Cost of LLC: Everything You Need to Know
An LLC, or limited liability company, is a business structure that offers liability protection to its owners (members). 3 min read
2. LLC Guidelines
3. LLC Creation Process
4. Additional Requirements and Costs
Cost of LLC
The cost of LLC depends on your priorities and the state where you register the entity. LLC fees usually consist of:
- Registration fees for the business name
- State file fees
- Service fees in the form of attorney or accountant fees
An LLC is a distinct entity that’s different when it comes to liability protections. Personal liability protections mean that LLC members cannot be held liable for business obligations and debts. Further, an LLC has the same flexibility and pass-through taxations as partnerships and sole proprietorships.
In essence, an LLC’s profits flow from the LLC to individual shareholders, where they would record such information on their personal tax returns. Members are also called owners, in the same manner partners in a partnership arrangement. Even though the members are the same as partners, an LLC slightly differs in the respect that an LLC can also be owned by sole or multiple members.
You should be aware of the following fee structures and requirements in greater detail:
- Registration Fees: You must pay this fee to reserve your LLC name at the secretary of state office. During the registration process, state officials conduct a name search to see if the name is already in use. If the name is taken, you must pay additional fees to submit a new name. To avoid such complications, you may confirm with authorities before you register the name.
- LLC State Filing Fees: To create an LLC, you may need a lawyer to help you file an articles of organization with the secretary of state office. Each state has a fee in regards to creating an LLC, and the fee for registering an articles of organization depends on the state in which you register the entity. State fees vary anywhere from $50 to $800 nationally.
- Service Fees: Service fees are necessary in cases where you need an attorney to help you register an LLC.
- Added Fees: Certain states mandate new LLCs to publish its creation in local newspapers. Such requirements vary, but you may need to publish an ad that appears once per week for up to six months. The notices need to be in local papers that are approved by the state clerk office. In certain cases, this can be expensive. For example, New York City publishing costs could run up to $1,250.
LLC Creation Process
When it comes to managing an LLC, you should have a manager who makes vital business decisions and commences daily tasks, and you may hire multiple managers for various departments. As a member/owner, you also have two options: hire managers to perform certain tasks or operate the business on your own.
Once you decide on the management structure, you need to draft an operating agreement, and while states generally do not mandate operating agreements, you should draft one to effectively manage your business. An operating agreement outlines the rules and operating procedures of your business.
In the case of multi-member LLCs, members must agree unanimously before rendering vital business decisions. An LLC does not require a board of directors like corporations do, but LLC members should conduct regular business meetings.
Additional Requirements and Costs
You need a registered agent in cases where your company is not registered in the state. You may hire registered agent companies for $100 annually. In addition, certain states may charge yearly taxes and license fees. For instance, Delaware levies $80 a year, while California imposes $800 per year.
When you create an LLC, you must be aware of certain ongoing costs, and such costs come in the form of annual fees. Moreover, you must be aware of certain state costs and fees:
- California Costs: California mandates $20 in presorting fees that must be sent 90 days after the creation date, and every two years thereafter. Moreover, annual $800 taxes are due by the fourth month on the 15th day after the LLC creation date, and each year after.
- Delaware Costs: An annual cost of $300 is levied on LLCs, which are due on June 1 yearly. With that, Delaware LLCs do not pay income taxes.
- Nevada Costs: Nevada imposes an ongoing fee of $150, including a $200 business license application, all of which are due within 30 days after the creation date.
To learn more about the cost of LLC, submit your legal inquiry to our UpCounsel marketplace. UpCounsel retains some of the best lawyers in the nation that will help you successfully register an LLC in your state. Moreover, they will give you the pros and cons of LLC creation, including whether other entities would be more suited to your business endeavors.