The main startup costs of forming an LLC consists of state fees and service fees. However, there are additional costs you need to consider when starting an LLC. How much it will cost you depends on the state where the LLC is formed. It also depends on whether you do the work yourself or hire an attorney or company to help you.
This article will outline the yearly costs that need to be accounted for in your LLC.
Every state in the United States charges a fee to form a limited liability company, but the amount is different from state to state. The price will usually range from $50 to as high as $500.
Once your LLC is officially operating, you’ll have to pay ongoing fees to be able to maintain your right to operate under your state and local government. If you fail to pay these fees, your LLC could lose its legal right to do business.
Some states require your newly registered LLC to publish a statement of formation in a local newspaper. Publishing costs can be anywhere between $40 and $2000, depending on your state’s specific requirements.
Name Reservation Fees
If you’re forming an LLC in Alabama, you will also need to reserve your LLC’s name for a small fee of $10-$28. Reserving a name is optional for all other States, but could be something that you wish to do.
Most states will then require LLCs to submit an annual or biennial report which includes updating the name, address, and ownership of the LLC. The report fee varies state by state.
Every LLC must have a registered agent to receive lawsuits, annual report notifications, and other official communications. It is possible for an LLC owner to act as their own agent, but you can also hire an agent if that suits your needs better. The annual fee that registered agent companies charge is usually $100 to $300.
Some states levy a yearly tax on LLC’s often called a franchise tax. This is most often a flat tax that needs to be paid regardless of how much your LLC earns. Even if the LLC has a low income for the year or is not substantially active, it will still owe a fee. If an LLC does not pay the annual or biannual fee owed to the state, the business can be forced to shut down or dissolve.
The state with the highest minimum annual tax for LLCs is California, which charges $800 per year. In most other states with such taxes, the minimum tax is $100 to $400.
Annual Report Fees
Most states, require an LLC to make a filing every one or two years with the Secretary of State to ensure that the LLC’s contact information is up-to-date. This filing is often called an annual report, periodic report, or statement of information. A filing fee must be paid along with the report or statement. The fee is usually $20 to $100.
Business License Fees
Depending on where your business is located, it’s likely that you’ll need to apply for a business license from your city or county government. Some states, such as Washington, have state-wide business licenses, but most of the other states have local license requirements.
The cost to obtain a business license is usually $50 to $100. You may have to renew your business license every year. The license renewal fees are usually $20 to $100.
As you can see, there area variety of different yearly costs that you will need to pay in order to run your LLC. Depending on the state in which your LLC resides these costs can vary, so make sure you do your research thoroughly on the state you are in.