LLC Related Costs Across Different States

Forming an LLC is a sound decision for individual entrepreneurs and small business owners who want to scale their businesses.

A limited liability company offers better liability protection for business and personal assets than self-employment and sole proprietorship.

In many states, setting up an LLC also makes sense for tax purposes as such entities are exempt from corporate profit taxes. So you’d only have to pay a personal income tax as an LLC member.

Ready to learn more about LLC costs? Let’s dive in!

Table of contents

• LLC filing costs
• Optional LLC costs
• Recurring LLC costs
• Conclusion

LLC Filing Costs

Articles of Organization filing fees

Every US state charges a mandatory state filing fee for company formation. It’s a sum that goes to the government for processing your request. In return, you receive articles of organization — a legal document stating that you’ve incorporated a business entity.

Some states let you file for LLC formation online, while others only accept paper-based forms. Filing fees range from $45 – in Arkansas – to $500, the highest in Massachusetts for domestic LLC formation. A domestic LLC is a business structure operating in the state where it was registered.

The filing fees are slightly higher for foreign LLCs — entities that carry out business activity in different states. A company with a physical presence, employees, or significant revenue coming from another state must register as a foreign entity in that state.

Publication fees

Three states — Arizona, Nebraska, and New York — have a mandatory publication fee. It means you need to publish a statement of limited liability company formation at one of the approved local newspapers within a specified period of incorporation.

The publication fees include:

• Affidavit of publication fee: paid to the government. It’s $50 in New York, zero in Arizona, and $10 online/$30 in person in Nebraska.
• Newspaper publication fees: You must also pay a local newspaper to publish an ad about your company formation for three consecutive weeks (Arizona and Nebraska) and six weeks in New York. The publication costs depend on the publisher. Re-check the information locally.

Optional LLC registration costs

The above are baseline company registration costs. But in most cases, you’ll need to budget for additional expenses such as the following.

Name reservation fee

Your LLC needs a unique business name that doesn’t violate any registered trademarks or sounds too close to another company. Most states allow you to reserve the desired company name for up to 120 days while completing the incorporation process. The name reservation cost is under $50 in most.

Expedited processing fees

Incorporation time varies from state to state. Washington processes new registration in two days (as of July 2024). In contrast, other states have a backlog of requests, with processing delayed by up to 3-5 weeks.

However, suppose you want to get your articles of incorporation sooner. In that case, you can pay an expedited fee for faster registration (within several days), and in some states — a same-day registration fee.

Registered agent fee

An agent is a person or entity designated to receive service of process and other correspondence for your LLC. You can act as your own agent, appoint someone else, or use a registered agent service. Most states also charge a fee for agent appointments.

Doing business as (DBA)

If you plan to operate under a different brand name than the one you are using for your LLC, you must file for DBA with your state. The fees range from $10 to $200.

Certified document copies

It’s good to have several legally certified copies of your business registration documents. But most states charge extras for those — $5 to $50 on average.

Business license and permits

Depending on your business type and industry, you may need to obtain extra licenses for your company from a local authority. Licenses and permits are provided on federal, state, and local levels. Some industries requiring business licenses include agriculture, law, medicine, and finance, among others. Service fees vary.

Federal Tax ID Number (EIN)

To open a business bank account and prepare for tax reporting, you’ll also need to request an employer identification number (EIN) from the IRS. It's free if you do it yourself, and you can apply online. But some choose to pay a lawyer to handle the chore for them.

Operating Agreement

An LLC operating agreement is a legal document detailing how your LLC will take important business and financial decisions and specifies the rights, duties, obligations, and liabilities of all company members.

Providing an operating agreement isn’t mandatory for company formation in most states, except California, Delaware, Missouri, and New York. These states ask you to create an operating agreement, but it shouldn’t be filed with the State Department. If you are a single-member LLC, you can make an operating agreement yourself. But if you are entering a partnership or plan to have several stakeholders, consider getting legal advice.

Legal assistance

Forming an LLC yourself can be overwhelming because you have to prepare many forms, confirm (and re-confirm) specific operational details with the authorities, and make special provisions based on compliance requirements for your industry. For that reason, some business owners choose to hire a lawyer to help with the incorporation.

Attorneys charge $100-$300 on average. But since some of the filing work will be done by paralegals, the total costs can be lower. Alternatively, small business owners also opt to use online company incorporation websites. They charge a small fee (under $100) on top of state filing fees to help you with the registration.

Recurring LLC costs

Apart from paying for company formation, you’ll also have to budget for recurring annual payments. These include state report filing fees, taxes, and additional fees.

Failure to file required reports and cover the fees could lead to legal penalties and fines. So stay atop the due dates!

Annual report fees

Most states require LLCs to file a yearly or biennial report with the local Secretary of State (SOS) that contains current information on the LLC’s contacts. If there are any changes, you are required to file a change request separately.

Such annual filings are also called periodic reports or statements of information. The fee varies between $25 to $100 on average. States such as Alabama, Arizona, Delaware, Idaho, Missouri, Mississippi, New Mexico, Ohio, Pennsylvania, South Carolina, and Texas waived that fee. It did not require regular fillings if there were no changes to your business details.

Minimum annual LLC tax

Some states impose a mandatory annual tax on LLCs called the minimum annual tax fee or franchise tax. You have to pay it regardless of whether your company made any money in the state or not. The tax rate also increases progressively depending on your income.

The good news is that these are waived during the first year.

States with minimum annual tax include:

• Alabama: $50 (minimum Business Privilege Tax (BPT))
• Arkansas: $150 (minimum franchise tax)
• California: $800 (waived during the first year)
• Connecticut: $250 (minimum biennial Business Entity Tax (BET))
• Delaware: $300 (minimum franchise tax)
• District of Columbia (D.C.): $250 (minimum franchise tax)
• Rhode Island: $400 (minimum corporate tax)
• Tennessee: $100 minimum (or 0.25% of the greater of net worth or real and tangible property)
• Texas: franchise tax rate starts at 0.375%
• Washington: has a Manufacturing B&O tax rate of 0.484% of gross receipts

Business license renewal fees

Lastly, don’t forget that most business permits and licenses are due for annual renewal too. The fees vary, so re-check the information with a local authority.

FAQs about LLC incorporation and costs

The following are some frequently asked questions regarding LLC incorporation fees.

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Last updated: Nov 2024