Limited Liability Companies (LLCs) are no longer just for large company owners with a global presence. Many small and medium business owners form an LLC because of the limited liability protection and tax incentives, amongst other advantages.
Starting up an LLC is not a daunting task, but you do need to form it correctly. And while it’s not free, you might be surprised at how little it can cost.
Where your business is and what service it provides will determine your LLC costs. Expenses also depend on either hiring a registered agent or becoming the registered agent on behalf of your business.
You can find all the essential information about how much your LLC will cost to start and operate here. From Maine to California, find out how much you can expect to pay in each state.
LLC Formation Fees by State (as of 2022)
|State||LLC Filing Fees (Online, 2022)||LLC Recurring Fees|
|New York||$200||Gross income based for proceeding year $25-$4500. $25 if no income. Exceptions to which LLCs must file.|
|Pennsylvania||$125||at least $500|
|Tennessee||$50per member at filing date (min $300-max $3000)||$50per member at filing date (min $300-max $3000)|
|Wyoming||$100||$60 or two-tenths of one mill on the dollar ($.0002) whichever is greater based on company's assets located & employed in the state of Wyoming|
Initial Fees To Form an LLC
Your first step to setting up an LLC is making sure you’re financially prepared to pay the initial fees. You’ll need to research all the city, county, and state requirements and fees you must fulfill to create an LLC operating agreement.
Most state fees for filing articles of incorporation (also known as “certificate of incorporation” or “articles of organization”) are $100 up to $250. But some state fees are below and above this range. For example, Arkansas’s domestic online filing fee is $45 ($50 for paper filing), and the domestic filing fee is $500 (online or paper) in Massachusetts.
Foreign filing fees are generally the same as domestic ones, although many states charge slightly to significantly more.
Reserving an LLC name
You can expect another LLC cost if you elect to reserve a name. You can do this for one or two months in many states, with fees ranging from $10 to $50. Reserving a name is optional in all states except Alabama. While you don’t have to reserve a name before you file your articles of organization, remember that reserving a name ensures that someone else can’t use it before you file.
Business Licenses and Permits
The cost of business licenses and permits depends on the location where your business is registered. Some states have statewide business license requirements. While others don’t have this requirement, you may have to file for a business license with your city or county.
Depending on the type of LLC you’re starting, you may also need additional licensing or permits for restricted activities. This is typical with medical and legal businesses with far more requirements.
Fictitious Business Name Application
Whether you have to file a fictitious name statement depends on your business type and city, county, and state laws. But it’s necessary if you plan to sell products or services under a different name than the one registered as your LLC. The cost range of filing a fictitious name, also known as “doing business as (DBA),” is between $50 and $100, with some locations as little as $10 and others as much as $200.
Other Costs To Consider
You may incur other LLC costs, such as publication fees, an annual franchise fee, and dissolution fees. But again, these vary from state to state.
Most states don’t require a franchise fee, but others do, such as California’s annual fee of $800. Additionally, Oklahoma has a yearly agent fee of $40, while other states don’t charge for this at all.
Ongoing Costs of Running an LLC
You should anticipate ongoing fees once your LLC is set up. Although these costs may not be high, you must know what the fees are, when they’re due, and how to pay them correctly.
Business License Renewal Fees
Depending on your state or municipality, you may have to pay renewal fees if your LLC is required to have a business license. The amount to renew the license is often the same as the original filing fee, but some states may charge less for renewals.
Registered Agent Fees
A registered agent is either a person or an organization physically located in the same state as your LLC and is responsible for receiving and filing legal documents. Every state requires LLCs to name a registered agent. A member of the LLC can typically serve as the registered agent.
Not all states charge registered agent fees or charge for filing a change of registered agent. But the private individual or company you hire will indeed charge you for their services, usually between $100 to $300 per year.
Minimum LLC Taxes
How the IRS determines your tax rate is based on classifying your LLC. The classification depends on the number of members in your company. Therefore, the IRS will treat your LLC as a sole proprietorship (single-member LLC) or a partnership (multi-member LLC). LLC partners pay taxes according to their share of business under the partnership agreement.
You or your partners may decide to keep a certain portion of profits within the business, benefiting you to file a corporate tax, such as a C Corporation or an S Corporation.
C Corporate profits are taxed as corporate taxes, but then again as personal tax returns. But the flat tax rate for C Corp is 21%, which is lower than the top three individual income tax rates. Therefore, a C Corp tax filing is beneficial for LLC owners with higher incomes.
However, the S Corp tax rate avoids double taxation. Profits and losses are taxed as personal returns, which also reduce taxes for high-income business owners.
LLC Incorporation Fees 2022 – by State
Now that you have the initial cost information of starting and operating an LLC, you can research further to find detailed information based on the state where your business is located.
LLC Incorporation Fees for Foreign Nationals
|State||Online Filing Fee||Paper Filing Fee|
Cost of an LLC FAQs
Are LLCs Expensive?
Forming and maintaining an LLC can be more costly than a sole proprietorship, but it is cheaper than establishing a corporation. Ongoing LLC costs such as business license renewal fees, registered agent fees, annual report fees, and minimum LLC taxes can all add up, and many will depend on what state you decide to set up your limited liability company in.
Do you have to pay for an LLC every year?
In some states, you will have fees to pay every year. These are either annual franchise tax and/or annual report fees. Ongoing costs of running an LLC can include:
- Business license renewal fees
- Registered agent fees
- Minimum LLC taxes
What is the cheapest way to get an LLC?
The cheapest way to get an LLC is to do most of the setup process yourself. You can complete the formation process, create your own operating agreement, be your own registered agent and get your own EIN – if you need one. You could also save money by setting up your LLC in a state that has low setup costs, such as Kentucky.