LLC Fees By State: Everything You Need to Know
LLC fees by state can range from $50 to $500. These fees are subject to change at any time.4 min read
LLC fees by state can range from $50 to $500. These fees are subject to change at any time.
A limited liability company, or “LLC,” is one of the most popular types of business structures available to an entrepreneur starting up a business. It can be thought of as a combination of a partnership and a corporation, and generally has the best attributes of the two.
The Initial Costs of Forming a Limited Liability Company
Starting a business often means incurring certain start-up costs. Since LLCs are regulated by the state, the start-up costs of forming an LLC depends on state and service fees. Each state sets their own start-up fees, and these fees can be changed at any given time, especially if the state is looking to boost revenues.
Initial start-up fees for an LLC can include but are not limited to:
• Registering your company’s name
• Filing Articles of Organization
• Forming an Operating Agreement
• Establishing an Employer Identification Number
Different Types of LLC Fees
As mentioned above, there are fees that a business must pay when it files certain required documents, such as the Articles of Organization. Filing fees for an LLC can cost anywhere between $50 (Arizona, Arkansas, Colorado) to $500 (Massachusetts). The average cost of filing an LLC is $127. This is a one-time payment that the state requires when you first form the business.
There are also costs associated with annual reports that a business is required to file. Depending on the state, an LLC is required to submit these reports every year or every two years. These “annual” fees are what keep your LLC in compliance each year and must be paid regardless of the LLC’s income or activity. The average cost of filing an annual report is about $100 and is paid to the state(s) where you are registered. If you fail to pay the annual fees, the state will essentially cancel your business registration,and you will not be able to keep your LLC running.
What State(s) Should You Form an LLC In?
Because each state sets its own rules and regulations for forming an LLC, you should definitely do your research into what state or states to register your LLC and what would be the most beneficial to the business. While there is some flexibility in choosing what states to register in, there are some baseline requirements to keep in mind. For instance, you have to register your LLC in any state where you will be conducting business. “Conducting business” is somewhat subjective, but if you have an office in a state or employees working in a state, that is considered conducting business for purposes of paying fees. If you are a more local business that will only be doing business in your home state, it would make sense for you to register your LLC in that state, even if the fees are a bit higher.
There are some benefits to registering your business in more than one state, and it is not as complicated as it might sound. Some states have more appealing tax laws and are generally more business-friendly. As long as your LLC has a registered agent in the second state, the ability to maintain your LLC status in that state should be relatively simple.
Forming an LLC in Delaware
Delaware is probably the most common state that comes to mind when a person is deciding where to form their business. Historically, they have been business-friendly and were considered the pioneer for corporations in the 1800s. They have reduced tax burdens and loosened restrictions for businesses. What is unique about Delaware is that they have an entirely separate court who handles business matters. The “Chancery Court” has established hundreds of years of case law.
Forming an LLC in Nevada
Known as the “small business capital of the world,” Nevada is one of the fastest growing states in the U.S. and, as such, has morphed into a very business-friendly atmosphere. The state does not tax any business income, franchise fees, or state corporation tax, due in large part to the huge gaming industry.
Forming an LLC in Wyoming
Similar to Nevada, Wyoming does not tax business income or have franchise fees. The state government is actively working to increase Wyoming’s reputation for being business-friendly. On top of that, the state allows a “lifetime proxy,” which means a designated person can vote on your behalf forever and you do not have to ever travel to the state if you so choose.
If you need help determining what LLC fees are required in your state, you can post your legal need (or post your job) on UpCounsel’s marketplace. UpCounsel accepts only the top 5-percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law, and average 14 years of legal experience, including work with, or on behalf of companies like Google, Menlo Ventures, and Airbnb.