How Much Does It Cost to Start an LLC?
The main expense for aspiring businessmen is the fee for a state representative to process the Articles of Organization. Simply put, this is the registration fee. It can range from $40 to $500, depending on where you establish your entity.
LLC Cost - Choose Your State
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But what about the extra expenses? It will depend on which registration method you opt for:
- Start an LLC independently. Check out our article to find step-by-step instructions, which will help you establish your LLC with minimum costs;
- Contact professionals. You will have to pay extra for their services. But it is a 100% guarantee that your LLC is formed according to all state requirements.
If the second option appeals most to you, check out our Best LLC Formation Services rating. This article compiles the most reliable contractors. We've studied their offerings in terms of cost, quality of service, reviews and created a comprehensive list.
For example, a great partner in registering an LLC would be Northwest Registered Agent. For $225 a year, they will assist with registration and appointment of a registered agent.
The Cost of an LLC: Basic and Extra Costs
If you've decided to start an LLC on your own and experience all the hurdles of the process, you will run into a list of mandatory costs.
These include:
- Articles of Organization filling. When you file this mandatory document with the state, you are required to enclose a check for state fees ($50-500);
- Obtaining licenses and permits. The amounts will fluctuate based on the state, county, and the activity that you are involved in;
- Publication Fees. If your location is Arizona, New York, or Nebraska, include the publication fee in your LLC formation budget;
- Reserving a business name. If you've decided on a name for your LLC but are not yet ready to go through the registration process, it's worth reserving it;
- DBA registration fee. DBA is a fictitious name that you can use for marketing purposes (put it on business cards, store signs, advertisements, etc);
- Insurance. Although it requires additional investment, insurance is a critical aspect to consider. An agent will guide you on the cost of such services.
State Filing Fees
If your budget is tight, there is a great way to save money on registering an LLC. If so, you just need to file the Articles of Organization yourself and not pay for the services of intermediaries.
In this case, you will only pay the registration fee, which will vary from $40 to $500, depending on your location. For example, in California, it is $70, and in Alabama, $200.
Other LLC Expenses and Fees
Business Licenses and Permits
In order to legally conduct business in any area, you will need the necessary permits to do so. Licensing can occur at different levels (from state to local ones). This is especially relevant for those deciding to register a PLLC.
The cost of getting licenses depends on the locality and the type of business your LLC conducts.
Want to learn more about licensing? Read our comprehensive guide!
Publication Fees
Registering a company in Arizona, Nebraska, or New York? Then you'll need to meet the requirements of these states to publish information about opening a new LLC.
The cost of publication in the newspapers varies from $50 to $2,000. You should check with your state representatives for this information.
Name Reservation Fee
Have already chosen a name for your LLC but are not yet ready to proceed with filing the incorporation papers? Reserve it so that it doesn't get snatched away from you. It will cost you no more than $28.
Note that this is only mandatory in Alabama. In other states, you are free to do so at your own discretion.
DBA Registration
Although this is not compulsory in any state, it is common for LLC owners to register a DBA. Doing so is a great solution for successful brand building.
For example, your business is officially called "Lola Leather Bags, LLC." You may well register the fictitious name "Lola Bags" to make it look better in your marketing campaigns and easier to remember.
Where Should I Form My LLC?
It's always a good idea to form an LLC in the state where you plan to run your business. Otherwise, your LLC will be considered a foreign one, and you will have to spend money on additional permits to operate the company.
The Cost of Forming an LLC in Each State
In addition to incorporation fees, you will likely face the extra costs of keeping your business in good standing with state requirements. These are franchise taxes and annual reports (there is also a fee for filing these documents).
Because requirements differ from state to state, we have created a table where you will find the information you need. If you want to learn more about the state you are interested in, just click on it.
| State | Registration Fees | Maintenance Fees |
|---|---|---|
| Alabama | $200+ | Annual Privilege License |
| Alaska | $250 | $200 Biennially |
| Arizona | $50 + Publishing Requirement | No Annual Fee |
| Arkansas | $50 | $150 Annually |
| California | $70 | $20 Biennially + Annual Franchise Tax |
| Colorado | $50 | $10 Annually |
| Connecticut | $120 | $20 Annually |
| Delaware | $90 | $300 Annual Franchise Tax |
| District of Columbia | $220 | $300 Biennially + Annual Franchise Tax |
| Florida | $125 | $138.75 Annually |
| Georgia | $100 | $50 Annually |
| Hawaii | $50 | $15 Annually |
| Idaho | $100 | No Annual Fee |
| Illinois | $150 | $250 - $300 Annually |
| Indiana | $95 | $50 Biennially |
| Iowa | $50 | $30 - $45 Biennially |
| Kansas | $160 | $50 - $55 Annually |
| Kentucky | $40 | $15 - $30 Annually + Annual Entity Tax |
| Louisiana | $100 | $30 Annually |
| Maine | $175 | $85 Annually |
| Maryland | $100 | $300 Annually |
| Massachusetts | $500 | $500 Annually |
| Michigan | $50 | $25 Annually |
| Minnesota | $155 | Annual Partnership Tax |
| Mississippi | $50 | No Annual Fee |
| Missouri | $50 | No Annual Fee |
| Montana | $70 | $20 Annually |
| Nebraska | $100 + Publishing Requirement | $10 - $13 Biennially |
| Nevada | $75 | $125 Annually |
| New Hampshire | $100 | $100 Annual + Annual Enterprise Tax |
| New Jersey | $125 | $50 Annually |
| New Mexico | $50 | No Annual Fee |
| New York | $200 + Publishing Requirement | $9 Biennial + Annual Filing Fee |
| North Carolina | $125 | $200 Annually |
| North Dakota | $135 | $50 Annually |
| Ohio | $99 | Annual Commercial Activity Tax |
| Oklahoma | $100 | $25 Annually |
| Oregon | $100 | $100 Annually |
| Pennsylvania | $125 + Publishing Requirement | No Annual Fee |
| Rhode Island | $150 | $50 Annually |
| South Carolina | $110 | No Annual Fee |
| South Dakota | $150 | $50 Annually |
| Tennessee | $300 Minimum | Annual Franchise & Excise Tax |
| Texas | $300 | Annual Fee |
| Utah | $70 | $20 Annually |
| Vermont | $125 | $35 Annually |
| Virginia | $100 | $50 Annually |
| Washington | $180 - $200 | $60 Annually |
| West Virginia | $100 | $25 Annually |
| Wisconsin | $130 - $170 | $25 Annually |
| Wyoming | $100 - $102 | $50 or 0.02% value of assets Annually |
Ongoing Maintenance Costs
Spending does not end with the completion of the business registration process. In order to keep your LLC in compliance with state requirements, you will have to include further expenses in your budget.
Franchise Tax
In simple terms, a franchise tax is a charge for your company to continue existing in the area where it is registered. Not all states will require you to pay this fee to maintain your business.
Here is a short list of states that charge franchise tax:
- Alabama;
- Arkansas;
- California;
- Delaware;
- Georgia;
- Illinois;
- Louisiana;
- Mississippi;
- New York; New York;
- North Carolina;
- Oklahoma;
- Tennessee;
- Texas.
This is usually a fixed amount that you pay each year to the Secretary of State.
Annual/Biennial Report
Filing such a report is a requirement of most states. In this document, you list any changes that occur in your business. For example, you may include a new address or add members. That way, the Secretaries can always be aware of all the details of your LLC operations.
However, filing this report incurs additional costs since the procedure is not free.
There are states that have abandoned the practice of filing annual reports and expect to be notified privately about all the changes. Pennsylvania, South Carolina, and New Mexico are among them.
How to Register an LLC By Yourself
Forming an LLC seems like a time-consuming process at first glance. But with our step-by-step instructions on how to form a business in each state, it becomes much simpler.
5 Steps to Register an LLC:
- Step 1: Choose a business name;
- Step 2: Appoint a registered agent;
- Step 3: Fill out the Articles of Organization;
- Step 4: Fill out the Operating Agreement;
- Step 5: Get EIN.
Note: Many business owners decide to register an LLC when they are already sole proprietors. We've detailed the difference between these two business structures here.
Step 1: Choose a Business Name
Choosing a business name seems like a trivial task. But in fact, there are many requirements for doing so.
Here are some of them:
- Your business name should not be identical to any other state-registered name or resemble it too much;
- The name cannot hint at ties to government agencies;
- To use certain words in the LLC name, you will have to get permission first;
- The business name cannot contain profanity or be offensive to any population group;
- It's worth checking if a domain matching the chosen name is available.
Thoroughly research your state's business name requirements on the Secretary of State's website so you do not need to reapply.
Note: Later, you will be able to change your LLC name if needed. We have outlined how to do so here.
Step 2: Appoint a Registered Agent
An agent for an LLC can be any adult U.S. citizen or company that provides such services.
If you want to save money, you can do these duties yourself. But be ready to forgo weekends or vacations because the agent needs to be present at the registered address every day during business hours (except public holidays).
You can also turn to registered agent services for help. For a very reasonable fee, these companies are willing to serve the process for you and notify you of receiving important documentation.
Step 3. Fill out the Articles of Organization
Articles of Organization is a document that contains the most basic information about your LLC: business name, agent and founder details, etc.
The cost of processing this paper by the Secretary of State varies, depending on the locality where the company is registered.
Step 4: Create an Operating Agreement
The operating agreement is not a mandatory document when registering an LLC. Nevertheless, we always include this step in all our guides. In fact, this paper can regulate all the internal processes of your business.
Provided it is legally certified, this document can be crucial in resolving conflicts or disputes within the company.
Step 5: Get an EIN
An EIN is required if you want to:
- Open a business bank account;
- File tax returns;
- Recruit employees.
You can apply for it on the IRS website. It will take you just a few minutes and will not cost you a penny.
Note: Some LLC formation companies offer to obtain an EIN as a paid service. Given the simplicity of the process, there is no point in paying for it.
Hiring an LLC Service Provider
If you don't want to deal with the paperwork yourself but would rather delegate these tasks to professionals, consider LLC formation services to help. Such companies will take the burden off your shoulders and save you time.
Note: To avoid paying for the services of intermediaries, use our guide to registering an LLC. This way, you will only have to cover the state fees.
How Much To Pay For LLC Registration Services?
LLC Registration Services cost on average $29 - $150. A basic package of LLC registration services from online providers can cost you as little as $39 a month if you decide to contact Northwest Registered Agent. Of course, the state fee will have to be paid additionally.
There are other options such as LegalZoom ($79 + state fees) or ZenBusiness ($49 + state fees).
Most often, all or some of these services are included in the basic package:
- Business Name Check;
- Business Forms;
- Completing and submitting Articles of Organization;
- Obtaining an EIN;
- Obtaining Registered Agent Consent;
- Assistance with Operating Agreement creation;
- Registered agent's assistance for one year.
Each company includes a different list of services in the basic package, so it is worth carefully comparing them to make the right choice.
Operating Agreement Drafting Cost
Operating Agreement Drafting costs $50-$100. This document can be used to regulate the relations within the company, as well as to set the rules for its operation.
You can draw up this document yourself with the help of examples on the Internet. But to be sure that all the specifics of your business are considered in it, you can ask professionals for help.
Delegate the drafting of this paper to a lawyer or specialists at LLC formation services.
Registered Agent Services Cost For LLC Creation
Registered Agent Services will cost you $0-$125. A prerequisite for conducting a business is the appointment of a registered agent. This person receives all business correspondence and is the liaison between the LLC and state representatives.
You can hire a professional to perform these tasks. For such a service, you will need to pay an average of $100 per year or even less.
Note: We have analyzed and compared the Best Registered Agent services to give you a list of the top options for cooperation. You can find our ranking here.
Business License Research Service
Business License Research Service will cost you $99. Since licensing is a process that can be expected at different levels, it's worth contacting a business license research service. They can help you understand which permits your business needs and assist you in obtaining them. If you are not a professional lawyer, it is extremely difficult to do this on your own. The help of such a service will cost you less than $100.