A limited liability company (LLC) is simple to establish and is often a good choice of business entity for an entrepreneur looking to start a company. How much your LLC will cost you depends on which state you're in and what kind of legal or tax advice you seek during the process. These are generally the kinds of expenses you face.
The document that officially creates your LLC is called the articles of organization. Every state requires you to file this document with the appropriate state agency, typically the Secretary of State's office or Department of Corporations. Usually, the state offers a short form that calls for your business name and address, a list of the company's owners (called members), and a name and address for a registered agent. Each state also has a filing fee for this document. As of 2018, this fee ranged from $50 to $500 depending on the state.
In addition, if you'd like to reserve your company's chosen name so that no one else can use it while you're getting your paperwork in order, most states allow you to do so for a fee. This fee also varies by state. For instance, as of 2018, California charges $10 while Delaware charges $75.
Moreover, your LLC must have a registered agent, which is the individual or entity you designate to receive service of legal documents on the LLC's behalf. The registered agent's address is public record, and someone must be available at that address during normal business hours. Many people, therefore, choose to use a professional registered agent service, which will charge a fee.
Costs of Additional State Requirements
In some states, you must take additional steps beyond filing your articles of organization to set up your LLC, and these additional steps usually come with additional costs. For example, in New York, you must announce your LLC's creation by publishing notices in two newspapers, so you have to pay publishing fees. On top of that, you must pay a fee ($50 in 2018) to file a Certificate of Publication with the state. You may also have to pay licensing or permit fees in some states, depending on what your business does.
Additionally, some states require every LLC to have a written operating agreement, and it's a good idea to have one even when that's not the case. Your LLC's operating agreement is a contract among the members establishing each one's management responsibilities and business share. The cost of creating your operating agreement depends on how you decide to do it—whether through using a form, consulting an online service provider, or hiring an attorney.
Most states also have ongoing filing requirements that add to the cost of running your LLC. Generally, you must file an annual or biennial statement that carries a fee. Some states impose an annual franchise tax regardless of your business's profits as well. As of 2018, this tax was $300 in Delaware but $800 in California. And if you fail to file the forms or pay the taxes on time, you may face additional late fees.
Costs of Legal and Tax Advice
Furthermore, you may want to consult an attorney or tax professional when setting up your company for advice on drafting your operating agreement or deciding whether your proposed business name really is too close to an existing company's. Additionally, you may want tax advice when deciding whether you want your LLC to be taxed as a sole proprietorship, partnership, or corporation. Any of these options may be available to you depending on your circumstances, and your choice can have significant consequences. Seeking these kinds of assistance comes with additional costs.
If you're ready to take the first step in setting up your own LLC, an online service provider can help you get started today.
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.