How Much Does It Cost To Set Up An LLC?
Last Updated on 30 December 2024
Starting your own Limited Liability Company (LLC) can be an exciting venture, but have you ever wondered about the costs involved?
Each state in America imposes its own unique set of fees for LLC formation, which vary from $0 to $500.
This article aims to break down all possible expenses associated with setting up an LLC, from initial filing fees to other essential considerations like operating agreements and annual reports.
Key Takeaways
- The cost of setting up an LLC can vary depending on the state, with filing fees ranging from $0 to $500.
- Additional expenses may include operating agreement costs, publication fees (if required), registered agent fees, and ongoing maintenance costs like annual reports and business licensure.
- LLC owners should budget for name reservation fees (ranging from $10 to $40) and apply for a free Employer Identification Number (EIN) online.
- It’s important to research state–specific fees and compare prices before starting your LLC journey.
- The best states to incorporate a foreign-owned LLC are New Mexico (the cheapest) and Wyoming!
Startup Costs of Setting Up an LLC
Setting up an LLC involves various startup costs, including filing fees, operating agreement expenses, publication requirements (if applicable), and registered agent fees.
Filing fees
Filing fees form an integral part of the startup costs of setting up an LLC.
These charges can vary significantly, ranging from $50 to a whopping $800 based on state-specific regulations.
For instance, completing and submitting your articles of organization usually involves a filing fee between $50 and $200.
Certain states, like New York, further add to these costs with the added publication fees required during LLC formation.
Conversely, Massachusetts is known for having higher filing charges that can even reach up to $500 in some cases.
It’s crucial for foreign LLC owners to take note of these expenses while planning their budget for establishing an LLC.
Here is a table with the current fees per state:
| State LLC | LLC Filing Fee | LLC Annual/Biennial Fee |
|---|---|---|
| Alabama | $200 | $50 minimum (every year) |
| Alaska | $250 | $100 (every 2 years) |
| Arizona | $50 | $0 (no fee and no information report) |
| Arkansas | $45 | $150 (every year) |
| California | $70 | $800 (every year) + $20 (every 2 years) |
| Colorado | $50 | $10 (every year) |
| Connecticut | $120 | $80 (every year) |
| Delaware | $90 | $300 (every year) |
| Florida | $125 | $138.75 (every year) |
| Georgia | $100 | $50 (every year) |
| Hawaii | $50 | $15 (every year) |
| Idaho | $100 | $0 (however, an information report must be filed every year) |
| Illinois | $150 | $75 (every year) |
| Indiana | $95 | $31 (every 2 years) |
| Iowa | $50 | $30 (every 2 years) |
| Kansas | $160 | $50 (every year) |
| Kentucky | $40 | $15 every year |
| Louisiana | $100 | $35 (every year) |
| Maine | $175 | $85 (every year) |
| Maryland | $100 | $300 (every year) |
| Massachusetts | $500 | $500 (every year) |
| Michigan | $50 | $25 (every year) |
| Minnesota | $155 | $0 (however, an information report must be filed every year) |
| Mississippi | $50 | $0 (however, an information report must be filed every year) |
| Missouri | $50 | $0 (no fee and no information report) |
| Montana | $35 | $20 (every year) |
| Nebraska | $100 | $13 (every 2 years) |
| Nevada | $425 | $350 (every year) |
| New Hampshire | $100 | $100 (every year) |
| New Jersey | $125 | $75 (every year) |
| New Mexico | $50 | $0 (no fee and no information report) |
| New York | $200 | $9 (every 2 years) |
| North Carolina | $125 | $200 (every year) |
| North Dakota | $135 | $50 (every year) |
| Ohio | $99 | $0 (no fee and no information report) |
| Oklahoma | $100 | $25 (every year) |
| Oregon | $100 | $100 (every year) |
| Pennsylvania | $125 | $7 (every year) |
| Rhode Island | $150 | $50 (every year) |
| South Carolina | $110 | $0 (no fee and no information report, unless LLC is taxed as an S-Corp) |
| South Dakota | $150 | $50 (every year) |
| Tennessee | $300 | $300 (every year) |
| Texas | $300 | $0 for most LLCs (however a No Tax Due Report and Public Information Report must be filed every year) |
| Utah | $54 | $18 (every year) |
| Vermont | $125 | $35 (every year) |
| Virginia | $100 | $50 (every year) |
| Washington | $200 | $60 (every year) |
| Washington DC | $99 | $300 (every 2 years) |
| West Virginia | $100 | $25 (every year) |
| Wisconsin | $130 | $25 (every year) |
| Wyoming | $100 | $60 minimum (every year) |
Operating agreement
An operating agreement is a crucial document for an LLC.
Despite not being mandatory in most states, it serves as the backbone of your business operations by dictating company rules and procedures, defining member roles, and outlining profit distribution.
On average, this significant document comes with a cost of $740.00.
The total expense depends on how you choose to obtain your operating agreement.
Do-it-yourself templates are available at little to no cost but might leave room for errors or omissions due to lack of legal expertise.
Professional services like Registered Agents offer convenience by preparing an accurate and comprehensive operating agreement at additional fees.
Incorporate these costs into your startup budget early on – they are part of the critical formation expenses and contribute towards setting up successful LLC establishment.
The states that we recommend for Foreign LLC owners do not charge a fee for operating agreements or do not make it mandatory!
Publication requirements (if applicable)
Certain states have specific publication requirements for LLC formation.
A prime example is New York, where the law mandates that new LLCs publish a notice of their formation in two designated newspapers within 120 days of forming the company.
This requirement adds to your startup costs. The publishing fee stands at $50, apart from the state filing fee, which is set at $200 in New York.
However, not all states have these prerequisites.
For instance, Arizona only requires a state filing fee and publishing costs without any continuous dues or paperwork.
This does not apply to the states we recommend!
Registered agent fees
The cost of having a registered agent for your LLC can vary depending on the provider you choose.
It’s important to consider your options and find a registered agent service that suits both your budget and your needs.
Some registered agents offer plans starting at $0 plus filing fees, while others may charge higher fees for additional services.
Whether you decide to DIY, hire a lawyer, or use an online incorporation service, it’s essential to factor in the cost of registered agent fees when budgeting for setting up your foreign LLC.
Ongoing Maintenance Costs of an LLC
LLCs also have ongoing maintenance costs, including annual reports, business licensure, and compliance services.
Find out more about these essential expenses to ensure the success of your LLC.
Annual reports
LLC owners need to be aware of the ongoing maintenance costs associated with their business, including filing annual reports.
Annual reports serve as a way for LLCs to provide updated information and ensure compliance with state regulations.
The average annual fee for an LLC in the US is $91, but this can vary depending on the state. For example, in the District of Columbia (D.C.), an annual report with a $7 fee will be required starting in 2024.
In Florida, LLCs are required to file an annual report with a fee of $138.75 between January 1st and May 1st each year.
It’s important to note that there are penalties for late filing – in Florida, a late fee of $400 is applied if the annual report is filed after May 1st.
LLCs should prioritize staying up-to-date with their annual reports to avoid any potential penalties or complications.
Meeting these obligations ensures that your business remains compliant and maintains good standing within your operating jurisdiction, allowing you to focus on growing your company without unnecessary interruptions or issues arising from non-compliance.
Business license
Maintaining a business license is an important ongoing cost for LLC owners.
Each year, LLC owners must renew their business license to ensure compliance with licensing requirements and business regulation.
The renewal cost typically ranges from $20 to $100, depending on the state.
It’s essential to factor in this expense when budgeting for the maintenance of your LLC, along with other ongoing expenses such as annual reports and compliance fees.
On average, maintaining an LLC in the US costs around $91 per year, although it’s worth noting that some states may have higher fees or additional requirements for their business licenses.
Compliance services
Foreign LLC owners are responsible for fulfilling ongoing compliance obligations to maintain their LLC.
Compliance services ensure that your business meets all the necessary requirements and regulations, helping you avoid penalties and legal issues.
These services can include assistance with annual reports, filing tax returns, obtaining business licenses, and meeting other financial obligations specific to your state.
By outsourcing compliance tasks to professionals, foreign LLC owners can focus on running their businesses while ensuring they remain in good standing with the law.
Additional LLC Costs and Fees
In addition to the startup and ongoing maintenance costs of setting up an LLC, there are also various additional fees that may apply.
These include LLC name reservation fees, EIN or ITIN application fees, and other state-specific charges that vary depending on the location of the LLC.
LLC name reservation fees
LLC name reservation fees are an important part of setting up your LLC.
When reserving a name for your company, you will need to pay a fee that can range from $10 to $40, depending on the state.
This fee ensures that no one else can use the name you have chosen while you complete the necessary paperwork to form your LLC.
It’s essential to reserve your desired name as soon as possible to secure it for your business.
Some states may also have specific requirements regarding how long the reserved name is valid. For example, in Florida, a reserved name remains valid for five years before it expires.
So if you’re planning to establish an LLC and want to ensure that nobody else takes your preferred business name, don’t forget about the LLC name reservation fees when considering the costs associated with forming an LLC.
EIN application fees
Applying for an Employer Identification Number (EIN) is an essential step in setting up your LLC.
The cost of obtaining an EIN is completely free and can be done online through the IRS website.
This unique nine-digit number is required by the IRS to identify your business for tax purposes.
It’s important to note that only one EIN should be issued per LLC, even if you have multiple locations or subsidiaries.
By applying for an EIN, you’ll ensure that your LLC is compliant with federal tax requirements and eligible for various business activities.
This obtention of an EIN number is generally free, but paying can help speed up the process!
Other state-specific fees
In addition to the standard costs associated with setting up an LLC, there are also state-specific fees that must be considered.
These can vary widely from one state to another.
Here is an overview of some of the specific fees in different states:
| State | Specific Fees |
|---|---|
| Alaska | The filing fee for an LLC is $250. |
| Arizona | For LLC filings, there is a charge of $50 for paper filings or $45 for online filings. |
| Arkansas | Paper filings for an LLC cost $50, while online filings are slightly cheaper at $45. |
| New Mexico | Filling out an LLC in New Mexico (our favorite state) only costs $50! |
| Wyoming | Filling out an LLC in Wyoming (our second favorite state) only costs $100, or $102 if done online! |
For more information on startup legal requirements and services, visit https://legalvision.co.uk/startup-lawyers-lp
Conclusion
In conclusion, the cost of setting up an LLC can vary depending on the state and additional requirements.
The main expense is the state filing fee, which ranges from $0 to $500.
Recurring fees for reports and legal service providers may also need to be taken into account.
At Nomad Offshore Academy, we only recommend the best states for Foreign Owners that provide the best advantages in terms of liability, privacy and are the cheapest to incorporate and run!
Frequently Asked Questions
What is the average cost to set up an LLC?
The average cost to set up an LLC can vary depending on the state and additional services needed, but it generally ranges from $50 to $500.
Are there any ongoing fees associated with maintaining an LLC?
Yes, there are ongoing fees associated with maintaining an LLC, such as annual reports and franchise taxes, that vary by state.
Do I need a lawyer to set up an LLC?
No, you do not necessarily need a lawyer to set up an LLC. You can handle the process yourself or use online legal services for assistance.
Can I deduct the costs of setting up an LLC on my taxes?
Yes, in most cases, you can deduct some or all of the costs associated with setting up an LLC as business expenses on your taxes.
Can the cost of setting up an LLC be paid in installments?
Yes, some states allow for installment payments when registering and forming your LLC, making it easier to manage the initial cost over time.
