LLC costs are low compared with other types of business entities. This makes the LLC ideal for small business owners who do not yet have a lot of capital to invest in forming their business. Minimizing your initial costs will help to make your business profitable as soon as possible. You should know exactly how much an LLC costs before you start the process of setting up your limited liability company. If possible, you may even want to investigate LLC costs by state to determine if a neighboring state is less expensive.
How Much Does an LLC Cost?
LLC fees can be broken down into three main areas: state filing fees, additional state fees, and avoidable fees. Every state will have a filing fee that is typically between $100 and $250. Some states impose additional fees, such as annual registration dues, franchise taxes, business license costs, and publication fees. Finally, there are some additional costs that you can completely avoid, such as name reservation.
LLC State Filing Fees
LLC startup costs usually begin with the mandatory state filing fee. You can typically expect to spend a few hundred dollars on your state filing. This fee includes the processing of your Articles of Organization and registry of your business in the state’s company directory. The fee will also protect your business’s name from appropriation and use by another business in the state.
It is not necessary to submit a DBA for an LLC because your initial filing will automatically register your business name.
A low cost LLC registration will typically be around $75. California is one of the cheapest states for filing at only $70. Texas is one of the most expensive states, charging $300 to new LLCs formed in the state. Special types of LLCs, such as a series LLC or a professional LLC, can cost more — potentially up to $750.
Additional LLC Costs
A possible LLC cost includes payment to another agency within the state. Any fees in this area will be explicitly mentioned in the organization forms provided by the state. These additional costs make it necessary to look beyond just the LLC filing fee. For instance, though California only charges $70 to new LLCs, it also charges an $800 fee payable to the state Franchise Tax Board.
Similarly, Nevada and some other states require that new LLCs submit an initial list of members (owners) to the state. A filing fee of $125 must accompany this initial list. An LLC license or business license could also be required, costing around $200.
Potentially the most expensive additional LLC cost comes with the publication requirement. Some states mandate that new LLCs publish a notice in local newspapers to announce its formation. Depending on your area, this can cost as much as $1,000. Newspapers for large metropolitan areas tend to be more expensive, naturally. Not all states have this publication requirement.
Not all states have these additional fees and requirements, so be diligent when you search for the best state to form your LLC. Sometimes a higher initial LLC filing fee can be cheaper overall if the state does not charge any additional fees.
LLC Cost Avoidance
Some business owners will pay what is called a name reservation fee to hold their business name. This is always unnecessary. Your business name will be automatically registered when you file your Articles of Organization, so a separate registration fee is not needed. Though this service may be helpful if you want to hold a business name while you fill out your LLC paperwork, the simplicity of LLC registration means that it will only take you a few days or weeks to complete the process. It is unlikely that your chosen business name will be registered in the interim. You can save typically around $25 by simply omitting business name reservation.
Expedited filing will cost between $25 and $100 usually and is helpful if you need your LLC registered immediately. However, wait times for LLCs are typically not long, and your LLC will usually be completely registered within a week or so. Wait times may vary depending on your state and the time of year, however. Very rarely is expedited processing necessary, and you should fully evaluate your needs before deciding to pay extra for this service.
Fees from professionals such as lawyers and accountants are also avoidable. Though an accountant and a lawyer are helpful to make sure your LLC registration process goes smoothly, no state requires the aid of a professional in setting up your limited liability company.
The cost to set up an LLC does not have to be enormous if you are a small business owner without much capital. Research any LLC cost in your state and neighboring states — including all potential additional fees — before deciding which state is right for your LLC business.