What Does It Cost To Start An LLC?
There are several different fees and costs associated with setting up an LLC however, the most expensive part of forming an LLC comes from the fee associated with filing the articles of organization with the Secretary of State, which could run you anywhere from $40-$500, depending on the state you’re filing in.
Different Costs Associated With Starting An LLC
- Filing Fees – $40-500
- Registered Agent – $40-$150
- Operating Agreement – $25-$1000
- Company Bank Account – $50-$100
State Filing Fee
State filing fees cover both the legal services and the filing fee itself. For legal services, you may expect to pay around $50 depending on the state. An additional $40 to $500 accounts for the articles of organization filing fee and is usually where the bulk of LLC startup costs come from.
As a piece of advice, you may want to consider hiring an attorney or seek help from a legal service to reduce the possibility of improper filing, which could lead to more fees and wasted time in the future.
Registered Agent
A registered agent is someone who is in charge of sending and receiving court filings, fee payments, etc. to ensure you don’t lose your status as an LLC. They usually cost anywhere from $40 to $150 however, you could elect to take care of this step yourself or appoint someone from the company to act as the registered agent, which would save you on this cost.
LLC Operating Agreement
An Operating Agreement essentially governs how the LLC will be run as far as the daily operations go.
It covers things like the responsibilities of employees, how finances will be handled and distributed, chain of command, the decision-making process, and more.
You have the option to come up with an operating agreement on your own, purchase a downloadable template from the internet, or have a lawyer draft one up for you.
Depending on the type of business you have, and the method you choose, the total cost could range anywhere between $25-$1000
This step will ultimately decide how your business is ran on a daily basis, so it is important to seek proper help if this is your first time drafting something of this nature.
Company Bank Account
Another cost you’ll need to consider is the cost of setting up a company bank account. This can be a bit pricey, as most banks will charge you between $50 and $100 to open an account.
You’ll also need to factor in the cost of business insurance, which is typically around $300 per year.
Maintenance Fees
You’ll need to pay ongoing LLC maintenance fees. These fees go towards things such as keeping your LLC registered with your state and making sure that your businesses paperwork is up to date.
The cost of these fees will vary depending on your state, but they typically range from $50 to $200 per year.
Taxes
The typical taxes paid by LLCs as part of their maintenance costs are:
- Franchise Tax
- Annual Report Fees
Franchise Tax
LLCs can be taxed in many different ways, depending on the state. In some cases, they may have to pay a yearly tax that is often called franchise fees. The franchise tax is usually a flat tax but can change according to what your annual earnings are.
Annual/Biennial Report
This is a report that includes the name, address, and ownership of the LLC. The annual report fee varies depending on the state.
Additional Costs and Fees
There are some additional costs that could come with starting an LLC such as obtaining additional business licenses/permits in your state, paying a publication fee, a name reservation fee, and a fictitious name fee.
These additional fees are not required in every state.
Business Licenses and Permits
Depending on the industry of your business and where it’s located, there may be some additional state or local licensing fees that you’ll need to pay for. This also goes for any business structure you may form in the future.
Publication Fee
States such as Arizona, Nebraska and New York require new LLCs to publish something called a statement of formation in a local newspaper.
Publishing this could cost anywhere from $40 to $2000 depending on the state you’re filing in.
Name Reservation Fee
Alabama is the only state that requires LLCs to reserve their name with them for a fee that ranges from $10-$28. Every other state is optional.
Fictitious Name Fee
Also referred to as a DBA or ‘doing business as’ name. This fee is ultimately up to whether the business owner wants to have multiple brands under the same LLC or not.
Is It Expensive to Start an LLC?
Overall, the cost of starting and maintaining an LLC can range anywhere from a few hundred dollars to a few thousand dollars per year. But this is a small price to pay for the legal protection and peace of mind that an LLC can provide.
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How Much It Costs To Start An LLC By State
| State | Startup Cost | Maintenance Costs |
| Alabama | $200+ | Annual Privilege License |
| Alaska | $250 | $200 Biennially |
| Arizona | $50 + Publishing Requirement | No yearly fees |
| Arkansas | $50 | $150 per year |
| California | $70 | $20 Biennially + Annual Franchise Tax |
| Colorado | $50 | $10 per year |
| Connecticut | $120 | $20 per year |
| Delaware | $90 | $300 Annual Franchise Tax |
| District of Columbia | $220 | $300 Biennially + Annual Franchise Tax |
| Florida | $125 | $138.75 per year |
| Georgia | $100 | $50 per year |
| Hawaii | $50 | $15 per year |
| Idaho | $100 | No Annual Fee |
| Illinois | $150 | $250 – $300 per year |
| Indiana | $95 | $50 Biennially |
| Iowa | $50 | $30 – $45 Biennially |
| Kansas | $160 | $50 – $55 per year |
| Kentucky | $40 | $15 – $30 Annually + Annual Entity Tax |
| Louisiana | $100 | $30 per year |
| Maine | $175 | $85 per year |
| Maryland | $100 | $300 per year |
| Massachusetts | $500 | $500 per year |
| Michigan | $50 | $25 per year |
| Minnesota | $155 | Annual Partnership Tax |
| Mississippi | $50 | No Yearly Fee |
| Missouri | $50 | No Yearly Fee |
| Montana | $70 | $20 per year |
| Nebraska | $100 + Publishing Requirement | $10 – $13 Biennially |
| Nevada | $75 | $125 per year |
| New Hampshire | $100 | $100 Annual + Annual Enterprise Tax |
| New Jersey | $125 | $50 per year |
| New Mexico | $50 | No Annual Fee |
| New York | $200 + Publishing Requirement | $9 Biennial + Annual Filing Fee |
| North Carolina | $125 | $200 per year |
| North Dakota | $135 | $50 per year |
| Ohio | $99 | Annual Commercial Activity Tax |
| Oklahoma | $100 | $25 per year |
| Oregon | $100 | $100 per year |
| Pennsylvania | $125 + Publishing Requirement | No Annual Fee |
| Rhode Island | $150 | $50 per year |
| South Carolina | $110 | No Annual Fee |
| South Dakota | $150 | $50 per year |
| Tennessee | $300 Minimum | Annual Franchise & Excise Tax |
| Texas | $300 | Yearly Fee |
| Utah | $70 | $20 per year |
| Vermont | $125 | $35 per year |
| Virginia | $100 | $50 per year |
| Washington | $180 – $200 | $60 per year |
| West Virginia | $100 | $25 per year |
| Wisconsin | $130 – $170 | $25 per year |
| Wyoming | $100 – $102 | $50 or 0.02% value of assets per year |
Knowing the difference between an LLC and an S Corp is essential. Check out our article on LLCs vs. S Corps before you form your business into an LLC.
