Starting a Limited Liability Company (LLC) is a popular choice for first-time business owners across the United States. It offers flexibility, personal liability protection, and favorable tax treatment. But before you take the leap, one key question needs answering: How much does it cost to start an LLC?
The answer varies based on your state, whether you use legal services, and any additional business needs. In this comprehensive guide, we’ll break down every potential cost, so you can plan your budget wisely and avoid surprises.
Why Choose an LLC?
An LLC provides several advantages, especially for new entrepreneurs:
- Limited liability protection for personal assets
- Pass-through taxation, meaning profits are taxed on your personal return
- Simplified structure compared to corporations
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Initial Costs of Starting an LLC
1. State Filing Fees
Every state charges a fee to file your Articles of Organization (or Certificate of Formation). These fees vary widely:
- Low-cost states: Kentucky ($40), Mississippi ($50)
- Mid-range: Texas ($300), Florida ($125)
- High-cost states: Massachusetts ($500), California ($70 + $800 franchise tax)
Check your state’s LLC filing fee
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2. Registered Agent Service
A registered agent is required to receive legal documents. You can act as your own, or hire a service:
- DIY: $0 (must be available during business hours)
- Professional service: $100–$300 annually
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3. Operating Agreement
Not required in every state, but highly recommended. You can:
- Use a free or paid template: $0–$50
- Hire an attorney to draft one: $200–$1,000+
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4. EIN (Employer Identification Number)
Required to open a business bank account or hire employees. It’s free via the IRS.
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5. Business Licenses and Permits
Depending on your industry and location, you may need:
- Business license: $25–$500
- Zoning permits or health permits: Varies
Check your city or county website for details.
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6. Publication Fees (Certain States)
In states like New York, LLCs must publish a notice in local newspapers:
- New York: $600–$1,200 (based on county)
- Arizona & Nebraska: Similar requirements
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Optional LLC Startup Costs
1. Legal or Online Formation Services
If you don’t want to file yourself, use:
- Online services (e.g., ZenBusiness, LegalZoom): $49–$400 + state fees
- Attorney: $500–$2,500 depending on complexity
Compare LLC formation services
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2. Trademark Registration
If you want exclusive rights to your brand name:
- Federal trademark: $250–$350 per class via USPTO
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3. Business Website and Domain
Most businesses need an online presence:
- Domain name: $10–$20/year
- Hosting: $50–$200/year
- Professional design (optional): $500–$2,000+
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Annual and Ongoing Costs
1. Annual/Biennial Report Fees
Most states require a periodic report to maintain your LLC:
- Ranges from $10 to $800 annually (e.g., California)
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2. Franchise Taxes
Some states charge this even if you don’t make money:
- California: $800 minimum
- Delaware: $300 flat fee
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Real-Life Example: LLC Cost in Florida
Let’s say you start an LLC in Florida:
- Filing fee: $125
- Registered agent service: $150
- EIN: $0
- Operating Agreement (template): $25
- Business license: $100
Total initial cost: ~$400
Ongoing annual costs:
- Annual report: $138.75
- Registered agent renewal: $150
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Common Questions About LLC Startup Costs
Q: Can I start an LLC for free? A: No. At a minimum, you’ll pay your state’s filing fee. However, you can save by filing yourself and acting as your own registered agent.
Q: What’s the cheapest way to form an LLC? A: File directly with your Secretary of State and use free templates for documents.
Q: Are online LLC services worth the cost? A: Yes, if you want convenience and professional support. They often include compliance reminders and templates.
Final Thoughts
Understanding the full cost of starting an LLC helps you plan better and avoid unexpected fees. While the process is relatively affordable, costs can add up quickly depending on your needs and location.
If you’re budget-conscious, a DIY LLC is doable with a little research. For more complex situations, investing in professional help can save you time and legal headaches down the road.