As recession bites and unemployment spikes, Americans are starting businesses and looking forward to the next wave of growth and recovery – whenever that may come. As easy as it is to set up an LLC in the US, you will need to do some research and fill in various applications before opening the doors of your new business, and knowing how much you will need to invest to get your business established will help a great deal.
This article will explore the potential costs of starting an LLC, including the use of any services in this process, but first, let’s take a closer look at what an LLC is.
What is an LLC?
LLC stands for a ‘Limited Liability Company’ (including Corporations), which forms part of a formal business structure, usually an LLC is ideal for small businesses because of the ease of setting it up, pass-through taxation, and an easy-to-understand business structure.
If you are looking to start a small business with the necessary protection of your personal assets and property, an LLC is the best option. Other benefits of an LLC include taxation benefits, safeguarding against legal defenses, as well as a better reputation as a business amongst customers and banks.
An LLC ensures liability protection for you business and you can determine whether or not you need an LLC (opposed to an informal business structure) by asking the following questions:
- Will the business earn a profit that will not only be earned from the get-go, but remain stable in its growth?
- Will there be potential risks / liabilities involved with owning the business?
Potential Costs of Starting an LLC
During the process of setting up your LLC there are four areas that will require payment from you (also dependent on the state you operate in and if you decide to use certain additional services), let’s go over these in more detail below:
- Formation fees
- Annual fees
- Services used
- Additional fees
Formation fees will include state filing fees, which will consist of filing your Articles of Organization. The prices can start anywhere from $40 to $500, as mentioned above, the state you operate from will determine the cost.
These can also be referred to as Maintenance costs, which consists of providing an annual or biennial report, when submitting annual reports it requires an update of the business information like the name, ownership, as well as the address. The costs for these will also be determined by the state you operate in.
Other yearly payments can be in the form of Franchise tax, which is a yearly tax payment for your LLC.
Sometimes it’s helpful to use services to make the process of starting an LLC easier, however it is also not always necessary, depending on the state you operate in.
ZenBusiness is a recommended service provider for small businesses for when you do need to reach out for additional help. Prices are structured in three packages, starting at $39, $149 or $249, all of which includes state filing fees. ZenBusiness offers a wide range of assistance, from business filings, Registered Agent, Operating Agreements, EIN (Employer ID Number), and any rushed filing.
Another service provider that can assist with legal matters like documents or questions related to legal matters in your small business is RocketLawyer; for non-members documents cost $39.99, however customers can try the services for free for 7 days.
Additional fees are also determined by the state in which the business operates, such as Publication Fees and Name Reservation Fees:
- Publication fees can range from $40 to $2000 and consists of the LLC to publish a Statement of Formation in the local newspapers (required in states like New York, Arizona, and Nebraska).
- Reserving your LLC’s name is required in the state of Alabama, and ranges from $10 to $28.
Visit TRUiC’s website where you can learn more about setting up your LLC, as well as all the detailed costs involved for formation filing in each state.