If you’re thinking of starting an LLC and you’re wondering about the cost to form an LLC, you’re on the right page…
That’s because starting an LLC requires in-depth knowledge about the costs of starting an LLC.
Since the cost of setting up an LLC varies from one state to the other, you need to be sure that you’re not spending extra money when you’re forming an LLC.
As a business lawyer, I’ve assisted hundreds of clients just like you start their LLC and I can definitely help you with yours.
To help you carry out the process of staring an LLC smoothly, I’ll guide you through identifying how much does it cost to set up an LLC in your state. At the end you will no longer be wondering “how much is an llc?” or “what is the cost going to be for my llc?”.
Plus, I’ll explain the detailed procedure of filing legal documents before setting up an LLC.
If you have any questions or if you’re looking to start your LLC, email me at firstname.lastname@example.org
How Much Does it Cost to Form an LLC?
Wondering how much to form an LLC?
I’ll answer your question by explaining the two categories of costs involved in forming an LLC.
When it comes to determining how much a Limited Liability Company LLC costs, be sure that there are 2 costs to consider:
- Formation costs, and
- Ongoing annual costs
The formation cost of an LLC consists of business name registration fees, state filing fees, and services fees.
Business Registration Fees
You must reserve the name of your LLC in the office of the Secretary of State. As a part of the filing process, most states conduct a business name search.
If your business name is already used by someone else, your registration will be rejected. This is when you’ll be required to submit additional fee for refiling a new business name. To avoid such an issue, you should confirm with the office beforehand to know the availability of the business name.
State LLC Filing Fees
To form an LLC, you will need a business lawyer to file an Articles of Organization (also called Certificate of Formation) with the Secretary of State of State.
Every state has its own filing fee for forming an LLC. So the filing fee for filing the Articles of Organization or Articles of Incorporation will depend on which state you will be incorporating in.
Typically, state filing fees for forming an LLC are between $50 and $800, depending on which state you will be forming your LLC in.
You can find a list of state filing fees here.
In addition to state filing fees, you may also pay service fees for the expertise and additional services of a business lawyer to form your LLC.
At Mollaei Law, I included all state filing fees and service fees as included as part of my package.
Email me if you would like a quote on forming your LLC.
How Much Does it Cost to Operate an LLC?
Once you form your LLC, there are some costs associated with operating an LLC on an ongoing basis.
Typically, each state charges an annual fee to maintain an LLC.
In many states, you must also submit an annual report or statement of information, which is a one-page form sent by the state. Some states also have state taxes.
If you want to know how much does LLC cost in various states, the annual fees for three popular states, California, Delaware, Nevada, and New York, are as follows (prices shown are as of January 2019)…
California LLC Costs
A $20 reporting fee is required to file Statement of Information 90 days after formation and then every two years.
Further, an annual $800 LLC tax is due by the 15th day of the fourth month after LLC formation and every year thereafter. If the LLC’s income exceeds $250,000, it will owe an additional LLC tax based on the income amount.
Delaware LLC Costs
The ongoing cost of a Delaware LLC is an annual LLC tax of $300 due each June 1st, beginning the year following formation. There is no state income tax for Delaware LLC.
Nevada LLC Costs
The ongoing cost of a Nevada LLC is $150 fee and the Initial List of Managers or Managing Members, as well as a $200 fee and a Business License Application, are due within 30 days of formation. There is no state income tax for Nevada LLC.
New York LLC Costs
Every New York LLC must publish notice of its formation in two newspapers in the county in which it was created. In some areas, the fees for this publication can run up to $2,000. The company must then submit a certificate of this publication to the state, together with a $50 filing fee.
For LLCs that choose to be treated as a partnership, there are annual taxes that are based on total income (from a minimum of $25 to a maximum of $4,500)
Other State LLC Costs
Email me if you have any questions about the cost of LLC in your state.
If you’re moving to another state and want to know how much does it cost to start an LLC in that state, I can help you save time and money when you form an LLC in a new region.
What is a Limited Liability Company (LLC)?
A Limited Liability Company (LLC) or LLC is a business entity that is separate from its owners that offers personal liability protection.
Personal liability protection means the members of the LLC are not personally liable for business debts.
Also, like a sole proprietorship or partnership, an LLC has operating flexibility and enjoys pass-through entity for tax purposes. What this means is that the LLC’s profits are passed through and taxable to the members of the LLC — and the LLC itself is not taxed.
“Members” are actually the owners of the LLC (just like they’re called “partners” in a partnership business). Though members are similar to partners, there is a difference: an LLC can either be owned by a single member or multiple members.
To carry out routine tasks and finalize business decisions, an LLC should have a manager. As the owner/member of the LLC, you have two options: manage the business yourself or hire a credible manager to carry out your business operations. Once you’ve taken the decision, you need to specify it in the Operating Agreement while forming your LLC.
In case of multi-member LLC, all members can give their opinions until they agree upon a decision. Though there isn’t any formal structure of board of directors required, the LLC members can conduct occasional business meetings.
What Legal Documents Do I Need to Form an LLC?
Now that you know how much does it cost to create an LLC in each of the different states, the next step is to ensure you have all legal documents to form an LLC.
Depending on the state you want to set up your business in, you’ll be required to follow a specific set of guidelines to form an LLC. They adhere to general principles that are more likely the same. However, regardless of which state your LLC has been formed, you’re required to prepare two legal documents to provide a legal recognition to your business:
1. Articles of Organization
Once you’ve named your business and registered it, you’ll need to prepare this legal document to begin the process of starting an LLC while you pay the cost to start an LLC.
To create an LLC, a [business lawyer] will prepare and file Articles of Organization with the Secretary of State in the state where you will be conducting business.
This requires you to submit a form that includes some basic information about your business such as the business name, the names of members (if this is a partnership business), business address, and your attorney’s details (a registered lawyer you’ve authorized for accepting legal documentation while representing you as the business owner).
2. Operating Agreement
Next, the LLC members will need an Operating Agreement, which sets forth the rights of the members and the rules for running the company.
Though it is not required by law for the members of an LLC to enter into an Operating Agreement, it is highly advisable that members do so in order to set forth rights, responsibilities, and liabilities of the members, ownership interests, what happens upon departure or addition of a member, dissolution rules, tax calculations and more.
This document structures the functional and financial decisions of your business. An operating agreement is necessary in situations when there is more than a single LLC owner. Since the agreement defines the powers and responsibilities of each LLC member, it explains which of the various LLC members will make the key decisions in business.
Besides this, it states how profit and loss will be shared, how business meetings will be held, and the procedure of transferring ownership in case any of the LLC members leave your business.
Once your business lawyer prepares the Operating Agreement and the LLC members sign it, it becomes the official contract that binds them to specific terms of operating the LLC. Even if the state you’re conducting business in doesn’t make it a mandatory step, it’s a wise decision to create an Operating Agreement so you can legally protect your business.
3. Employer Identification Number (EIN)
Further, an LLC will need its own Employer Identification Number (EIN) (also called Tax ID Number) from the IRS. If you have a Social Security Number (SSN), you can apply for an EIN here. If you do not have a Social Security Number (SSN), you can apply for an EIN here.
How Much Does it Cost to Hire Someone to Set up an LLC for Me?
The cost of having a business lawyer set up and form your LLC for you can be anywhere from $490 to $790 depending on the complexity of your business and how many members your LLC has.
If you’re interested in forming an LLC, email me at email@example.com