How Much Does an LLC Cost: Fees, Taxes & Maintenance Costs

Starting a Limited Liability Company (LLC) is a strategic move for entrepreneurs aiming to blend a partnership’s flexibility with a corporation’s liability protection. An LLC shields personal assets from business debts and liabilities while offering tax advantages and operational flexibility. However, the financial aspect of forming and maintaining an LLC often raises questions. 

This article aims to demystify the costs associated with LLCs, breaking down the expected initial fees, annual taxes, and maintenance expenses. We’ll provide specific figures where possible and offer insights into how these costs vary by state and business needs, ensuring you have a clear picture of what to budget for when planning your LLC.

How Much Does a LLC Cost: Overview

Starting an LLC involves mandatory and optional costs, ranging from state filing fees to website development. Here’s what you need to know about the expenses of setting up and maintaining your LLC.

Mandatory Costs:

• Filing Fees: $35 to $500, varies by state.
• Operating Agreement: Free to $600, depending on DIY or professional help.
• Publication: $40 to $1,500, based on state and newspaper.
• DBA Fees: $10 to $100 for trading name registration.
• Registered Agent: $0 to $300 annually if using professional services.
• Business License Fees: $50 to $1,000+, depending on business type and location.
• Annual/Biennial Report Fees: $10 to $800, required for LLC compliance.
• Total: Overall, expect $150 to $4,000+ for initial and ongoing LLC expenses.

Optional Costs:

• LLC formation services: Costs start under $50 plus state fees.
• Certified copies of business documents: Ranges from $0 to $30.
• Standing certificate: $0 to $15.
• Register a foreign LLC Cost: Between $100 and $300 per state.
• Website development: From $500 to $5,000+.
• Marketing costs: Starting at $500 to $5,000+ for comprehensive efforts.
• Total: Overall, expect to spend from $650 to over $10,000, depending on the extent of your investment in services, online presence, and marketing.

LLC Mandatory & Maintenance Costs

Let’s discuss the money side of starting and keeping up with your LLC. We’ll break down the specific costs of forming and running your business, making it easier to understand. Remember that these costs vary from state to state, so we’ll dive into the details.

Filing Fees

When you kickstart your LLC, you’ve got to pay filing fees. This can range from a modest $35 in Montana to a more substantial $500 in Massachusetts. Please see the chart below:

Remember: Knowing how much your state charges helps you plan your budget and get your business on the right foot.

Operating Agreement

Even though it’s unnecessary everywhere, creating an operating agreement is smart. This document helps everyone in your LLC understand things better. In places like New York, where it’s not a must, having one can still be super helpful in making sure everyone is on the same page.

Publication

There’s a unique rule in some states like New York and Arizona – you must put a notice in local newspapers about your new LLC. This can add a few hundred dollars to your costs, so knowing and planning for this rule is good.

DBA Fees

Regarding DBA (Doing Business As) fees, the range typically falls between $10 and $100. A DBA is a trade name that a business uses, differing from its legal one. The cost of acquiring a DBA varies across states and encompasses several components:

• Filing Fee: This initial cost is for registering your DBA, acting as the gateway to officially using your chosen trade name.
• Publication Costs: In some states, the requirement to publish your DBA in local newspapers adds an extra layer of expense to the process.
• Renewal Fees: To keep your DBA active and recognized, periodic renewal fees may be necessary.
• Notary Fees: Notarizing documents related to your DBA might incur additional charges.

Beyond the initial registration fees, acquiring a DBA may trigger the need for supplementary business licenses, contributing to the total setup cost of your LLC. It’s crucial to consult your secretary of state’s website or business registration office for precise and up-to-date information on DBA costs in your specific state.

Moreover, getting into trademark registration becomes worthwhile if you aspire to have exclusive rights to your DBA name beyond its local boundaries. However, keep in mind that trademark registration involves distinct fees at both the federal and state levels.

Registered Agent

Your LLC’s liaison with the state is the registered agent. They handle lawsuits, legal documents, and office mail, simplifying your business life. Good news – almost any adult in your state can be this go-to person during business hours, and guess what? There are no extra costs for this essential role. 

But, if you’d prefer a pro take the wheel, some service providers are up for the job at a yearly fee ranging from $0 to $300. Simple and effective – that’s your registered agent keeping things in check.

Business License Fees

Determining the cost of your LLC’s business license involves considering factors like location, business type, and revenue. Liquor licenses in high-demand areas can range from hundreds to hundreds of thousands. Casinos? Prepare for million-dollar licensing. Industries with hefty environmental impacts may face costly compliance fees. Healthcare facilities and large transport companies? They often rack up expenses quickly. 

Annual and Biennial Report Fees

Annual and biennial report fees for your LLC aren’t just about dollars but deadlines. The main cost is the state filing fee, varying across states and influenced by revenue or member count, sometimes reaching up to $800. Missing the deadline means facing late fees and penalties or losing your limited liability protection. Changes during the report, like a new agent or updated address, might mean extra costs.

For foreign LLCs, filing in different states comes with unique fees. Falling out of good standing may need additional reinstatement fees. Stay on top of deadlines to keep your LLC financially sound.

LLC Optional Costs

When setting up an LLC, apart from the necessary filing fees and legal documents, optional costs can vary significantly based on your choices and the state where your LLC operates. 

LLC Formation Services

LLC formation services streamline setting up your LLC, handling paperwork, and ensuring compliance with state regulations. While you can file the necessary documents, using a service provider can mitigate risks associated with incorrect filings. These services vary in cost, starting at less than $50 plus the applicable state fees. The value here lies in the peace of mind and time saved, particularly for entrepreneurs unfamiliar with the legal intricacies of starting a business.

Our Recommendation: Best LLC Formation Services

When selecting the best LLC formation services, it’s essential to consider what each provider excels in and how that aligns with your business needs. After reviewing Zen Business, Inc. Authority, and LegalZoom, We found that each has unique strengths that cater to different aspects of the LLC formation process.

Zen Business stands out for its affordability and comprehensive service offerings. Ideal for entrepreneurs looking for value and extensive support, Zen Business provides a blend of competitive pricing, including a starting plan at $0 plus state fees and a range of services from basic business formation to “Worry-Free” compliance and website building tools. Their highly-rated customer service makes them a top choice for those prioritizing cost-effectiveness without sacrificing support.

Inc Authority shines with its free LLC formation services, only requiring you to pay the mandatory state fees. This makes it an attractive option for startups on a tight budget or those who prefer to pick and choose additional services à la carte. The first year of registered agent service is complimentary, further enhancing its appeal for new business owners. However, it’s worth noting that Inc Authority may frequently contact you to upsell their services, which could be a consideration depending on your preference for communication.

LegalZoom, a well-established name in the online legal service industry, offers a broader spectrum of services beyond just LLC formation. Their extensive experience and wide array of legal services make them suitable for entrepreneurs needing legal advice or additional legal document support as their business grows. LegalZoom’s customizable plans and mobile app support provide a convenient and scalable option for business owners looking for more than just formation services.

Certified Copies of Business Documents

After forming your LLC, you may need certified copies of your business documents for banks, loans, or other legal matters. Depending on the state, these copies range from $0 to $30. These documents are official records of your business’s legal status and are often required for significant financial transactions.

Standing Certificate

A standing certificate (or certificate of good standing) verifies that your LLC complies with state regulations and is authorized to do business. This certificate is crucial for expanding to other states, obtaining financing, or renewing licenses. Prices range from $0 to $15, with the variation mainly due to the state’s administrative costs.

Cost to Register a Foreign LLC

If you’re expanding your business beyond the state where it was initially established, you’ll need to register as a foreign LLC. This registration ensures your company is legally recognized in the new state, with fees ranging from $100 to $300 per state. This cost is essential for businesses operating in multiple states, ensuring compliance and legal operation across state lines.

Website Development

A professional website is crucial for any business in today’s digital age. Website development costs range significantly, from basic templates at around $500 to custom designs exceeding $5,000. The investment depends on your specific needs, including the complexity of the site, e-commerce capabilities, and custom features.

Marketing Costs

Effective marketing is vital for growing your business and attracting customers. Initial marketing efforts can start as low as $500 for basic strategies, scaling up to $5,000 or more for extensive marketing plans that include SEO, social media campaigns, and paid advertising. The right investment in marketing can drive your business’s growth and brand recognition.

LLC Costs FAQs

Can I Open an LLC on My Own?

Yes, you can open an LLC on your own. The process is designed to be accessible to individuals. In New York, for instance, you start by filing the Articles of Organization with the Department of State. This document outlines essential details about your LLC, including its name, purpose, and members’ names. While legal advice can be helpful, many entrepreneurs successfully explore this process independently. It’s a practical and cost-effective way to establish your business.

Are LLCs Worth It?

Absolutely. Limited Liability Companies (LLCs) offer a valuable combination of protection, flexibility, and tax benefits. They shield individual members from personal liability, meaning your assets are generally protected from business debts and liabilities. This flexibility is complemented by various tax options, allowing you to choose the most advantageous structure for your business. 

Take Note: The worthiness of an LLC largely depends on your business goals and the level of protection and flexibility you seek.

Is There an Annual Fee for an LLC in New York State?

Yes, LLCs have an annual filing fee in New York State. The amount is based on the New York source gross income for the previous tax year. It’s important to factor in this cost when budgeting for your LLC. Annual fees contribute to the maintenance of your business entity and are a standard requirement to keep your LLC in good standing.

Should I Start an LLC for My Side Hustle?

Starting an LLC for your side hustle can be a smart move. It provides a legal structure that separates your assets from your business, offering protection in unforeseen circumstances. While it involves some paperwork and potentially annual fees, the benefits of liability protection and potential tax advantages make it a prudent choice, significantly if your side hustle is growing.

Should I Pay Myself a Salary from My LLC?

Deciding whether to pay yourself a salary from your LLC depends on various factors, including your business structure and financial goals. LLC members typically receive profits through distributions rather than traditional wages.

However, you can pay a salary if you elect corporate taxation for your LLC. It’s advisable to consult with a tax professional to determine the most tax-efficient and financially sound approach for your specific situation.

How Much Money Should You Make Before LLC?

There isn’t a specific threshold of income that dictates when you should form an LLC. The decision is more about the level of risk and liability you’re comfortable with. Forming an LLC early on is wise if your business involves substantial risks or you want to protect personal assets. It’s not solely about income but about safeguarding yourself from potential legal and financial challenges.

What Happens If My LLC Does Not Make Money?

If your LLC doesn’t make money, it may incur losses, which isn’t uncommon in the early stages of a business. The flexibility of an LLC allows you to pass these losses through to individual members, potentially reducing personal tax liability. However, it’s crucial to track and report these losses accurately. If losses persist, assessing your business strategy is essential, potentially making adjustments to improve profitability. Remember that the ability to deduct losses depends on your participation in the business and the IRS rules.

Related

• Difference Between LLC And Corporation 
• Best Small Business Insurance

Conclusion On How Much Does an LLC Cost?

Starting an LLC involves some basic costs; you can choose some based on your needs. The must-pay fees, like filing fees and a fee for making your LLC official in the newspaper, can add up to anywhere between $150 to $4,000 or more. This depends on where you’re setting up your LLC. 

Then, there are extra choices like getting help to set up your LLC, making a website, or spending on getting the word out about your business. These could cost you from $650 to more than $10,000, based on how much help you want and how fancy you want your website to be.

Talking to a lawyer or financial expert is smart since the costs can vary depending on your state and business needs. They can help you determine precisely what you need to pay for and how to start your business without overspending.