One of the most efficient tools accessible to business owners is an LLC. It offers tax flexibility and shields them from personal liability arising from corporate obligations. In addition, for all their strength, the initial cost to start an LLC is rather low than alternative investments you’ll make in your company. Check our guide on Best Online LLC Formation Service Of 2022.
For sole proprietors and business owners who desire to expand their operations, forming an LLC is a wise choice. Compared to self-employment and a sole proprietorship, a limited liability company provides stronger liability protection for business and personal assets.
Since these businesses are exempt from corporate earnings taxes, forming an LLC makes economic sense in many states. As an LLC member, you would solely be responsible for paying personal income tax. Read Our Guide On Difference Between Sole Proprietorship And LLC.
LLC startup costs and LLC maintenance costs are the two basic types of LLC expenses. The cost of forming an LLC mostly depends on the state in which it is formed. The maintenance of your LLC involves substantial continuing expenses. Here in this guide, we will discuss how much does an LLC cost in every state. Let’s get started with LLC filing fees!
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TABLE OF CONTENTS
LLC Filing Cost By State (Updated For 2022)
You must submit a document known as articles of organization, sometimes known as a “certificate of formation” or “certificate of organization,” to the business filing office of your state in order to formally incorporate an LLC. This is the Secretary of State in most states, and the cost to submit articles of incorporation ranges from $50 to $100, however it is $250 in Alaska.
Depending on your state, the cost to form an LLC with the Secretary of State ranges from $40 to $500. With our Form LLC tutorials, you can create an LLC on your own and simply have to pay the state registration cost.
These LLC costs do not include the price of add-on services like name reservations, applications for fictional businesses, or registered agent services. Additionally, they exclude the cost of regional business licensing, which varies greatly from region to region.
Let’s break down the LLC cost by state below:
Cost To Start An LLC
|STATE LLC||LLC FILING FEES||LLC ANNUAL FEES|
|Alabama LLC||$200||$100 Minimum/ Year|
|California LLC||$70||$800 (Every Year) + $20 (Every 2 Years)|
|New York LLC||$200||$9 (Every 2 Years)|
|Ohio LLC||$99||$0 (No Fees)|
|North Carolina LLC||$125||$200/Year|
|Pennsylvania LLC||$125||$70 (Every 10 Years)|
|South Carolina LLC||$110||$0 (No Fees)|
|Michigan LLC||$50||$25 (Every Year)|
|Illinois LLC||$150||$75 (Every Year)|
|Maryland LLC||$100||$300 (Every Year)|
|Arizona LLC||$50||$0 (No Fees)|
|Washington LLC||$200||$60 (Every Year)|
|Massachusetts LLC||$500||$500 (Every Year)|
|Kentucky LLC||$40||$15 (Every Year)|
|Wyoming LLC||$100||$60 Minimum/Year|
|Indiana LLC||$95||$30 (Every 2 Years)|
|Wisconsin LLC||$130||$25 (Every Year)|
|Utah LLC||$70||$20 (Every Year)|
|Connecticut LLC||$120||$80 (Every Year)|
|Tennessee LLC||$300||$300 (Every Year)|
|Colorado LLC||$50||$10 (Every Year)|
|Oklahoma LLC||$100||$25 (Every Year)|
|Missouri LLC||$50||$0 (No Fees)|
|Iowa LLC||$50||$45 (Every 2 Years)|
|Louisiana LLC||$100||$35 (Every Year)|
|New Hampshire LLC||$100||$100 (Every Year)|
|Nebraska LLC||$105||$10 (Every 2 Years)|
|New Mexico LLC||$50||$0 (No Fees)|
|Oregon LLC||$100||$100 (Every Year)|
|Delaware LLC||$90||$300 (Every Year)|
|Kansas LLC||$160||$50 (Every Year)|
|Nevada LLC||$425||$350 (Every Year)|
|New Jersey LLC||$125||$75 (Every Year)|
|West Virginia LLC||$100||$25 (Every Year)|
Other LLC Startup Costs & Fees
To form an LLC, you must pay a number of expenses. The exact sum differs from one state to another.
1. Articles Of Organization Filing Fees
For the purpose of forming a business, each US state levies an obligatory state filing fee. It’s money that the government receives in exchange for handling your request. You get articles of organization in return, which are legal documents that confirm your incorporation as a business organization.
While some states exclusively accept paper-based forms, others allow online LLC creation filings. For the formation of a domestic LLC, filing costs range from $45 in Arkansas (the lowest) to $500 in Massachusetts (the highest). A domestic LLC is an organization that conducts business in the state in which it was incorporated.
Foreign Limited companies that conduct business in various states have slightly higher filing costs. A business must register as a foreign entity in a state where it has a strong existence, employees, or substantial income originating from another state.
2. Publication Fees
Arizona, Nebraska, and New York are the only three states that require a publication charge. It means that within a certain time after incorporation, you must publish a declaration of limited liability business establishment in one of the recognized newspapers.
Additionally, you must pay a local newspaper to run an advertisement regarding the establishment of your business for three consecutive weeks in Arizona and Nebraska and six consecutive weeks in New York. The publisher determines the cost of publication. If you have further questions, analyze the information again locally.
3. Name Reservation Fee
Your LLC needs a distinctive company name that doesn’t violate on any legally protected trademarks or sound too much like the name of another business. During the incorporation process, you can often reserve the chosen company name for up to 120 days. Most name reservations cost less than $50.
4. Expedited Processing Fees
States have different durations for incorporation. Washington takes two days to process new registrations. In contrast, the processing of requests in other states is overloaded and may take 3-5 weeks.
But let’s say you need your articles of incorporation right away. In that situation, you have the option of paying an expedited fee for quicker registration (within a few days), as well as a same-day registration cost in some states.
5. Registered Agent Fee
Limited liability companies must choose a registered agent to act on their behalf when receiving legal paperwork. Although the owner is typically designated as the registered agent, some businesses opt to use registered agent services.
Check our guide on Top-Rated And Best Registered Agent Services Of 2022.
Any adult person who resides in the state may act as the registered agent for your LLC. The registered agent for your LLC may be either you or another owner. A registered agent can also be a member of your staff, your attorney, your spouse, or another close family member, friend, or trustworthy individual. Therefore, a lot of LLC members prefer to work with a reputable registered agent business. These businesses often charge an annual fee between $100 and $300. You receive the guarantee that critical documents addressed to your LLC will be collected and transmitted to you in exchange for paying the cost.
6. Doing Business As (DBA)
The legal name specified in your LLC’s articles of organization is not required to be used when conducting business. You are permitted to use a different name, sometimes known as a DBA, assumed name, or fictional business name (for “doing business as”). This is completely optional, if you like, you can continue using the name of your existing LLC.
You must submit a DBA application to your state if you intend to conduct business under a different brand name from the one you are using for your LLC. The costs are between $10 and $200.
7. Business License And Permits
You may have to apply for additional permits for your firm from the local council depending on the type of your business and the industry. The provision of licenses and permits occurs at the federal, state, and local levels. A few professions that need business licenses are law, medicine, finance, and agriculture. A business license typically costs between $50 and $100.
8. Federal Tax Id Numbers (EIN)
You must apply for an employer identification number (EIN) with the IRS in order to open a business bank account and get ready for tax reporting. You can apply online for free if you do it yourself. But other people decide to employ a lawyer to take care of the task instead.
9. Operating Agreement
A written document known as an operating agreement describes how a firm will be run and managed. Important details like organizational hierarchy, investments, taxation, and profit-sharing are included in the operating agreement.
Although operating agreements are not often required for limited liability organizations, it is nevertheless a smart idea to have one, particularly if the LLC has multiple members. An operating agreement will assist prevent and settling any potential business issues by outlining the roles and obligations of all the employees and leaders in a company.
Apart from California, Delaware, Missouri, and New York, most states do not need the filing of an operating agreement when forming a corporation. You must prepare an operational agreement for these states, but it must not be submitted to the State Department. If your LLC just has one member, you can create your own operating agreement. However, you might want to think about hiring legal advice if you’re starting a partnership or have other shareholders.
10. Legal Assistance
Starting an LLC on your own takes a lot of time because there are many legal requirements, such as completing forms, making special provisions, and verifying operational information with the appropriate authorities based on your business. It is advised that you work with a qualified attorney who will assist you with the incorporation procedure to make your job easier.
Generally, average attorney fees range from $100 to $300. However, since legal professionals will handle some of the filing work, the overall expenses may be reduced. Small business owners can also use online platforms for forming corporations as an alternative. To assist you with the registration, they charge a nominal cost (around $100) in addition to state filing fees.
11. Legally Certified Copies
It’s a great idea to have many versions of your company registration documents that have been legally certified. However, most states impose additional fees usually $5 to $50 for these services.
LLC Ongoing Costs
After forming your LLC, you will need to continue paying fees to keep it in good standing with your local and state governments. Your LLC may lose the ability to conduct business in the state if you don’t pay these fees.
1. Annual Report Fees
The local Secretary of State (SOS) must receive a report from an LLC every year or every two years that includes up-to-date information on the LLC’s connections. You must submit a change order separately if there are any changes.
These annual filings are often known as periodic reports or information statements. The cost ranges, on average, from $25 to $100. Some states exempted themselves from that tax, including Alabama, Arizona, Delaware, Idaho, Missouri, Mississippi, New Mexico, Ohio, Pennsylvania, South Carolina, and Texas. If your business information did not change, it won’t require routine filings.
2. Minimum Annual LLC Tax
The franchise tax or minimum annual tax fee is a required annual tax that some states impose on LLCs. Whether or not your business generated revenue in the state has no effect on whether you must pay. Additionally, the tax rate gradually rises in proportion to your income.
The Secretary of State must receive a file from an LLC every one to two years in order to update the LLC’s contact information. An annual (or biennial) report, periodic report, or statement of information are common names for this file. The record or statement must be filed, along with a filing fee.
3. Registered Agent Fees
A registered agent must be chosen by each limited liability corporation. If you’d prefer to engage a business to handle receiving official documentation, legal paperwork, and lawsuits, you can do so for between $100 to $300 per year.
4. Business License Renewal Fees
Most states charge yearly fees to maintain a company permit or license after the initial acquisition. The cost to renew a business license often ranges from $20 to $100.
Knowing that you are aware of the actual cost to form an LLC in 2022, you can plan for additional fees. Using the official government materials and online registration procedures to submit the application yourself is the most cost-effective option to incorporate your firm. However, it’s best to seek professional advice if you feel the method is extremely complicated.
After all, almost every state demands that you spend the same amount or more in order to submit a change with one of your formation paperwork. As stated earlier, the cost to incorporate an LLC differs based on where you do it. Even though certain states have greater fees, starting an LLC normally costs less than starting a corporation. Additionally, if you hire an expert to launch your firm for you, you can pay extra.
Want to speak with a professional about your concerns regarding the fees involved in starting a limited liability company? Leave your questions in the comment section below! Our experts will get back to you immediately!
FAQs About LLC Costs & Fees
1. Do you have to pay for an LLC every year?
Yes, the majority of states, with the exception of Alabama, Arizona, Delaware, Missouri, New Mexico, Ohio, Pennsylvania, South Carolina, and Texas, demand that business owners file a company annual report. Costs range from $10 to $500.
2. What kind of tax flexibility does an LLC provide?
LLCs can be treated as partnerships, C corporations, S corporations, sole proprietorships, or other entities. Owners of an LLC might use this option to reduce their tax liability.
3. How much does it cost to LLC a business?
State expenses for forming an LLC vary from $45 to $500. The minimum level is what you should plan to spend. Add to it additional costs for publication, registration agent services, name reservations, certified copy fees, and legal fees if you intend to hire an expert. You can register a new corporation for as low as $100 or as much as $800 in your state.
4. Are LLCs Expensive?
Limited liability company formation and maintenance will be more expensive than starting a sole proprietorship, but less expensive than starting a corporation. Your LLC business can also be exempt from corporate taxes in your state (unlike corporations, for instance). In general, an LLC has been the most affordable legal form for small firms, new ventures, and solopreneurs.
5. Is an LLC really necessary?
Limited liability protection is offered by an LLC. This means that in the event of a business loss, such as a lawsuit or unpaid debt, an LLC secures your personal assets. We advise forming an LLC for any small firm that has even the least risk or liability.