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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Can I Create an LLC in Texas by Myself?

Seeking the counsel of a lawyer and an accountant can help you navigate the steps to form a limited liability company (LLC) in Texas. However, hiring professionals to help you start an LLC is not a requirement. You can form an LLC on your own if you abide by the provisions in the Texas Business Organization Code (BOC) enacted in January 2010.

The Cost of Forming an LLC

Because LLCs (limited liability companies) are creations of the state rather than the federal government, official costs to form an LLC vary. Most states charge fees that are similar to the charges for registering a new corporation. Some states, however, choose to set their fees notably less or more than new corporation costs. You may also face other expenses for retaining expert assistance from an experienced attorney and/or accountant to set up your LLC properly.

How to Change From Sole Proprietor to LLC Business

Changing your business from a sole proprietorship to a limited liability company, or LLC, is accomplished by complying with the LLC laws in your state. Every state designates an agency -- usually the secretary of state’s office -- to oversee business activity, and provides forms and information to assist in business formation. Although state laws vary regarding the steps to create an LLC, all states require filing a document, usually called articles of organization, to bring an LLC into existence.

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