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Limited liability companies (LLCs) are among the most popular business entities in the US. They offer strong liability protections and flexible tax structures, making them the perfect entity for small businesses.
While some entre
preneurs hire professionals to form their LLCs, others are drawn to the allure of doing it themselves.
Starting an LLC on your own may seem like an excellent way to save money, but the hidden costs of DIY LLC formation can easily outweigh the savings it offers. That said, you must understand the real cost of establishing an LLC on your own.
Below, we’ll uncover the hidden LLC formation fees people commonly overlook and explai
n why working with a business formation specialist is a better investment than you think.
There are several fees associated with forming an LLC. Whether you establish one by yourself or with the help of a business formation specialist, you must pay the following fees:
You pay These fees w
hen you file your LLC’s formation documents. Depending on your state, LLC filing fees typically range from as low as $50 to as much as $500.
Here’s a quick breakdown of the LLC filing fees for each state:
| State | Filing Fee |
| Alabama | $200 |
| Alaska | $250 |
| Arizona | $50 |
| Arkansas | $50 |
| California | $70 |
| Colorado | $50 |
| Connecticut | $120 |
| Delaware | $110 |
| Florida | $100 |
| Georgia | $100 |
| Hawaii | $50 |
| Idaho | $120/$100 |
| Illinois | $150 |
| Indiana | $100/$95 |
| Iowa | $165/$160 |
| Kansas | $40 |
| Kentucky | $40 |
| Louisiana | $100 |
| Maine | $175 |
| Maryland | $100 |
| Massachusetts | $500 |
| Michigan | $50 |
| Minnesota | $135/$155 |
| Mississippi | $50 |
| Missouri | $105/$50 |
| Montana | $35 |
| Nebraska | $110/$100 |
| Nevada | $75 |
| New Hampshire | $100/$102 |
| New Jersey | $125 |
| New Mexico | $50 |
| New York | $200 |
| North Carolina | $125 |
| North Dakota | $135 |
| Ohio | $99 |
| Oklahoma | $100 |
| Oregon | $100 |
| Pennsylvania | $125 |
| Rhode Island | $150 |
| South Carolina | $110 |
| South Dakota | $165/$150 |
| Tennessee | $300 |
| Texas | $300 |
| Utah | $54 |
| Vermont | $125 |
| Virginia | $100 |
| Washington | $200 |
| West Virginia | $100 |
| Wisconsin | $170 |
| Wyoming | $100 |
*Rates are current as of April 2024 and could change anytime.
A Doing Business As (DBA) name
is a trade name businesses use that’s different from their LLC’s legal name. Each state has its registration process and fees for a DBA name, but generally, you’ll have to pay between $10 to $100.
Most states require LL
Cs to have a registered agent, a person, or a company designated to receive legal correspondence on behalf of the LLC. You can appoint anyone to be your registered agent if they meet your state’s requirements.
But you can also get registered agent services from a third-party service provider, which costs between $100 to $300 per year.
If you think the mentioned charges cover all the expenses you must worry about when you form your LLC, think again. Several hidden costs could increase your overall expenses, including:
LLCs must have a unique name that’s yet to be used by another business within the state. Some states allow applicants to reserve their target name for a specific period, typically 30 to 60 days, for an additional fee.
An operating agreemen
t is a legally binding document that outlines an LLC’s ownership structure and operating procedures.
While most states don’t require operating agreements, they are highly recommended because they help prevent member disputes and provide a clear framework for the LLC’s operations.
Drafting a comprehensive operating agreement requires a lawyer’s expertise, costing betw
een $50 and $200.
Depending on your state, you may have to obtain a business license to start your LLC’s operations and additional permits depending on the business activity you want to conduct.
Below are some of the mo
st common licenses and permits you could get:
Business insurance is another LLC cost that most people overlook. You want to get one of the following insurance coverages to protect your business from potential risks like law
suits:
The price of these insurances
varies depending on the size of your LLC, its location, and the risks associated with it.
Lastly, to maintain your newly established LLC, you must file its annual report to your Secretary of State and pay its filing fee.
Annual reports are how state g
overnments keep track of the business under their jurisdiction. Be mindful of your state’s deadlines for annual reports, as late submissions could result in late fees and penalties.
Registering your LLC on your own and reducing your overall expenses is tempting, but truthfully
, you might spend more in the long run.
You could encounter several mistakes and pitfalls, like failing to submit the right requirements and missing deadlines for annual reports. These errors may seem small initially, but they could easily lead to hefty penalties and even the dissolution of your LLC.
We highly reco
mmend you work with your state’s experienced business formation specialist. Here’s why:
Business formation specialists are experts in the complex LLC formation processes. They have an in-depth knowledge of your state’s filing requirements and can guide you through the entire process, from filling out your articles of organization to obtaining your business license. Their expertise can give you the confidence you need to navigate the formation process.
LLC formation can be time-consuming, especially if you must fulfill several requirements before getting your business up and running. Fortunately, a business formation specialist can help you streamline the process. This way, you’ll have more time to focus on your launch.
When you work with a business formation specialist, you no longer have to worry whether your LLC was formed properly. They will ensure your LLC is in good standing with the state and that all its formation documents are filed correctly.
Although there are upfront costs to hiring a specialist, it can save you more money in the long run by helping you avoid costly mistakes.
Worried about the cost of hiring a business formation specialist? IncAuthority is here to help!
At Inc Authority, we’re committed to making LLC formation more affordable for aspiring entrepreneurs nationwide. We understand how expensive LLC formation can be, so we’ve made our services free instead of letting our clients go the DIY route.
We’ll waive our service charges, labor, and overhead fees when you work with us. All you have to pay for is the mandatory state filing fees.
Visit our website here to learn how to form an LLC with a business specialist’s help for free.
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