A CPA Firm vs Online Formation Services
The $0-formation platforms are excellent at one thing: filing a form. Here's an honest look at what happens after — and who should use which.
- Formation + EIN (no SSN needed)
- Operating agreement & banking pack
- Form 5472 & compliance calendar
- A licensed human, year-round
Formation platforms have made starting a company trivially easy — genuinely a good thing. The comparison isn't about the filing. It's about the twelve months after.
What "$0 formation" actually includes
- The state filing, done by software (state fees billed separately)
- Everything else as an add-on: registered agent (renewing at $199–$299/yr), EIN "service" for a form the IRS provides free, compliance subscriptions, template documents
- No licensed professional, no tax advice, no one accountable when something's wrong
Where DIY-plus-platform genuinely works
- US resident, home-state LLC, simple service business
- You'll calendar your own annual report and quarterly taxes
- No cross-border, multi-state or investor complexity anywhere in sight
Where the platform model breaks
- Non-resident founders — EIN without an SSN, W-8BEN, banking documentation and Form 5472 are exactly the things a filing platform doesn't do, and the 5472 miss alone starts at $25,000
- Wrong-state formations — platforms happily form you in Delaware while you operate in California, doubling your annual costs; nobody in the funnel is paid to stop you
- Year two — the renewal upsells arrive, and there's still no one to ask a tax question
The honest comparison
Simple domestic situation and disciplined about deadlines? A platform plus our free checklists will serve you fine. Non-resident, multi-state, or planning to grow? The flat-fee firm route costs a little more on day one and reliably less by April.
FAQ
Formation services advertise $0 — how is that possible?
The state filing fee is charged separately, and revenue comes from add-ons: registered agent renewals, 'compliance' subscriptions, EIN fees for a free IRS form, and upsells at every step. $0 is the top of a funnel, not a price.
Is a formation service ever the right choice?
Yes — a US resident forming a simple home-state LLC with no tax questions can be fine with one, if they decline the add-ons and calendar their own compliance.
What does a firm do differently?
The formation is the easy 10%. The other 90% is what follows: EIN without an SSN, banking documents, Form 5472 for foreign owners, state calendars and a licensed human to ask. A firm owns all of it under one flat fee.
Formation that includes the aftermath
$299 flat: filed, EIN'd, documented for the bank, and calendared for every deadline that follows.