As a budding entrepreneur, the scaring part of starting your process to financial and professional freedom is always the first step: registration. If you have some experience of bookkeeping and knowledge of the space, you may heard of an LLC.
The most popular type of incorporation, a LLC (Limited Liability Corporation) isn’t difficult to form. The question that is most often on entrepreneurs’ minds, however, is “how much does it cost to form an LLC?”
After all, if you haven’t yet incorporated your business, chances are that you are very early on in the process, so you think you don’t have the revenues to support registration costs.
If these questions are bugging you, then worry no more for you are in the right place. In this article, we’ll go over the cost to create an LLC, and how much it will set you back to maintain your incorporation.
How Much Does it Cost to Form an LLC
The answer to this question is very much state-dependent. Each state has its own range of fees, and the answer to this question for you will require some research into your individual state’s policies. The cheapest state to form LLCs in are Hawaii and Michigan, which are just $50 each. However, some states can get real expensive — up to $500 in Michigan.
Even more complicated, New York has county-dependent fees, so where you are in the state you might pay anywhere from $200 to $500. If you’re not in New York though, just look up your state’s LLC fee schedule. However, rest assured that you won’t have to pay more than $500 at the absolute maximum, and in most states will be under $150.
Cost to Start an LLC: The Breakdown
The cost to form an LLC is split into various types of fees.
State fee — This is the fee we discussed above. It’s entirely dependent on your location.
Publication fee — Some select states charge this fee (NY, PA, GA, AZ, NB, NV). The publication fee is the cost of publishing a “statement of formation” article in your local newspaper. This article is essentially an announcement of your new company’s existence. Depending on the newspaper you publish in, this fee can be as low as $50.
Name reservation fee — If you plan to starting your company in Alabama, you will pay an additional $28 to reverse your company’s name.
Maintaining Your LLC
In the same way that it is fairly simple to form an LLC, it’s pretty easy to maintain your registration. In addition, the cost of forming an LLC is fairly similar to the yearly cost of maintaining your registration. Much like the forming cost, the maintenance cost depends entirely on your state. The average yearly maintenance cost across the United States is $101.
The maintenance is comprised of a fee to submit your LLC’s annual report to the state, which contains ownership information, revenue reports, and more.
Now that you can answer how much does it cost to form an LLC, it’s time for you to get out there, research your state’s fees and process, and make it happen!