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Welcome to the captivating world of LLC formation costs! Whether you’re just starting your business journey or looking to reorganize an existing company, understanding the financial side of things is essential.
In this post, we’ll break down the details of forming an LLC, explore various expenses you might encounter, and offer key insights to help you navigate these costs confidently. From basic filing fees to potential hidden costs, let’s dive into a cost-conscious adventure toward establishing your ideal business entity.
How Much Does It Cost to Start an LLC?
An LLC, or Limited Liability Company, is a fantastic asset for entrepreneurs. It shields them from business liabilities, ensuring they aren’t personally on the hook, and it offers great tax flexibility. Despite its benefits, setting up an LLC doesn’t cost a fortune compared to other business investments.
Two main types of costs are associated with LLCs: startup costs and maintenance costs. Startup costs depend largely on the state where you register the LLC. There are ongoing expenses to keep your LLC running. Here’s what you need to know.
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LLC Startup Costs
Forming an LLC involves various fees for creating and filing the necessary legal documents. There are related costs when registering your LLC with state and local authorities.
For instance, you need to secure the correct permits, business licenses, and certificates mandated by local, state, and federal governments. The total cost will depend on whether you decide to handle the process yourself or hire professionals.
Reserving an LLC Name
In many states, you must reserve a business name for your LLC before you file the formation paperwork. This reservation typically costs between $10 and $50. However, reserving a name before formation in most states isn’t mandatory.
The duration for which you can reserve an LLC name varies. It may last from one to two months or even up to 120 days.
Filing Fees
Typical costs: $50 (legal services) + $50 to $800 (filing fee), depending on the state
For most entrepreneurs, filing fees make up the bulk of their LLC startup costs. While hiring a lawyer to file articles of organization isn’t necessary, using an LLC filing service can be beneficial. These services are affordable, with many providers offering to register your LLC for less than $50, plus the state fee.
Opting for a legal services provider can be a smart investment. It minimizes the risk of paperwork errors, which could otherwise result in extra fees to correct mistakes or reapply, not to mention wasted time.
| State LLC | LLC Filing Fee | LLC Annual/Biennial Fee |
| Alabama LLC | $200 | $50 minimum (every year) |
| Alaska LLC | $250 | $100 (every 2 years) |
| Arizona LLC | $50 | $0 (no fee and no information report) |
| Arkansas LLC | $45 | $150 (every year) |
| California LLC | $70 $0 (Good news! California LLCs are free until June 2023.) | $800 (every year) + $20 (every 2 years) |
| Colorado LLC | $50 | $10 (every year) |
| Connecticut LLC | $120 | $80 (every year) |
| Delaware LLC | $90 | $300 (every year) |
| Florida LLC | $125 | $138.75 (every year) |
| Georgia LLC | $100 | $50 (every year) |
| Hawaii LLC | $50 | $15 (every year) |
| Idaho LLC | $100 | $0 (however, an information report must be filed every year) |
| Illinois LLC | $150 | $75 (every year) |
| Indiana LLC | $95 | $31 (every 2 years) |
| Iowa LLC | $50 | $30 (every 2 years) |
| Kansas LLC | $160 | $50 (every year) |
| Kentucky LLC | $40 (sorry, I said $90 in the video) | $15 (every year) |
| Louisiana LLC | $100 | $35 (every year) |
| Maine LLC | $175 | $85 (every year) |
| Maryland LLC | $100 | $300 (every year) |
| Massachusetts LLC | $500 | $500 (every year) |
| Michigan LLC | $50 | $25 (every year) |
| Minnesota LLC | $155 | $0 (however, an information report must be filed every year) |
| Mississippi LLC | $50 | $0 (however, an information report must be filed every year) |
| Missouri LLC | $50 | $0 (no fee and no information report) |
| Montana LLC | $70 $35 | $20 (every year) |
| Nebraska LLC | $100 | $13 (every 2 years) |
| Nevada LLC | $425 | $350 (every year) |
| New Hampshire LLC | $100 | $100 (every year) |
| New Jersey LLC | $125 | $75 (every year) |
| New Mexico LLC | $50 | $0 (no fee and no information report) |
| New York LLC | $200 | $9 (every 2 years) |
| North Carolina LLC | $125 | $200 (every year) |
| North Dakota LLC | $135 | $50 (every year) |
| Ohio LLC | $99 | $0 (no fee and no information report) |
| Oklahoma LLC | $100 | $25 (every year) |
| Oregon LLC | $100 | $100 (every year) |
| Pennsylvania LLC | $125 | $70 (every 10 years) |
| Rhode Island LLC | $150 | $50 (every year) |
| South Carolina LLC | $110 | $0 (no fee and no information report, unless LLC is taxed as an S-Corp ) |
| South Dakota LLC | $150 | $50 (every year) |
| Tennessee LLC | $300 | $300 (every year) |
| Texas LLC | $300 | $0 for most LLCs (however a No Tax Due Report and Public Information Report must be filed every year) |
| Utah LLC | $54 | $18 (every year) |
| Vermont LLC | $125 | $35 (every year) |
| Virginia LLC | $100 | $50 (every year) |
| Washington LLC | $200 | $60 (every year) |
| Washington DC LLC | $99 | $300 (every 2 years) |
| West Virginia LLC | $100 | $25 (every year) |
| Wisconsin LLC | $130 | $25 (every year) |
| Wyoming LLC | $100 | $60 minimum (every year) |
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Operating Agreement
Typical costs: $0 to $200
An operating agreement is an internal document outlining how your LLC will function, the roles and contributions of the owners (members), and the decision-making process.
Although you can create an operating agreement yourself for free, it’s wise to involve professionals when it comes to dividing profits and losses among the members. Legal service providers can draft this document for $50 to $200, or you can hire a local lawyer. This small investment helps ensure clarity and avoid future disputes among members.
Publication
Typical costs: Varies based on state and local newspapers’ rates therein
Entrepreneurs in New York, Nebraska, or Arizona face extra LLC costs due to publication requirements. In these states, LLCs must publish notices for a specific period in one or more newspapers across various cities or counties. This step is mandatory and adds to the overall cost of forming an LLC in these locations.
Business Licenses and Permits
Depending on your industry and where you’re located, your business might need federal, state, and local permits or licenses to operate legally. This requirement applies whether you form an LLC or any other business structure. Ensuring you have the necessary permits and licenses is crucial for compliance and smooth operation.
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LLC Maintenance Costs
Once your LLC is registered, you’ll need to handle ongoing maintenance costs. These include state and federal taxes, reporting fees, and expenses for any services you use to keep the LLC running smoothly. Regularly addressing these costs ensures your LLC remains compliant and operational.
Taxes
Typical costs: Varies from state to state
Like any other person or entity, LLCs must pay taxes. The federal government doesn’t directly tax the LLC. Instead, taxes are collected from the owners’ profits as pass-through income. However, LLCs can write off certain startup costs, up to $5,000, such as attorney fees, market research, office space, and equipment.
Most states tax LLC profits similarly to the federal government, with profits passing through to members’ personal tax returns. However, some states have mandatory LLC franchise taxes. For instance, Delaware charges a $300 franchise fee, while California imposes a minimum $800 annual franchise tax.
At the state level, LLCs may also face reporting fees. These fees vary by state but typically average around $100 a year.
Registered Agents
Typical costs: $0 to $300
A registered agent serves as the primary contact between your LLC and the state. They accept legal documents, lawsuits, and office mail on behalf of the LLC. Any adult can be a registered agent as long as they live in the state where the LLC is registered and are available during business hours.
This flexibility means businesses can avoid costs when designating a registered agent. However, you can hire service providers to act as your registered agent for $100 to $300 per year if preferred.
Franchise Tax
Some states impose an annual tax on LLCs, often referred to as a franchise tax. This tax is usually a fixed amount, but in some states, it varies based on your LLC’s annual earnings. It’s important to check your specific state’s regulations to understand the exact costs involved.
Annual/Biennial Report
Most states require LLCs to submit an annual or biennial report, which includes updates on the name, address, and ownership of the LLC. The fee for this report varies by state. Keeping up with these reports ensures your LLC remains in good standing.
How to Register an LLC Yourself?
Forming an LLC yourself is straightforward. Our state-by-state LLC formation guides break the process down into five basic steps, making it simple and manageable.
Step 1: Name Your LLC
When naming your LLC, you’ll need to choose a name that:
- Is available for use in your state
- Meets your state’s naming requirements
- Is available as a web domain
Step 2: Choose a Registered Agent
In most states, LLCs must appoint a registered agent. This agent acts as the main point of contact between your LLC and the state. Most importantly, they accept service of process if your business gets sued.
A registered agent must:
- Be at least 18 years or older
- Have a physical address in the LLC state
- Available during normal business hours to accept service of process
Step 3: File the Articles of Organization
The articles of organization, also called the certificate of formation or certificate of organization, is a document filed with your state to officially form an LLC. The filing fee for this document varies, ranging from $0 to $500, depending on the state.
Step 4: Create an Operating Agreement
In operating agreement is a legal document that outlines the ownership and operating procedures of an LLC.
A comprehensive operating agreement ensures all business owners are aligned and helps reduce the risk of future conflicts.
Step 5: Get an EIN
An EIN, or Employer Identification Number, is a nine-digit number issued by the Internal Revenue Service (IRS) to identify a business for tax reporting purposes. It’s essentially a Social Security number for the company.
An EIN is required for several reasons:
- To open a business bank account
- For Federal and State tax purposes
- To hire employees
>> Start Your LLC With Northwest >>
Hiring an LLC Service Provider
LLC service providers can simplify setting up your business. Here are five top LLC formation services to make your journey easier:
Northwest Registered Agent – Best LLC Service Overall
If you’re planning to form an LLC and need a registered agent service, Northwest Registered Agent is a top choice. Their basic package includes LLC formation services and registered agent service right from the start. Their Corporate Guide® service ensures you meet all your requirements efficiently.
Northwest Registered Agent offers high-quality LLC formation services for $225 per year. This comprehensive package includes preparing and submitting Articles of Organization, name availability verification, and one year of registered agent services.
They provide convenient and customizable solutions with online document access, free forwarding of legal and tax documents, and compliance reminders. Northwest Registered Agent is the ideal option for hassle-free LLC establishment.
ZenBusiness – Best LLC Service
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ZenBusiness is the best LLC service provider, offering an interactive process that guides you through creating your LLC by asking questions about your business plans using a chat feature.
They also provide free resources and courses to help you explore new ideas for expanding your business. With their top-notch services, your LLC will be formed with ease and efficiency.
ZenBusiness offers three LLC service plans:
- Starter Plan: This plan has no annual fee, only state filing fees, and provides essential services.
- Pro Plan: Priced at $199 per year, this plan offers comprehensive support, including an Operating Agreement and EIN registration.
- Premium Plan: Costing $299 annually, this plan provides benefits like faster filing, compliance monitoring, and a worry-free guarantee.
Swyft Filings – Best LLC Service for Quick Turnaround Time
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For business owners who need to set up their ventures quickly, time is crucial. That’s where Swyft Filings excels as the best LLC service option. With turnaround times as fast as 7 to 10 business days, it lives up to its name and outpaces most other business formation services in terms of speed.
Swyft Filings offers three LLC service plans:
- Basic Plan: Priced at $49, this plan covers state fees and includes preparation and submission services for articles of incorporation/organization, a name availability check, and one year of registered agent service.
- Standard Plan: Also at $49, this plan includes all the Basic plan services, ensuring a solid LLC foundation.
- Premium Plan: Costing $299, this plan adds a professional website, domain, business email, phone number, and a comprehensive business license report.
Choose the plan that suits your needs and enjoy top-quality LLC services.
Tailor Brands – Best LLC Service for Branding Solutions
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Tailor Brands stands out as the best LLC service provider, empowering entrepreneurs with a comprehensive and convenient solution. Their services encompass LLC formation, compliance, and branding/online presence.
While they offer three different plans, the Elite Plan is highly recommended for serious entrepreneurs, as it provides all the essential tools needed to effectively reach their target audience.
Tailor Brands offers three pricing options for their services:
- Basic Plan: Pay the annual fee upfront for a discounted rate of $3.99 per month, or opt for the regular monthly rate of $9.99.
- Standard Plan: An upfront yearly payment reduces the monthly cost to $5.99, compared to the regular monthly cost of $19.99.
- Premium Plan: Choose between $49.99 per month or a discounted rate of $12.99 per month with an upfront yearly payment.
Bizee (Previously Incfile) – Best LLC Service for Affordability
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After thorough research on LLC formation services, we’ve found Bizee to be the most cost-effective option for those starting a business with limited funds.
With Bizee, you only need to cover the state filing fees and receive a free year of registered agent service. While there may be additional charges after the first year, we still highly recommend Bizee as our top choice for helping you establish your business on a tight budget.
Bizee offers three LLC formation packages:
- Silver Package: Requires only the payment of state fees, with no additional charges
- Gold Package: Priced at $199 plus state fees
- Platinum Package: Priced at $299 plus state fees
>> Visit Bizee to Start Your LLC >>
Disclosure: We earn commissions if you shop through the links below. The order in which services appear may or may not depend on the payment level.
How Much Does It Cost to Form an LLC? – Frequently Asked Questions
Bottom Line – How Much Does It Cost to Form an LLC?
An LLC Operating Agreement is the backbone of a Limited Liability Company, offering structure, protection, and clarity to its members. By defining ownership, management, and decision-making processes, it lays the groundwork for successful collaborations and reduces conflicts.
This crucial document provides a solid foundation for smooth business operations, safeguarding individual interests and outlining the growth path. Whether you’re starting a new venture or strengthening an existing LLC, investing time in crafting a comprehensive Operating Agreement is well worth it.
It’s a legal requirement and a powerful tool that empowers entrepreneurs to build thriving businesses, ensuring transparency, accountability, and long-term success.
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Larry is a finance graduate and entrepreneur who loves educating others on various business software through his own experiences. Larry loves to write about all topics, from fashion editorials to tax advice. On his days off, you can find him at a basketball court or gym working up a sweat.
