Many people have questions as to whether it is really safe to form a corporation or Limited Liability Company (LLC) over the internet, rather than heading to their state’s secretary of state office in person.
In fact, I probably get one or two emails a month asking about whether “I can incorporate myself on the internet” rather than in person at a government office.
The short answer is that people form LLCs and corporations over the internet regularly.
In fact, a large industry has built up of websites offering incorporation and LLC formation services. And this, of course, is where the problem comes in.
I’m going to let you in on a little behind the scenes, “inside baseball” stuff about the business. You see, incorporation services are fairly profitable–once the incorporation website sets up its system (and maybe a one-time consultation with an attorney), the costs involved in actually doing the paperwork to create an LLC for a particular customer is small.
So, there are MANY companies that have entered the online incorporation industry, and it has gotten competitive.
In order to capture market share, some incorporation companies advertise really low prices – $19, $29 + state filing fees.
Now, there is no way they can legitimately offer these super-low prices. After combing through the fine print and filling and abandoning many a shopping cart, I’ve found there are two different tricks they pull – the Bad and the Ugly:
- The upsell. Sure, their “basic” service is $19 + state filing fees…except that basic service does nothing and everything is an add-on. By the time you have purchased what any normal small businessperson would consider a complete incorporation or LLC formation package, the price is up to $100-$200 + state fees.
- “Forced Continuity” aka the Automatic Rebill – This is the worst–the Ugly. Forced Continuity is the marketers’ term for a system where a customer purchases a low priced product, and buried in fine print of the terms and conditions is an agreement by the customer to join some club, or receive a newsletter, or obtain some service. In exchange for this “agreement” (which is buried in fine print, remember), the customer’s credit card is automatically charged $39, $49, $89…whatever the amount, every month. It’s nearly impossible to get them to stop without filing a dispute with your credit card company and the whole situation is a big hassle and time and money waster. Forced Continuity is a controversial because it is technically legal if disclosed. As you might guess, some unscrupulous marketers hide their disclosures in paragraph 17 of tiny print.
Where Is It Safe To Incorporate Myself Online?
I own an operate the website LLC-Made-Easy.com, which is dedicated to helping small business people and entrepreneurs understand how to use and form a Limited Liability Company for their business.
One of the things I do on the site is to link to do-it-yourself LLC incorporation forms, along with instructions.
However, I know that many people are wary of do-it-yourself legal work. Therefore, I also recommend quality, honest online companies that will take care of LLC formation for you.
My site has a comment feature, and hundreds of visitors have written to me. So far, not one has complained of any problems with the incorporation services recommended at LLC-Made-Easy.com.
I have myself formed LLCs for my own businesses using the very services recommended on the site.