How Much Does An LLC Cost?
If you’re thinking of starting an LLC and you’re wondering about the cost to form an LLC, you’ve come to the right place. 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 next, you need to be sure that you’re not spending extra money when you’re forming an LLC business.
As a business lawyer, I’ve assisted hundreds of clients just like you start their LLC and I can help you with yours.
To help you carry out the process of starting an LLC smoothly, I’ll guide you through identifying how much does it cost to set up an LLC in your state.
In 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.
Without further ado, let us discuss this matter thoroughly to keep us well informed and help us save our time and resources.
How Much Does it Cost 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
- Ongoing annual costs
The formation cost of an LLC consists of business name registration fees, state filing fee, and services fees.
Business Registration Fees
You must reserve the name of your LLC in the office of the state agency (typically the Secretary of State). As a part of the filing process, most states in the United States of America conduct a business name search.
Your LLC’s name must be different from the names of other business entities in your state. You can search your state’s business name database online to find out if the name you want is available.
If your business LLC name is already used by someone else, your registration will be rejected. This is when you’ll be required to submit an additional fee for refiling a new business LLC name.
To avoid such an issue, you should confirm with the office beforehand to know the availability of the business name.
When you find the LLC name you’re looking for, the website will indicate whether the LLC is active. If your name search doesn’t yield any results, then that LLC name is unused and probably available in your state.
Searching the state business database is free, although you can hire professional registered agent services.
The cost to form an LLC varies by state and may include the state information fee, LLC name reservation fee, and publication fee, in addition to ongoing fees annually.
State LLC Filing Costs or 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.
Every state has its filing fee and state fees for forming an LLC. So the filing costs or state fees for filing the Articles of Organization or Articles of Incorporation will depend on which state you will be incorporating in.
Typically, state fees for forming an LLC are between $50 and $800, depending on which state you will form your LLC.
The cost of setting up an LLC as a small business owner can vary greatly, depending on where you’re located and the types of services you need.
To make the formation process go more smoothly, research the fees ahead of time to be sure you have budgeted for state fees and other business formation costs.
On the other hand, there are several service providers that can register your LLC for less than $50 plus the state fee.
Using a legal services provider is well worth the cost. It can reduce the risk of improperly filing paperwork, which can lead to additional fees to fix the application or reapply—not to mention all that wasted time.
You can find a list of state fees here.
Remember, the startup cost of forming an LLC consists of state fees and service fees. To the best of my knowledge, there are additional costs you need to consider when starting an LLC.
First, there are different LLC filing fees and state fees can change at any time.
Second, to state LLC startup costs, you may also pay fees for the expertise and additional services of a service provider.
In addition to state the filing costs or 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 fee 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 Start 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.
Most states charge an annual fee, though there are some states with no reporting fees. Filing the annual report and paying any fees is essential to keep the LLC in Good Standing and keeping the liability protection intact.
A few states also have what’s known as an annual franchise tax, which is a yearly tax on the privilege of doing business in that state.
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 2022).
California LLC Costs
To start a California LLC, you are required to file your Articles of Organization with the California Secretary of State, which costs $70 online.
You can apply online, in person, or by mail or fax. A $20 reporting fee is required to file a Statement of Information 90 days after formation and then every two years.
Furthermore, California LLC has an annual $800 LLC tax is due by the 15th day of the fourth month after LLC formation and every year thereafter.
If the income of California LLC exceeds $250,000, it will owe an additional LLC tax based on the income amount.
Read this: California LLC Fee (What’s the cost?)
Delaware LLC Costs
The ongoing cost of a Delaware LLC is an annual LLC tax of $300 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 a $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
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.
Email me if you have any questions about the cost of an LLC in your state
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 a 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.
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 the 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 the board of directors required, the LLC members can conduct occasional business meetings.
Many business or LLC owners have a registered agent to receive lawsuits, annual report notifications, and other official communications.
Some LLC owners act as their own agents, but others hire an agent for convenience, privacy, or because they are not typically at an office in the state during normal business hours.
The LLC’s registered agent can be the owner of the business, accountant, or anyone who lives in the state and is generally available during normal business hours.
Some businesses will pay an LLC’s registered agent service for additional privacy and peace of mind knowing someone is always available to receive service of process should the LLC be sued.
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 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. As of 2020, the average filing fee for an LLC in the United States of America is $132.
To create an LLC, a [business lawyer] will prepare and file the Articles of Organization with the Secretary of State in one of the states of the United States of America where you will be conducting your 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 for situations when there is more than a single LLC owner.
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 Agreements 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)
The term employer identification number (EIN) refers to a unique identifier that is assigned to a business entity so that it can easily be identified by the Internal Revenue Service (IRS) and is commonly used by employers for the purpose of tax reporting.
Take note that all businesses that meet certain criteria must have an EIN before they can begin operating and applying for one is free and applications are available on the IRS website.
Furthermore, an LLC will need its Employer Identification Number (EIN) (also called Tax ID Number) from the IRS. A tax number ID for an LLC provides several benefits and EIN works much like a social security number does for an individual.
If you have a Social Security Number (SSN), you can apply for an EIN online through the IRS page. 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 or a law firm set up your LLC on your behalf can be anywhere from $490 to $890 depending on the complexity of your business and how many members your LLC has.
Take note that getting a lawyer to set up your LLC is recommended to make sure that your LLC follows the right processes, complies with the state’s requirements, and most importantly, your LLC abides by the law of the states.
LLC Cost Quick FAQ
How much does an LLC cost yearly?
An LLC’s cost can vary annually. It depends where you decide to set up your business. You should establish your LLC in the state where you have a prevailing influence. Otherwise, if you don’t have a prevailing influence in a certain locale, choose a state that features lower start-up costs, such as Wyoming.
These costs can easily range from $50 to a little over $800. The two main fees for maintaining an LLC are the reporting fee and franchise fee.
What happens if my LLC expires?
If an LLC expires, or you do not comply and pay the annual fee, which is also known as a reporting fee, your business will shut down. The only way to make sure this does not happen is to contact an experienced business attorney.
If you want to make sure you always meet your filing requirements, contact an attorney. I will help you make sure that your reporting fee and franchise tax are paid annually. Send me an email today at firstname.lastname@example.org.
How much does a lawyer charge for forming an LLC?
First, you should retain the services of a top business lawyer. Doing so will ensure that you will create your LLC properly. What you pay to establish an LLC will depend on the state where you form your business and the state’s filing fee.
Normally, you can pay a minimal amount to form an LLC in Wyoming, as the filing fee is minimal as well ($100). The annual feel, to keep your business in force is $50. Preserve your professional reputation and contact a lawyer instead. Begin by emailing me at email@example.com today.
Conclusion: Cost to Form an LLC (What To Do Next)
Starting a business? If you’re interested in forming an LLC, email me at firstname.lastname@example.org
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