How Much Does It Cost to Start an LLC?

Choosing a business entity type is an important decision when you’re starting a business. If you’re considering a limited liability company (LLC) you’re no doubt concerned about what it will cost. 

LLC formation fees vary by state, so it’s helpful to do a bit of research and prepare yourself for the necessary steps. To find out the cost and all the associated fees for forming an LLC in a desired state, choose a state from the list below.

Cost to Register an LLC (Articles of Organization)

The cost to register an LLC varies by state and ranges from $40 in Kentucky to $500 in Massachusetts. The fee is for filing your articles of organization, which is the form you file to create your LLC. These forms vary by state but can generally be filed online. You’ll need to fill out the LLC name, the name and address of the registered agent, the names of the LLC owners, and in some states, the way the LLC will be managed.

Name Reservation Fee

Before you form your LLC, you may want to reserve your name with your state. Only Alabama requires that you do this, and the fee is $28. Fees in other states vary but are nominal. To reserve your name, you can fill out a Name Reservation Form on your secretary of state’s website. Before you reserve your name, you should make sure that the name is not already taken. 

DBA Name Registration

DBA stands for doing business as. This is a name a company registers to do business under that’s not its legal business name. For example, you may have an LLC called “Smith Enterprises”, but you do business under the name of “Smith’s T-Shirts”. A DBA name is also sometimes called a fictitious name or a trade name. 

You should check that your DBA name is not already taken. But keep in mind, a DBA name is generally not legally protected unless it is a legally registered business name, such as an LLC name, or if it is trademarked. Multiple businesses in the same state can have the same DBA. However, you should check your secretary of state’s website to see if the name is being used as a legal business name in your state and check the US Patent and Trademark Office to make sure the name hasn’t been trademarked.  

DBA filing requirements vary by state, county, and city, and also by business structure. Check with your local governments to find out what and where you need to file. Fees generally do not exceed $100, and you can usually file your DBA online.

In some states, you may have to place an ad in a local newspaper to announce your intention to use the name and run the ad for a certain period of time. This is to fulfill public notice requirements in those states. You should search online to make sure the name you’ve chosen isn’t already being used. Your state’s website is a good place to start.

If your LLC operates under a name that is not your LLC name and has not filed a DBA, you can face significant fines.

In some states, you may have to periodically renew your name registration. Make sure you stay on top of these deadlines to ensure you’re operating legally.

Registered Agent Cost

In nearly all states, you are required to have a registered agent, also known as an agent of service in process.  A registered agent is a person or business authorized to accept legal, tax, and financial documents on behalf of your business.  

Essentially, the purpose of a registered agent is to ensure compliance with state laws and to make sure all official matters are handled correctly and in a timely manner. Having one person or entity responsible for state documents helps ensure nothing is missed, avoiding potential potholes.

Documents your agent may receive include:

• Tax forms and documents
• Government correspondence
• Legal documents
• Summons documents in case of a lawsuit

In all states, you can be your own registered agent, or it can be another member of the LLC. An individual who is not a member or a professional agency can also serve as the registered agent for your LLC. 

Using a Registered Agent Service   

A registered agent service is a professional service that will handle official correspondence and documents for your business. Registered agents ensure that all official correspondence is handled on time and keep copies of documents for you. They also keep track of deadlines and send reminders of things you need to file, such as tax forms and annual reports.

You need a service that has an office in your state, but you may want to choose a national service so you have the flexibility to form LLCs in other states. Other than that, you should choose a service that offers:

• Compliance management, to send reminders of key deadlines 
• Document copying and digital storage so you can access documents online
• Availability during the required hours, with prompt customer service
• Service in all 50 states and US territories

Costs for a registered agent service range from $50 a year up to $300 or more. There are several online services to choose from.

Operating Agreement Cost

In most states, your LLC is not required to have an operating agreement in place. But it’s highly recommended, as an effective operating agreement can help avoid disputes and lawsuits that could threaten the stability of your LLC. 

An LLC operating agreement is an important legal document that details who owns the business and provides essential information pertaining to member duties. An LLC operating agreement establishes the financial relationship between members and the basics of the working relationships between those members and the managers who oversee daily operations. 

The operating agreement is not filed with the state, but instead remains private. It’s advisable to hire an attorney to ensure your operating agreement is thorough and legally binding. 

Creating an operating agreement is free if you just draw it up yourself. Alternatively, you can pay around $100 for guidance from an online business advisory like MyCorporation. 

This is an extremely important document, so it’s recommended that you use the services of a specialist or legal firm. If you choose to hire an attorney, the price will be around $500 for a single-member LLC and $2,500 for a multi-member LLC.

Business Licenses and Permits Cost

You may also need various business licenses and permits at the state and local levels, depending on your industry and location. Fees for these vary, but most fees are relatively low. 

Federal regulations, licenses, and permits associated with starting your business include doing business as, licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties. If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

LLC Formation Service Cost (Optional)

Forming an LLC tends to involve a lot of red tape and paperwork, so for many entrepreneurs just starting out it’s a good idea to hire an experienced service provider. 

LLC formation services will take care of all the key steps, keeping you updated while allowing you to focus on launching and growing your business.

The cost of professional services depends on your requirements and LLC formation plan. Most LLC service providers offer different plans/packages and there are many LLC services that offer free LLC formation. Registered agent services (mentioned above) is very often included in these plans.

Ongoing LLC Costs

Every state has a different fee structure and timelines for LLC documents and licenses. It’s important to stay up-to-date or your business could face significant penalties.  

Annual Report Costs

In most states, you’ll need to file an LLC annual report with your state to keep your LLC in good standing. The fee varies and you can generally file online.

Business License Renewal Fees

Some business licenses and permits must be renewed periodically, which may have a small associated fee. These may include your seller’s permit. 

In Closing

Registering an LLC and other fees that you will encounter vary by state. In general, you won’t spend more than several hundred dollars, but the benefits of an LLC weigh out the costs.