An LLC is a business legal structure with low start-up costs. An LLC can be started by preparing and filing a single form with the state and paying a filing fee. Other start up costs for an LLC can include drafting an operating agreement and obtaining accounting, tax and legal advice.
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One of the basic costs of forming an LLC is the cost of preparing a short document called the articles of organization. The cost of preparing this document can vary depending on whether you prepare it yourself, use a document preparation service or use an attorney. In some states, the articles of organization must state whether the LLC is to be managed by members or non-members. You may need to consider business issues, such as management, prior to filing the articles of organization, otherwise they may need to be amended later at an additional cost. The cost to amend the articles of organization can include the cost of preparing the amendment and a fee for submitting the amendment to the state.
Once the articles of organization are prepared, the document must be filed with a state along with a filing fee. The filing fee for an LLC varies from state to state and ranges from about $50 to $300 or more. Most states also offer other services, such as providing a certified copy of the articles of organization and a certificate of status, for small additional costs beyond the basic filing fee.
The operating agreement is a document that can include such details as how the LLC will operate, how profits will be distributed and how voting takes place. The cost of having the operating agreement drafted varies with the complexity of the LLC. For example, if the LLC is a single member, then the operating agreement may be simple form and very inexpensive to prepare. On the other hand, if the LLC has multiple members and requires detailed provisions for the operating agreement, then assistance of an attorney may be required and the cost of drafting the operating agreement may range from several hundred dollars to thousands of dollars depending on the complexity of the document, number of revisions and other factors.
There may be costs to obtain initial tax and accounting advice. For a start-up LLC these costs can range from hundreds to thousands of dollars depending on things such as the complexity of the business and the arrangement between owners. While adding to the cost of starting an LLC, the additional tax and accounting advice will be worth the peace of mind knowing that the LLC has been started properly.