• Formation fee: $39 + state fees
• Registered agent: First year free, then $125/year
• Operating agreement: Included
• EIN filing: Available

2. ZenBusiness — Best for Ongoing Business Tools

ZenBusiness offers formation starting at $0 + state fees (Starter plan), but the real value is in the $199/year Pro plan which includes registered agent service, operating agreement, and compliance reminders — a reasonable all-in package for businesses that want to stay organized. Their interface is cleaner than competitors and they include a worry-free guarantee that they'll correct any mistakes in the filing at no charge.

• Formation fee: $0 (Starter) or $199/year (Pro, includes registered agent)
• Registered agent: $199/year standalone or included in Pro/Premium plans
• Best for: Business owners who want an ongoing compliance dashboard

3. Incfile (now Bizee) — Best for Budget Formation

Bizee (formerly Incfile) offers free LLC formation (state fees still apply) with one year of free registered agent service. After year one, registered agent costs $119/year. The platform is functional and the formation process is straightforward. Less polished than ZenBusiness, but competitive pricing for the base case.

• Formation fee: $0 + state fees
• Registered agent: First year free, then $119/year

4. LegalZoom — Best Known, Not Best Value

LegalZoom is the most recognized name in legal document services, but it is consistently the most expensive option without proportionate value improvement. Formation starts at $0 + state fees but registered agent service runs $299/year. For straightforward LLC formation, you are paying a brand premium. LegalZoom makes sense for businesses that want bundled legal services (attorney consultations, contracts, trademarks) alongside formation.

• Formation fee: $0 (Economy) to $249 + state fees
• Registered agent: $299/year
• Best for: Businesses that want attorney access bundled with formation

The Operating Agreement: The Document That Actually Matters

The operating agreement is the internal document that defines how your LLC operates: who owns what percentage, how decisions are made, how profits are distributed, what happens when a member leaves or dies, and how the business can be dissolved. Most states don't legally require one for single-member LLCs, but every LLC should have one.

A properly drafted operating agreement: protects your liability shield (demonstrates the LLC is a real separate entity), prevents disputes between members by pre-defining rules, and can be customized for specific situations (equal ownership vs. weighted, voting rights, buy-sell provisions for multi-member LLCs).

After Formation: The Steps That Protect Your LLC

1. Get an EIN (Employer Identification Number) — free from IRS.gov/ein, takes 5 minutes online. Required to open a business bank account.
2. Open a dedicated business bank account — your LLC protection depends on financial separation. Never pay business expenses from personal accounts.
3. Register for state and local taxes — sales tax permits, business licenses, and professional licenses vary by state and business type.
4. Set up annual compliance reminders — most states require annual reports and fees. Missing them can result in your LLC being dissolved.
5. Maintain your operating agreement — update it when ownership or circumstances change.

Do You Actually Need an LLC?

Not every business needs an LLC. If you are: freelancing part-time with low liability risk and under $20,000/year in revenue, the administrative overhead and costs may not be justified immediately. A sole proprietorship is simpler and has zero formation cost. As revenue grows and liability exposure increases (client contracts, employees, physical locations), the LLC structure becomes increasingly important.

The other consideration: S-Corp tax election. Once your LLC earns $40,000+ in profit, electing S-Corp status can reduce self-employment taxes significantly — but requires more administrative complexity (payroll, additional tax filings). Consult a CPA before making this election; the savings can be substantial but the compliance requirements are real.

Frequently Asked Questions

Can I convert a sole proprietorship to an LLC later?

Yes — you can form an LLC at any time and transfer your business activities to it. There is no deadline. Transfer existing business contracts, bank accounts, and licenses to the new LLC entity. Clients and vendors may need updated W-9 forms with the LLC's EIN. The conversion is straightforward for most small businesses.

How long does LLC formation take?

Most states process online LLC formations within 1–5 business days. Some states offer expedited processing (1 business day) for an additional fee. California takes 3–5 business days. New York takes 3–7 business days plus the publication requirement adds 2–3 months. Formation services typically add 1–3 business days for their processing time before submitting to the state.

What is the difference between member-managed and manager-managed LLCs?

In a member-managed LLC, all owners (members) have authority to make business decisions and sign contracts. In a manager-managed LLC, one or more designated managers run the business — useful when some members are passive investors who don't want day-to-day involvement. Most single-member and small multi-member LLCs use member-managed structure.

The Bottom Line

For most small business owners: form your LLC in your home state using Northwest Registered Agent ($39 + state fees, includes first-year registered agent) or ZenBusiness ($0–$199, depending on plan). Avoid paying premium prices for LegalZoom when equivalent formation quality is available at a fraction of the cost.

The formation is the easy part. What protects you is using the LLC correctly: separate finances, a signed operating agreement, consistent compliance with annual requirements, and understanding the situations where personal liability can still reach through the corporate veil.