Financial considerations are usually top of mind when making the leap into owning your own business and most entrepreneurs know that the first essential step is setting up an LLC. An LLC limits your personal liability because an LLC is legally separate from its owners. LLCs are responsible for their own debts and obligations, and although you can lose the money you have invested in the company, personal assets such as your home and bank account can’t be used to collect on business debts.
So how much does it cost to form an LLC?
Read on to get the lowdown on what fees to expect.
There are many documents and articles that need to be filed to complete the registration process and ensure you are compliant with the law, the IRS, and your local tax authority. According to upcounsel a business attorney can cost anywhere from $150 to $1,000 per hour depending on the size of the firm and cost of living where you are filing. The number of hours is dependent on the complexity of your business as well as many other factors.
They also warn that there are some online legal companies that either blindly instruct you on how to ‘Do It Yourself’ or a “representative of the company is helping you behind the scenes – not a licensed attorney. Which leaves your paperwork prone to more errors”
The good news is that there is an option outside of spending uncontrollable amounts of money on the clock with a high-priced attorney or getting a sub-par experience with an unknown online service. Lex Launch offers 3 levels of LLC formation at a fixed price with a real attorney you have access to.
Filing Fee
The unavoidable state filing fee ranges between $40 and $500 and vary considerably from state to state. For instance, Kentucky charges only $40, while Massachusetts charges $520. Your Secretary of State’s office will be able to provide you with up-to-date fees and requirements for how much an LLC will cost you. The average filing fee for an LLC in the United States is $127.
Additionally, annual fees are required in some states in order to maintain the good standing of your LLC. If you do not pay your annual LLC fee on time, your state may dissolve and shut down your LLC. Annual fees range from $0 to $800, with the average fees coming out to $101.
Beside the state’s filing fees, there are other costs to consider when setting up your LLC. For instance, if you request a certified copy of your Articles of Incorporation, which you may need for tax purposes, it will cost you extra money.
Do you need to hire a Registered Agent?
Imagine this, you are approaching your home after going on a walk with your family, you wave at your neighbors and then realize there is a police car waiting in your driveway. Turns out your business is being served papers – which can sometimes be at no fault of your own. This embarrassing display is completely avoidable when you are running a business and hire the right people.
The Registered Agent is a person or company who agrees to accept Service of Process on behalf of your LLC. Service of Process is delivery of any legal documents pertaining to a lawsuit, such as a subpoena.
There are many benefits to hiring LexLaunch to be your Registered Agent:
- Avoid Being Embarrassed at Your Office: The Sheriff or Process Server is likely to serve LexLaunch on your behalf
- Anonymity: Your name, home and office address are not listed on the Secretary of State filings (LLC only)
- Hassle: You don’t have to deal with all the junk mail
- No Important Deadlines Missed: We will notify your local attorney, or find you one we trust
Additionally, by using LexLaunch as your Registered Agent you’ll benefit from saving 10% on future legal fees from participating law firms. You’ll also get the benefit of having access to the LexLaunch conference room for 1-hour to conduct your annual meetings.
Pay for an Operating Agreement or Get one for Free
An Operating Agreement establishes the structure of your company, helps protect your limited liability status, and, perhaps most importantly, create the governing rules of your business.
Depending on how you form your LLC, your Operating Agreement will either cost money or be included in your package. If you decide to go the DIY route you’ll likely need to purchase an Operating Agreement online. Fees generally range from $50 to $200.
Just remember your Operating Agreement should be clear and concise – less fluff, more substance. A professional service, like LexLaunch, has the experience to guide you through the process. It will give you the peace of mind that you have covered all of your bases.
No matter what you’re buying, selling, or trading, your company is unique. You want the ability to shape your rules to fit the goals and hopes of your business. An LLC Operating Agreement allows you to do so.
Federal Tax ID Number (EIN)
You’ll need to obtain a Federal Tax ID Number (EIN) in order to open your business bank accounts. This EIN will also be used for filing taxes, obtaining finances and getting credit cards. Obtaining a Federal Tax ID Number is a free service provided by the IRS.
Be sure to wait until your LLC is approved prior to obtaining your Federal Tax ID Number. If you’ve already obtained an EIN from the IRS before forming your LLC, then that EIN is not attached to your LLC and is attached to you personally, as a Sole Proprietorship. You can cancel your EIN here if you did this by mistake.
If you hire a lawyer, it might be included in their fees, but some will charge extra. Fees could be $50 to $100 depending on their hourly rate.
Some online incorporation websites charge a fee of $50-$100, but LexLaunch includes this service in all of their packages.
A good place to start if you have additional questions is LexLaunch.com. Our mission is to provide professional, ethical and cost-effective legal services to our clients. Contact us for a consultation today!