How Much Does It Cost to Form a Limited Liability Company?

by William Pirraglia

    The costs to form an LLC (limited liability company) typically arise from one or two sources. Since LLCs are authorized by individual U.S. states, not the federal government, filing and registration fees can vary. Be assured, however, all states require registration fees, regardless of the name used for these charges. The second source of cost is the charge for others to advise you and prepare filing documents.

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    Filing and Registration Fees

    Typical state filing fees fall in the $100 to $250 range. However, a few states charge less (e.g., Iowa, $55) and some charge more (e.g., Illinois, $675) to register LLCs. Most states require filing fees that are similar for both LLCs and corporations for fairness and simplification reasons. These fees are usually required at the time you file your articles of organization, which contains the name and address of your new LLC and your registered agent.

    Document Preparation and Filing Costs

    If you are not an attorney, accountant or experienced entrepreneur, you might want to have someone prepare your articles of organization and file for your LLC with your state. Charges for this service will vary, but always ask about the fee before you commit to anyone but a trusted adviser. There are other do-it-yourself options, which are extremely cost effective and offer you the forms, knowledge and assistance you need to file for your new LLC.

    Other Costs to Consider

    Costs to form an LLC are usually reasonable. However, you should plan for maintenance costs after you form your new company. Renewal fees are typically as reasonable as filing fees. But, some states charge considerably more for annual renewal fees. For example, some states, e.g., California, impose annual fees that must be considered. Filing for an LLC in California only costs $90, but an automatic "tax" of $800 is due annually. Although called a "tax," this fee is really just a charge for the "privilege" of operating as an LLC in California.

    Additional Filing Costs

    Some states have a "publication" requirement that will come with a cost. Some states require you to publish your intention to create a new LLC in local newspapers. Five or six states impose the fee for you. For example, Arizona includes a publishing cost of $75 in addition to its $170 LLC filing fee. Those states that require publishing your intent usually make it your responsibility to "remind" them, via an affidavit of publication, that you fulfilled this requirement. Your local newspaper can help you satisfy this necessity, proving that, at your expense, you met this requirement.

    About the Author

    For 34 years Bill Pirraglia served as a senior executive in the banking industry. Since 2005, he has authored articles, blog entries, tips and advice columns, SEO web copy and two published books. He specializes in personal and business finance topics, along with legal articles for clients large and small.

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