Most people open LegalZoom’s checkout flow, click through the recommended upgrades without reading them, and end up paying $400 more than they needed to for a basic LLC. I run Ecommerce Paradise, where I teach high-ticket dropshipping.
Here is exactly how to form an LLC with LegalZoom step by step, including which upsells to skip and which ones are actually worth it.
| Step | What You’re Doing | Time Required |
|---|---|---|
| 1 | Pick your state of formation | 10 minutes |
| 2 | Run a name search and choose your LLC name | 10 minutes |
| 3 | Select the Basic plan and skip the upsells | 15 minutes |
| 4 | File your own EIN directly with the IRS | 15 minutes |
| 5 | Use a free operating agreement template | 15 minutes |
| 6 | Set up your registered agent separately | 10 minutes |
Want the full pricing breakdown before you start? Read my complete LegalZoom pricing guide first →
Step 1: Pick Your State of Formation
For most first-time dropshipping entrepreneurs, your home state is the right call. Forming in Delaware or Wyoming means filing as a foreign LLC in your home state anyway, which doubles your filing fees for benefits that mostly matter once your business is larger. According to the Small Business Administration’s guide to choosing a business structure, state filing requirements and costs vary widely, so confirm your specific state’s rules before committing. Stick with your home state unless you have a specific reason not to.
Step 2: Run a Name Search and Choose Your LLC Name
LegalZoom’s name search checks availability against your state’s business registry before you commit. Have two or three backup names ready in case your first choice is taken. This step also flags if your name is too similar to an existing registered business, which would cause your filing to get rejected.
Step 3: Select the Basic Plan and Skip the Upsells
The Basic plan is genuinely free of a service fee, you only pay your state’s filing fee. LegalZoom’s checkout flow pushes Pro and Premium hard, but neither is necessary if you’re comfortable handling the EIN and operating agreement yourself, which takes about 30 extra minutes total. Decline the Business Attorney Plan trial at checkout unless you have an actual legal question queued up, since it auto-converts to $49 a month if you forget to cancel.
For a straightforward single-member LLC tied to a niche ecommerce store, Basic covers everything you actually need.
Step 4: File Your Own EIN Directly With the IRS
LegalZoom charges $79 for EIN application assistance, but according to the IRS’s own EIN application page, the process takes about 15 minutes and costs nothing when you file directly. Skip the paid add-on. You will need your EIN before you can open a business bank account, so do this step right after your LLC filing is approved.
Step 5: Use a Free Operating Agreement Template
An operating agreement is genuinely useful documentation, even for a single-member LLC, but LegalZoom’s standalone version costs $99. Free templates from your state bar association or a service like LegalNature cover the same basic terms for a simple LLC structure. Save the $99 unless your ownership structure is complex enough to need custom drafting.
Step 6: Set Up Your Registered Agent Separately
LegalZoom charges $249 a year for registered agent service, roughly double what competitors charge for the identical legal function. Form your LLC through LegalZoom, then use Northwest Registered Agent for the actual registered agent role, which includes a free first year and renews at $125 annually after that. This is completely legal and one of the simplest ways to cut your ongoing LegalZoom costs significantly.
Common Mistakes to Avoid
The most expensive mistake is letting the Business Attorney Plan trial convert to a paid subscription because you forgot to cancel it before day 30. The second most common mistake is paying for LegalZoom’s registered agent renewal year after year without ever comparing it to what Northwest or Bizee charge for the same service. Review aggregators like NerdWallet’s LegalZoom review consistently flag this same upsell pattern across the LLC formation industry, not just at LegalZoom specifically.
Budgeting LLC Formation Into Your Startup Costs
If you are still working through business formation and financial planning, treat LLC formation as a one-time cost you can keep under $150 total if you follow the steps above, plus your state’s filing fee. Once your LLC is formed, focus your remaining startup budget on supplier relationships and inventory rather than legal add-ons you don’t need yet.
Frequently Asked Questions
Can I really form an LLC with LegalZoom for free?
The Basic plan has no service fee, so yes. You still owe your state’s filing fee, which ranges from about $40 to $500 depending on where you form, and that fee applies no matter which formation service you use.
Do I need the Pro or Premium plan?
Only if you’d rather have the EIN and operating agreement handled for you. Basic plus 30 minutes of DIY work covers the same ground for free.
How long does LegalZoom LLC formation take?
LegalZoom typically submits your paperwork within 1-2 business days. Actual state processing time varies from same-day to a few weeks depending on your state, and that timeline is the same regardless of which formation service you use.
Should I use LegalZoom’s registered agent service?
Not if cost matters to you. Form through LegalZoom but use a separate registered agent like Northwest to save over $100 a year without giving up anything functionally.
What do I do after my LLC is approved?
Get your EIN from the IRS, open a business bank account using your EIN and formation documents, and set up basic bookkeeping before your first sale.
Building a high-ticket dropshipping business and want your legal foundation handled right? See how my done-for-you store build service works →
Or grab my free beginner’s guide to see how business formation fits into a complete high-ticket dropshipping system.
Trevor Fenner is an ecommerce entrepreneur and the founder of Ecommerce Paradise, a platform focused on helping entrepreneurs build and scale profitable high-ticket ecommerce and dropshipping businesses. With over a decade of hands-on experience, Trevor specializes in high-ticket dropshipping strategy, niche and product selection, supplier recruiting and onboarding, Google & Bing Shopping ads, ecommerce SEO, and systems-driven automation and scaling. Through Ecommerce Paradise, he provides free education via in-depth guides like How to Start High-Ticket Dropshipping, advanced training through the High-Ticket Dropshipping Masterclass, and fully done-for-you turnkey ecommerce services for entrepreneurs who want a faster, more hands-off path to growth. Trevor is known for emphasizing sustainable, real-world ecommerce models over hype-driven tactics, helping store owners build scalable, sellable, and location-independent brands.
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