No matter what type of LLC business structure you are planning to establish, there is a certain amount of cost you have to bear for different types of agreements and operating policies. Be it the multi-member LLCs or the sole proprietorships, considering the overall process costs is essential for every owner. It includes the registration cost, license cost, agreement costs, filing costs, legal documents, and so on. Once the LLC is formed, there are several other types of LLC maintenance costs that you need to keep in mind as the company owner. The overall cost of an LLCvaries according to the state where you are planning to set up the business.
On this page, you’ll learn about the following:
State LLC Formation Overall Cost Breakdown
The formation process of LLC cost can be broken down into different parts as per the requirements. Here, we have explained the four major LLC setup expenses you will have to bear in the US.
State Filing Fee
When you are setting up the LLC business, you need to file for the Articles of Organization or the Articles of Formation. The Articles of Organization would be a legal document that will contain the business name along with the reason for LLC creation and the services you will be providing.
This certificate for Articles of Organization will give your LLC the right to operate in the concerned state. The filing has to be done with the Secretary of State, which differs from one state to the other. A minimal filing fee is charged for the Articles of Organization, which usually ranges between $50 and $100 based on the state itself. However, the state filing fee is quite high in Alaska, almost around $250. Apart from this, there is a cost involved in the Operating Agreement filing, especially if it is a custom operating agreement.
Three US states- Nebraska, Arizona, and New York City- require a Statement of Formation to be declared in the local newspaper to notify the business market about your LLC. This is where you have to pay the publication fee. Even though it’s a very way to publicize the business, the cost can get quite high based on the state requirements.
For example, according to Section 206 of the New York State Limited Liability Company, every new LLC business will have to publish the Statement of formation in two local newspapers. For this, you need to pay a fee of around $200 to $400 based on the newspapers you are choosing.
Since you also have to have the Certificate of Publication, you need to pay an additional amount of $50. You can hire a business attorney to understand the publication cost for having the Certificate of Organization from the publishing house.
Name Reservation Fee
This particular fee is applicable only for those LLCs which belong to the Alabama state of the US. Here, once you decide on your business name, you can reserve it with the Secretary of State so that no other LLC can use your name. For reservation, you need to pay a minimal amount of $25 to the government body when submitting the application with the help of the best attorneys. You can either file the application online or mail it to the Alabama Secretary of State along with the required fee. As for the other states, name reservation is an optional step for all businesses, and hence, you wouldn’t have to bear the additional cost.
Professional Business License Fees
Since LLC is a form of legal business, you need to get the proper license issued by the state government so that you don’t have to face any sort of legal complications or lawsuit later on. Licenses are issued in two ways- state-wise licenses like in Washington or local license in other US states. Based on this, the business license fee will vary between $50 and $100. This particular amount needs to be paid once, after which you will have to bear the license renewal costs. You can take the business license research service to understand more about how such special agreements vary in cost.
State-Wise LLC Formation Cost Examples
As said, the LLC setup cost is different in different states. As the business owner, you should consider the partnership agreements to avoid excess expenditure on the formation process. For this reason, before you actually put the plan into motion, it’s better to have a look at how the costs vary from one region to the other.
- Alabama: setup cost is $200, and ongoing cost include the annual privilege licenses
- Alaska: $250 setup cost and $200 needs to be paid biennially as the ongoing operating costs.
- California: $70 is charged as a setup cost, and $20 needs to be paid biennially as operating costs along with the Annual Franchise tax.
- Connecticut: the setup cost is $120 and an ongoing fee of $20 annually as operating fees
- New York: $200 setup cost along with the publication charges and $9 ongoing biennial foes with an Annual filing fee
- Tennessee: $300 minimum is required as the setup cost and the ongoing charges consist of Annual Franchise and Excise tax
Apart from this, the different costs will be levied for registered agent services after your company completes the first year.
LLC Maintenance Costs
Once you have formed the LLC, you will have to think about the various maintenance charges you need to bear. Here, we have listed down the four main expenses you should consider after the LLC formation.
The Franchise tax is one of the main expenses most LLCs need to bear. It is charged by several states like Delaware annually once the company starts functioning fully. Even though the name suggests a franchise business, it isn’t compulsory that you need to open up a franchise of your LLC. The due date and the tax percentage will depend on the state where your LLC company is. If you make delays in paying the taxes, you will be charged a penalty along with monthly interests. You can pay this tax via your Northwest registered agent, who will remind you of the tax due date so that you can avoid the penalty.
Annual Report Cost
The annual or biennial report needs to be filed every one to two years. This report consists of detailed information about your LLC’s modus operandi and any kind of change that has been introduced. Here, you need to mention the finances, the member transfers, increase in the business credit, employees hired, and other such details. This report needs to be submitted to the Secretary of State along with a submission fee of around $20 to $100 based on the state where your LLC company is situated.
Registered Agent Fee
Since you need to have a registered agent from a third-party LLC agent corporation, you will have to pay the fees. Even though many people try to avoid this fee and nominate themselves as the agent, the decision is not profitable since, without a professional agent, one might mess up with the legal notices, the reminders, the taxes, and others. If such incidents happen, you will have to pay the penalties, which will be costlier than paying the agent his fees. Based on the corporation from where you have hired the agent, the fee will vary.
License Renewal Fee
Lastly, you need to pay a business license renewal fee every year, which usually ranges between $20 and $100 depending on which state your LLC is located.