LLC Annual Fees: Everything You Need to Know
LLCs typically pay them every one or two years; the schedule differs by state. No matter what an LLC's activity or income, paying the fee is a requirement. 3 min read
LLC Annual fees — also known as Annual Reports, Annual Certificates, Annual Registration Fees, or Franchise Tax Reports — are fees that businesses pay to the state to keep an LLC in good standing and in compliance. LLCs typically pay them every one or two years; the schedule differs by state. No matter what an LLC's activity or income, paying the fee is a requirement. States can shut down LLCs that don't pay their annual fees.
Basics of an LLC or Limited Liability Company
An LLC has the features of both a corporation and a partnership. The owners are not personally accountable for business debts. An LLC is taxed like a sole proprietorship.
Necessary Documents for Filing an LLC
The required documents for filing an LLC include:
- The Articles of Organization, which will be provided to the Secretary of the State or another proper state agency
- An operating agreement, created by LLC members
- A tax identification number, which can be applied for with the IRS
Factors in Filing an LLC Annual Report
The quickest way to file an LLC annual report, domestic or foreign, is electronically. LLCs that have been cancelled or dismissed cannot file electronically. A business entity may request permission from a manager to update changes such as:
- Principal address of the LLC
- A member's address
- A manager's address
A company isn't required to report certain changes when filing an annual report electronically. These changes include:
- Registered office's address
- Registered agent's name
Such changes will be filed on separate forms.
Possible Expenses for Creating LLCs
The basic expenses will be the state fee and the service fee. The filing fees for an LLC differ by state, which can be changed at any time. Besides these basic fees, some LLC businesses may pay professional service provider fees. All states charge an annual fee to keep LLCs in compliance and in business.
The Secretary of the State provides a Statement of Information form. The company will submit the form, which includes the LLC's annual report.
Annual fees for a few popular states are as follows (accurate pricing as of 2015):
- Within 90 days after formation, LLCs must provide a $20 reporting fee and a statement of information. These are required every two years thereafter.
- An $800 annual tax is due by the 15th day of the fourth month after an LLC is formed.
- If an LLC earns income higher than $250,000, it owes an additional LLC tax, which is determined by the income amount.
Within 30 days of formation, LLCs must provide:
- A $150 fee
- Initial list of managers or managing members
- Business license application and a $200 fee
Nevada has no state income tax.
Delaware has no state income tax. A yearly LLC tax of $300 is due June 1, which begins the year after the LLC formation.
Each LLC is required to publish notice of its formation in two newspapers in the county where it was created. Fees for publication may run as high as $2,000, depending on the area. Along with a $50 filing fee, the company is also required to submit a certificate of this publication to a state agency.
Any LLCs that operate as partnerships pay annual taxes based on total income. This ranges from $25 to a maximum of $4,500.
For all other states: Contact a local accountant.
Section 50-15 of the Limited Liability Company Act mandates a late fee penalty if an LLC doesn't process the annual report within 60 days of the due date.
To pay fees, Visa, MasterCard, Discover, or American Express credit cards are accepted. Upon processing of an electronic filing of an LLC annual report, all fees that are due must be paid. To file an annual report electronically, an expedited fee of $50 is also required.
If a company refuses to pay the fees, the annual report filing will be void and the company will be in a delinquent status.
Why You Need to Pay an LLC Annual Fee
It's required to pay annual fees to keep an LLC in good standing and compliance with the state. A state can dissolve an LLC if the annual fee isn't paid.
Check your state requirements for fees and deadlines to maintain compliance and to keep your LLC running.
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