Cost to Start an LLC: Everything You Need to Know
Understanding the cost to start an LLC is critical to securing the capital you need to get your business set up for long-term success. 4 min read
Understanding the cost to start an LLC is critical to securing the capital you need to get your business set up for long-term success. Two of the most important expenses to consider when forming your LLC are formation costs and ongoing annual costs.
You'll also need to account for state fees and service fees and decide whether you want to set up your LLC on your own, pay for the services of a small business attorney, or use premium online resources to create your business.
LLC Startup Costs: Overview
You can expect to pay the following depending on how much help you need to start your LLC:
- State filing fees, which range between $50 and $800.
- The hourly rate or flat fee for a lawyer's help, if needed.
- Between $99 and $900 to use online incorporation services, if needed.
More details about the costs for specific steps in creating your LLC are outlined below.
Registering Your Company Name
You can search through the Secretary of State online database in your region for free. This search will show you results that are either similar or identical to the name you want to use. Being thorough with this search process can help avoid application rejections and having to pay additional fees to reapply. Check with your Secretary of State's office to find the fee for registering your LLC with the state.
If you have other intellectual property you want to register, such as a trademark, you can register your content at the federal level through the U.S. Patent and Trademark Office. You'll have to pay additional filing fees for this, but you can also take advantage of U.S. trademark common law, which protects your intellectual property for free as soon as you use it commercially. However, registering can help streamline issues with infringement in the future and make it easier to defend your protected material.
Articles of Organization
The articles of organization, known as articles of incorporation for a corporation, are required when you establish your LLC. You'll have to file this document with the Secretary of State, and a filing fee will apply. The amount you pay depends on your state — for example, some states charge as little as $40 and others charge as much as $800.
Check your Secretary of State's website for information about current filing fees and other requirements for starting your LLC. In addition to a filing fee, you'll need to pay extra if you want a copy of your articles of organization.
You'll need to select a registered agent to handle legal paperwork for your LLC. This can be anyone, including yourself, as long as they're in the state where your LLC is registered. You can also hire a Commercial Registered Agent, which costs between $100 and $300 annually, to perform these services for you.
Statement of Formation
Some states require that you publish a statement of formation in a local newspaper as part of the process to establish your LLC. Moreover, after the initial notice, you'll have to publish notices every week over a period of time — usually no more than six months.
Check with the state clerk's office if this is required where you live. They'll have more information about local newspapers that you can publish the statement in and how long you'll need to publish the notice. Budget between $40 and $2,000, depending on your state's requirements and how long you'll have to run the publication, to meet this requirement.
Once the publication period has ended, you'll need to file a certificate or affidavit of publication with the state.
Though not required by federal law, setting up an operating agreement is key to avoiding future disputes about how your business is run. Some online services that will help set up your LLC include the cost of creating an operating agreement in their fees. You can also purchase an operating agreement for between $50 and $200 and fill out the document yourself.
LLC Operating Fees
In addition to initial filing fees, you'll have to pay some annual costs to keep your business running. The price you'll pay depends on your location and how you've structured the company. Some states only require that these fees be paid once every two, five, or ten years.
Also, check whether you're required to submit an annual report or statement of information. Additional taxes may also apply in your state, and what you owe in taxes may increase if your business's income exceeds $250,000.
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