Is a Free LLC Worth It?

"Free LLC" offers sound great — but state fees always apply. See what's really free, what the catch is, and whether free formation services are worth using.

You've seen the ads: "Form your LLC free!" Here's the truth: no one can form an LLC for free, because the state filing fee is non-negotiable. What services mean by "free" varies — and the difference matters.

What "Free" Actually Means

• Free service fee: the formation service waives its $50–$200 processing fee. You still pay the state's $35–$500 filing fee.
• Free LLC + registered agent: the company waives both the service fee and the typical $100–$150 first-year agent fee. Best deal.
• Free state fee: almost never happens, and if a company claims it, they're covering the state fee as a loss leader to sell you add-ons.
• "Pay only state fee": same as free service — the honest way to phrase it.

The Catch With Free Formation Services

Services that advertise free formation make money on the back end:

1. Upsells: operating agreements ($50–$200), EIN filing ($50–$100 — it's free at the IRS!), compliance calendars, and expediting fees.
2. Registered agent renewal: the first year is free, then $100–$200/year, sometimes with mandatory auto-renewal.
3. Annual report filing: $50–$150 per filing for what your state lets you do yourself for $0–$50.

None of this is a scam — it's a business model — but you can do every single add-on yourself for less. The IRS EIN application is genuinely free, and your state's SOS portal handles annual reports cheaply.

Should You Use a Free LLC Service?

Yes, if: you want someone else to handle the filing correctly and you'll use the free registered agent year one. The company's paperwork quality is usually identical to paid — the filing is the same state form.

No, if: you plan to skip the upsells and have 30 minutes — filing directly on your state's portal costs the least and takes one sitting. See the truly cheapest way to form an LLC.

Whichever route you take, budget for the real total LLC costs — the state fee is unavoidable, the annual report is unavoidable, and an operating agreement is a few dollars of your time.

Frequently Asked Questions

Is it really free to start an LLC?

The service fee is free, but the state filing fee ($35–$500 depending on state) always applies. No legitimate service can make the state fee disappear.

What does a free LLC service charge later?

Typically $100–$200/year for registered agent renewal and $50–$150 for annual report filing. You can do both yourself for much less.

Is ZenBusiness or a free service legit?

Yes, free-formation companies are legitimate and registered — but their margins come from add-ons. Read the contract for auto-renewals before signing.

What is the actual cheapest way to form an LLC?

File directly on your Secretary of State's website: just the state fee ($35–$500). Skip formation services and use yourself as registered agent until you need privacy.