Getting Your Business License: DIY vs. Hiring a Service

Congratulations on starting your business! Now comes the not-so-glamorous but essential step: obtaining a business license. This official permission from the government allows you to operate legally and opens doors to certain benefits. But where do you even begin? This guide unpacks the process of acquiring a business license, comparing the do-it-yourself (DIY) route with hiring a service company.

Hiring a Business License Service: Convenience at a Cost

Many companies offer business license filing services. They handle the paperwork for a fee, promising a smooth and efficient process. Here's a breakdown of how it works:

• Fees and Transparency: Look for companies that clearly display their service fees. Remember, this is separate from the state filing fees, which you'll still be responsible for.

• The Process: These companies typically don't offer one-on-one consultations. Instead, you'll receive forms to fill out, detailing your business information. They then submit them to the relevant state agency.

• Approval and Delivery: Once the state approves your license, the company will send you the official documents via mail or email. If any issues arise during processing, they'll help you rectify them.

Pros:

• Convenience: This option saves time and reduces the risk of errors for those unfamiliar with the process.

• Guidance: Some companies offer basic assistance in navigating the paperwork, ensuring you fill them out correctly.

Cons:

• Cost: These services typically come at a premium, adding unnecessary expense to the process.

• Limited Interaction: There's minimal personal interaction. You're essentially paying someone to submit paperwork you could potentially handle yourself.

The Essential Benefit: Registered Agent Services

Many business filing companies offer additional services like registered agent services. Here's why this is a crucial consideration:

• What is a Registered Agent? Every business needs a registered agent, a designated person or entity responsible for receiving legal documents on the company's behalf.

• State Requirements: While some states allow you to be your own registered agent, others have specific requirements, like a physical address within the state during business hours. It's important to note that some states strictly prohibit owners from acting as their own registered agent.

Benefits of a Registered Agent Service:

• Compliance and Peace of Mind: Hiring a registered agent service ensures you comply with state regulations.

• Privacy Protection: Using a registered agent service keeps your personal address off public records, enhancing privacy.

• Ensuring Document Receipt: They guarantee important legal documents are received and forwarded promptly, preventing missed deadlines and potential legal ramifications.

Cost and Bundling: Many filing companies include registered agent services with their filing packages for a minimal fee or offer them as an add-on service. These companies will be listed as your registered agent on official documents, accept service of legal documents for your business, and keep you informed.

Bonus Service: Mail Forwarding

Some companies offer mail forwarding services, ideal for businesses without a physical location. This allows you to avoid using your home address on official documents. The company acts as your official business address, receiving mail and forwarding it to you via email or physical mail depending on your chosen service package.

The DIY Approach: Saving Money and Taking Control

Getting a business license yourself is surprisingly straightforward. Here's why you might consider this option, but with a caveat:

• Cost-Effective: The DIY approach saves you the service fees charged by filing companies. You'll only pay the state-mandated filing fees.

• Easy Process: Most, if not all, states allow online filing of business license applications. Simply research the specific requirements for your state. A quick Google search with "[your state] business license application" should point you in the right direction.

Benefits:

• Save Money: This is the most cost-effective option.

Important Consideration:

• Registered Agent Restrictions: Remember, some states prohibit business owners from acting as their own registered agent. Be sure to research the requirements in your state.
  

So, What's the Best Option?

The DIY approach might be suitable for those in states that allow them to be their own registered agent, provided they are comfortable with research, organization, and keeping track of upcoming filing deadlines.

However, for most businesses, the convenience, privacy protection, and compliance assurance offered by a registered agent service outweigh the upfront cost savings.

Choosing the Right Business License Filing Service

You've decided to use a business license filing service – a smart choice! Now comes finding the best company for your needs. Here are some key considerations to ensure you get the most value:

Don't Be Fooled by Upfront Costs

The advertised price on a company's website is often just their service fee. Remember, you'll still need to pay separate state filing fees on top of that. Be sure to understand the breakdown of costs. Most companies will use an asterisk (*) next to their advertised fee, with the fine print revealing additional state filing fees based on your location.

Pricing Transparency is Key

Look for companies that clearly display their service fees, state filing fee estimates based on your business type, and any additional charges. Don't hesitate to contact a company if their pricing structure isn't clear upfront.

Looking Beyond Upfront Costs

While a low initial service fee is tempting, consider the bigger picture. Most companies will charge an annual fee to maintain your registered agent service and potentially handle future filings.

Yearly Filings and Hidden Costs

Many states require annual reports, fictitious business name statements, or other filings. These companies will typically handle them for a fee (often not included in the upfront cost). Switching companies each year to chase lower fees can be a hassle, not to mention incurring additional fees for registered agent service changes in some states.

Registered Agent Services

A Long-Term Commitment: Remember, the benefits of a registered agent service extend beyond initial filing. They ensure you receive important legal documents, maintain compliance, and protect your privacy. Finding a company with a low yearly registered agent fee can save you money in the long run and avoid the headache of switching agents later.

Choosing for the Long Haul

Think of your business license filing service as a long-term partner. Look for a company with transparent pricing, excellent customer service, and a commitment to keeping your business compliant. This will save you time, money, and unnecessary stress in the future.

Our Take Away

While the DIY approach to setting up a business in many states is an easy process, we have found that hiring a company to make the initial filing is a better choice because it provides the opportunity to create a long term relationship with a company that can serve as your registered agent, mail forwarding service and keep you on top of any quarterly or yearly filings required by your state.