If you're embarking on a new business venture and you want to set up an entity to distinguish between your company and yourself, a limited liability company (LLC) is a popular choice. It is generally simple to set up and run, and it protects you, as its owner, from personal liability for business debts.
Various Fees and Requirements
The cost of setting up an LLC varies depending on what state you're in and whether you get legal or tax advice during the process. These are the kinds of fees and other requirements that you'll encounter.
State Filing Fee
Creating this type of entity requires you to file articles of organization with a designated state agency, usually the Department of State. Many states have a one- or two-page form that's easy to complete, which typically calls for the business name, a list of members (which are the LLC owners), the business address, and the identity and address of a registered agent. Each state charges a filing fee for submitting your articles of incorporation. As of 2018, these fees ranged from $50 to $500, depending on the state.
Registered Agent Fee
A registered agent is the person or entity designated to accept service of process of legal documents on the company's behalf. The agent's address is public record, and requires availability at that address during regular business hours, so many people choose to use a professional registered agent service. If you opt for a professional service, they will charge a fee.
Other State Registration Requirements
Some states require new LLCs to complete additional requirements for registration, which carry additional fees. For instance, in some states you may need to search a state database of existing businesses to confirm that the name you choose for your company isn't already in use. In New York, you must publish a notice about your intent to establish a new company in the newspaper for a specified period of time, for which you must pay the cost of publication. And depending on what your business does, you may need additional state or local permits or licenses.
Every LLC should have an operating agreement, which is a contract among the members establishing each one's share in the business and management responsibilities. In fact, some states require you to file your operating agreement with them. If you are the only member, you can find forms online. Your cost to develop an operating agreement will vary depending on its complexity and how you decide to go about it.
In most states, the business must file an annual report and pay a tax or fee every year. Typically, the purpose of this report is to confirm that your company is still active and that the information the state has on file is correct and remains current. Filing the report keeps your company in good standing. As of 2018, these fees and taxes ranged from $10 to $800, depending on the state.
You can choose to have your LLC pay taxes in different ways, each of which may confer distinct advantages and disadvantages. Tax choices could be as a partnership, an S corporation, or a C corporation, depending on your circumstances.
If you are ready to take the plunge and start building your LLC, understand the different requirements and applicable fees associated with formation. You should also visit your respective state's Secretary of State website for additional information.
This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.