On average, a non-employer small business brings in around $53,000 each year, while an employer small business makes over $6 million a year.
Even if you run a company all on your own, there’s potential to make much more than you are currently. Plus, you’ll reap the benefits of being an entrepreneur, such as answering to no one but yourself and making your own hours.
Many people choose to start with a limited liability company (LLC). It’s highly beneficial since you’re not personally responsible for the business’s debts and liabilities.
How much does it cost to start an LLC though? Read on to find out the answer to this question and more.
How Much Does It Cost to Start an LLC?
Of course, as with many questions, there’s no straightforward answer. There are several moving parts involved, so let’s take a closer look at each one and how much they can possibly cost.
Filing Fee
The first thing to know is that you can never create an LLC for free; you’ll always be charged a filing fee.
However, the cost to set up an LLC will vary from state to state. If you’re lucky, you’ll be in a state that charges a filing fee of around $50. But if you’re unlucky, you may have to pay $500 or more just to form an LLC.
Plus, some states charge ongoing annual fees or franchise taxes. Make sure you factor these in when weighing up your expenses.
The good news is, while it’s not usually recommended, it’s possible to start an LLC in a state that you don’t live in. So if you’re looking at exorbitant fees, it’s worth considering forming your LLC elsewhere.
Registered Agent Fee
Most states require LLC owners to designate a registered agent. This is someone or entity that can receive your company’s legal and tax documents on your behalf.
The cheapest route here would be to name yourself as the registered agent, as that won’t cost a cent. However, it’s a difficult option that’s also not recommended, as the risks and inconveniences aren’t worth the cash saved.
Instead, you should choose a registered agent service. Those like Business Anywhere offer comprehensive services in addition to these, so it can be cost-effective to get bundles.
In general, expect to pay anywhere between $100 to $300 per year for registered agent services. Here at Business Anywhere, our prices start at $149 and we have a wide variety of services and packages to accommodate all budgets.
Operating Agreement
This is something else that’s not required by all states, but can be beneficial to have anyway.
An operating agreement is an official document that outlines the ownership structure, management, and any other important details of your LLC. Because it clearly defines each LLC member, as well as their rights and responsibilities, an operating agreement can come to the rescue during legal disputes. So it’s advantageous to have one, even if it’s not legally required.
To ensure your operating agreement is watertight, you should consult with an attorney and/or accountant. These costs will depend on your location and the professionals you hire, but typically, you should expect to pay upwards of $100 per hour for their services.
Publication Requirements
There are a few select states that require LLC owners to publish a notice about their newly-formed business; Arizona and New York are two of them. This needs to be done in the local newspapers.
Again, the exact prices will depend on where you’re located and which newspapers are local to you. With that said, it’ll probably cost you a few hundred or thousands of dollars to publish these notices.
Additional Services and Fees to Consider
In addition to the above items, you may have additional expenses, depending on what industry you’re in and what your business structure looks like. Below are some more things to factor in.
Employer Identification Number (EIN)
If you’re operating as a single-person LLC, then you most likely won’t need an EIN. However, it can be useful for applications if you need a business bank account or loans.
The good news is, if you’re a US citizen with an SSN number, an EIN won’t cost a cent. But the process to get one as a non-citizen is a lot longer and complicated, so it’s best if you have a lawyer apply for you. As we’ve said before, their costs can be high (hundreds of dollars per hour), but it’ll be worth it to get your business set up properly.
Business Licenses or Permits
The costs can vary widely here depending on the type of licenses and permits you get, as well as the requirements of your local government. For example, a full-service liquor license can cost anywhere from $100 to over $14,000.
It’s advisable to research the specific requirements of your industry. It can also be beneficial to consult with your local government offices to figure out the associated costs.
Attorney and Accountant Fees
Not every LLC will need to hire these professionals, but you might find yourself in a situation where you need to.
In addition to the area you’re in and the expertise of the lawyer or accountant you hire, the prices can differ based on the complexity of your business. It’s wise to get multiple estimates before you select someone to use, as you’ll be better able to budget.
Be Prepared for All the LLC Costs
Now you know the answer to the question, “How much does it cost to start an LLC?”
Do note that these are all approximate numbers, and that your actual expenses can vary based on your company’s specific requirements, as well as your state’s. The best thing to do is to request quotes when you can, and consult with a local attorney or online business formation service to get a more accurate estimate for your unique situation. Only then can you have better expectations for your finances.
If you’d like expert help setting up your LLC, then sign up with Business Anywhere today.
