How Much Does It Cost to Form an LLC?

By Lauren Miller

Compared to a corporation, limited liability companies are relatively inexpensive to start. LLCs are regulated by state limited liability laws, with those laws enforced by the secretary of state or a similar type of agency. The start-up costs of forming an LLC vary by state. Fees for LLC formation include those for document filings, expedited services and required LLC activities.

Naming Fees

After you decide on a name for you LLC and make sure it falls in line with state naming requirements, you may reserve the name with the state. States offer this service for companies so individuals can secure exclusive in-state use of the name before registering their company with the state. Name reservation fees are generally less than $100. A state may provide a name reservation form to download and mail. Some states offer an online name reservation service.

Hiring a Registered Agent

States require that LLCs have a person or business designated to accept service of process documents and state notifications for the company. In most states, this individual or business is referred to as a registered agent. Costs for registered agents vary depending on whom you hire for this responsibility. You can designate an LLC member at no cost or hire a business such as a national registered agent service.

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Articles of Organization

The most expensive filing fee when forming an LLC is for the articles of organization. This document name varies by state. It is generally no more than a few pages long and in some states, just a single sheet. It includes all the basic details about the LLC, its registered agent and management structure. Filing fees for this document vary widely from less than $100 to several hundred dollars. As of 2010, Kentucky charges $40 for filing articles while Illinois charges $500. You can pay an additional fee to speed up the processing of your articles. The U.S. Small Business Administration provides a list of links to all of the state agencies responsible for LLC filing requirements (see Resources). Generally, states provide a fee schedule of filings on their website.

Annual Reports and Other Document Fees

Some states require businesses to file annual reports or statements even within a few months of filing to form an LLC. The state may allow you to file your initial annual report along with the articles of organization. States charge a fee for this filing. A tax registration may also be required in order to receive state notices about taxes. Consult with a tax professional to make sure you file the proper annual report and tax paperwork for your state along with the required fees.

Business Licenses and Permits

If your state, county or city requires a business license, you should add the fees associated with these documents to your LLC formation costs. The federal government maintains an online database of license and permit requirements for jurisdictions in every state (see Resources).

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Cost of Starting an LLC in California Compared to Nevada
 

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The Cost of Setting Up an LLC

Costs are an important consideration when deciding to set up an LLC. Because each state has its own LLC laws, the amount and type of costs vary considerably depending on where you form the LLC. All states have a mandatory fee to file the LLC formation document, but further costs may also be incurred for publication, licensing or franchise tax fees that are necessary to complete the state’s LLC formation requirements.

How do I Register an LLC for Multiple Members?

A limited liability company, or LLC, is a “hybrid” business organization that combines the limited liability benefits of a corporation with the pass-through federal taxation and easier filing requirements of a partnership. The owners of an LLC are called members. State laws uniformly permit the creation of LLC’s with multiple members. Creating an LLC with multiple members requires filing a document, called the articles of organization, with the state agency responsible for registering business organizations.

What Does It Cost to Set Up an LLC in the State of Illinois?

Setting up an LLC or limited liability company in Illinois includes both mandatory and optional costs. The mandatory costs are primarily in the form of governmental fees that must be paid to file the required state forms to legally create an LLC. Optional costs generally include fees for professional services, such as for an attorney or accountant, or service fees charged by a private company that assists with filing the state-required LLC forms.

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