Cheapest way to llc/merchant account?

My current startup(which consists of two) is going through incorporation, registering the merchant account and hooking it up with Braintree. I saw Jason L Baptiste's interview on Mixergy where he slightly mentioned how much they spent on LLC/Merchant account costs ... but would really like to get a nice overview of the CHEAPEST way to LLC and merchant account.

Any ideas? Thanks in advance.

Registering an LLC is a very simple process, and I strongly advise against paying someone else to do it for you. Your state's website should have all the information you need. Save your money for something else.

Once you've registered your LLC, you will want to create an Operating Agreement. At this point you will want to get a lawyer involved to make sure everything is in order. The cheapest way to accomplish this is to use a template to create your own Operating Agreement, and then pay a lawyer to review it for you.

I did all of this myself for our LLC, with no previous experience, and it was very simple. For our Operating Agreement, I used the Nolo book Form Your Own Limited Liability Company. The book contains a CD with two Operating Agreement templates (created by a lawyer) that you can modify for your LLC. Once you've got that in-place have a lawyer review it for you.

This is pretty much the same thing lawyers do. They already have pre-made templates they take and modify for each client. But in most cases, they'll charge the client as if they had created that agreement from scratch just for them.

For a couple of other perspectives on this topic, read this other question: Did you use an incorporation service? And if you want more details on how you can do some of these things on your own, see this other question: The process of creating a startup with three cofounders (Warning: very long answer).

In california you can file your own LLC or S-corp yourself. The fees are around $200. You do not need a lawyer. Sites like legalzoom do not do much but fill out forms available from the secretary of state's office. The annual fees in california are $800. This is a minimum tax the state charges.

As for merchant accounts Braintree is a good choice.

If you have multiple products, it makes sense to have just one merchant account.
This is how i would do it.

Form an LLC for your Parent Company.
MyWebVentures LLC
register mywebventures.com

Sign up for a merchant account for mywebventures.com
Next create your sites.

MyShoppingsite.com
MyServicesite.com

Make sure all sites state that they are owned by mywebventures.com
Last, i would regiser a 4th domain name... for customer statements.

This could be called: webventurespayment.com
This is what i would ask briantree to print on your customers statments.
I would make a simple 1 page site that when your customers visit lists all your projects, so that they can realize what product they purchased and to keep down disputes.

Also, during the credit card processing, remind your vistors that it will show up on their bill as webventurespayment.com

The reason for putting all your products under a merchant account are:
1. Lower fees in the long run.
2. Only one monthly fee
3. Easier to manage
4. Easier to build payment history and eventually qualify for lower interchange plus pricing.

A side note on brain tree. Those guys are awesome but they typically lock you into their gateway. I would avoid this because it means you use them for your merchant account and gateway.

I am most comfortable using a merchant account + authorize.net gateway. My apps use authorize.net. And if i switch merchant accounts, all i do is make sure i keep the same gateway username and password for it, and nothing else changes. This lets you shop for lower fees and rates as your transaction volume grows.

Last, some merchants allow for multiple descriptors (what shows up on statements) and merchant sub accounts, but they are hard to find.

I would give a call to FlagShipMerchantServices.com ask for Kirk McWorther. I did a lot of shopping for merchant accounts and cannot give enough praise to these guys. Amazing service, honest, and work with you as your businesses grow. Let them know who sent ya! Best of luck.

Frank Basti

The cheapest way to form an LLC is to buy a book from Nolo and do it yourself. See "Can I form an LLC without a lawyer? "

Given that you have two founders, however, taking the cheapest route is not a smart move because, as that post explains, the Operating Agreement will be incredibly important.

Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.