State Fees For LLC: Everything You Need to Know
The state fees for an LLC include both startup costs and ongoing payments. When you start your company, expect your bottom-line price to include various service and state fees. 3 min read
2. How Do You Form an LLC?
3. After Formation, What Are State Fees for LLC Maintenance?
Not every state in the U.S. sets up filing costs the same. In fact, depending on whether a particular state becomes concerned with ways to increase its flow of money, these fees can change in price at any time.
Aside from state fees for LLC startups, as a business owner, you may also have an obligation to pay specific industry or expertise costs and payments to service providers for any additional aid needed to begin your business operations.
What If the State Fees Are Too High Where You Live?
It is common for entrepreneurs to select a state with the lowest fees or one more business-friendly than their home to form an LLC. Annual report fees and formation costs vary from state to state.
Establishing an LLC in a state with the lowest costs does not guarantee you will save money. If you form a limited liability company in a location different from where you are physically or where you do business, you have to pay taxes and filing fees for both states. It does not hurt to check filing prices across the country, but most small businesses experience a measure of benefit with LLC formation in the local area.
How Do You Form an LLC?
There are a few steps involved in starting a limited liability company. These process components tend to have fees attached, but some administrative tasks you can do for free.
- Pick a distinguishable name for your company that no other businesses already have registered with the state. The legal name must include one of the two acronym versions, "LLC" or "L.L.C." Additional guidelines for choosing a name get determined by each state. You must get approval from the Secretary of State to form the company.
- File the Articles of Organization. Different states allow filing online, while others limit this formation step to mailing in paper forms. The associated fees can range from $50 to $800.
- In various states, after filing the Articles, you may need to publish a statement announcing the formation in at least one newspaper distributed in the same county where you formed the LLC. Should you have to take this step, you can expect fees ranging from $40 to $2,000 depending on location and how long you get instructed to run the ad. Send an affidavit to the state after publication.
- Creating and filing an operating agreement with the state is optional. The document outlines the procedures, policies, and purpose of running your business. It establishes how the profits and losses are to get divided among members. The only cost for this portion of the LLC formation is what you pay to create the written agreement. If you do not file the document with the state, you should keep it at your central location at least.
- Get an Employer Identification Number (EIN) from the IRS for proper taxation and for other purposes, such as opening a bank account under your company's name.
After Formation, What Are State Fees for LLC Maintenance?
To keep your company running after startup, you need to pay ongoing fees. To support your LLC, it does not require too vast an amount of paperwork, but you pay regular, annual filing fees. In different parts of the U.S., the total fee costs are massive. Be mindful that when a state starts to need more money, it may raise the price for filings. Payments may include:
- Annual Franchise Tax: This gets applied to each LLC without a direct need for tax payment to come from the business profits. The least fee is higher in particular parts of the country than in others. For example, in Delaware, companies could pay the smallest charge of $250. Whereas, business owners in California pay $800.
- Reporting fees: These are yearly payments on top of the Annual Franchise Tax and other LLC filing fees. The number of partners the company has can increase the number of reporting fees a company pays. Take a state like New York. LLCs there can pay anywhere from $325 to the maximum of $10,000. However, not all states have such high costs. In fact, various places in the U.S. have flat fees set up as low as $20.
If you need help with state fees for an LLC, you can post your legal need in 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