Setting up a limited liability corporation offers unique benefits to business owners, but it can be costly. Various factors like the state that you’re filing in, to the different filing services that you use can influence the affordability of setting up an LLC. Let’s look at some of the estimated start up costs and how you can save.
When you set up a business entity, you have multiple options to consider, so why choose an LLC?
The first step in setting up an LLC is to choose a business name. It is necessary to check business name availability when choosing a business name. Some business registration organizations (like Legal Zoom) include a business name check in their services.
If business registration organizations do not include a business name checking service, the state business filing entity website usually offers a free business name checking tool.
Choosing a business name and looking up potential business name conflicts is free, but it does take time.
Choosing a business name can also cost money, especially if you decide to trademark a name or consult a branding agency.
For example, trademarking a business name can cost between $50 and $600 (plus legal fees) depending on whether you want to register in state only or file with the U.S. Patent and Trademark Office.
Branding agency fees can run anywhere from $500 to $75,000, depending on the size of the business and the branding package purchased.
In addition to establishing a registered agent (depending on your business setup,) you may need to set up a physical business address and/or mail management service. For example, if you live in Georgia and create an LLC in Nevada, you need a physical address that can receive mail correspondence.
The cost of establishing a physical mailing address for your business depends on the state in question, the mail receipt and forwarding services requested, and the volume of mail managed. Here are some popular options for business / mailing address options if you don’t have an office:
A registered agent serves as a point of contact for your business entity. Your registered agent handles important legal communication for your business, so that business communications are received and handled promptly.
The cost to establish a registered agent depends on the registered agent organization and the state where the business is registered. The average expense of registered agent services runs from $99 to $300 annually. Popular options include:
Your LLC articles of organization form are downloadable from the Secretary of State’s website for the state where the business is incorporated. Downloading the article of organization form is free, and if you are confident in filling in that form yourself, you only have to pay the state filing fee.
The state filing fee for your LLC article of organization fee varies and can cost from $50 to $3,000.
If you need legal assistance to fill in your LLC article of organization fee, you may wind up paying hourly legal fees or a flat rate fee, depending on the complexity of your needs. One of the best ways to manage these expenses is to use an incorporation service like Stripe Atlas or Clerky. These incorporation services take the complex legal work out of incorporating a business by offering incorporation specific legal services.
Another necessary part of setting up your LLC is creating an operating agreement. There are free LLC operating agreement forms online - but with a business on the line - it is always recommended to consult a business attorney or at least a professional business registry organization to create your LLC OA.
The average cost of consulting a professional when creating an operating agreement for an LLC is between $500 and $700.
There is no fee associated with filing an operating agreement.
There are additional fees associated with forming and maintaining an LLC in some states. For example, Arizona, Nebraska, and New York require an LLC publication fee of between $150 and $1,200. Alaska, California, Nevada, and Washington require an initial LLC report fee of between $0 and $325.
Most entrepreneurs set up their LLCs through a business filing organization. The package cost for LLC filing varies based on the state, the organization doing the filing, and the filing package purchased, including rush fees and hidden processing fees.
The average LLC filing package ranges from $49 plus filing fees (those official filing fees noted above) to over $1,000.
There are ways to save on LLC formation, for example:
So, how much does it cost to start an LLC? Setting up a limited liability corporation can involve significant start-up costs ranging from $654-$5,929, but it can also be an affordable process with plenty of pre-planning and research.
At Stable, we provide permanent virtual addresses and mailboxes for your business so you never have to worry about mail or changing addresses again. We’ll digitize all mail that you receive here, and you’ll be able to scan, forward, shred, (and even deposit checks!) from anywhere in the world.
One of the best ways to save is also to take advantage of any discount packages offered for new companies (i.e our 50% off Formation Discount!).
Get started with Stable here if you’d like a virtual business address + mailbox in less than 3 minutes.
Disclaimer: Stable is not a legal or accounting firm, therefore we cannot provide legal or tax advice. You should consult legal and tax professionals for advice on how to meet ongoing obligations that apply to you and your company.