How Much Does an LLC Cost?

An LLC is a popular business entity for many small companies because of its low cost structure, low tax benefits, and little liability for the owners. However, forming and sustaining an LLC comes with certain expenses. In this article, we’ll discuss some of these costs and why they’re worthwhile.

• The largest fee associated with an LLC is the annual license fee. This fee covers the legal expense of registering the LLC and paying the state taxes on the business. The annual fee also includes a prorated amount of the accountant’s fee and a filing fee for the corporate form. If your business has partners, there may be separate annual fees for each partner.
• The second largest fee associated with the formation of an LLC is the filing fee. Although you can usually save money on filing fees by contacting several attorneys, this strategy often results in several consultation fees that must be paid. In addition to hiring an attorney, you’ll need to hire a bookkeeper or a payroll service to handle the accounting and financial responsibilities of the LLC. These two fees are not included in the annual fee.
• One reason why some business owners aren’t compelled to pay the full details of their LLC is because they don’t want to disclose certain business-related information regarding their operation. Similarly, some individuals don’t want to pay the filing fees because they want to make sure that their LLC is completely legal and doesn’t violate any state laws. Regardless of your reasons for avoiding full disclosure of LLC information, it’s still important to make sure that you understand the ins and outs of your new business entity.
• While many entrepreneurs avoid the extra paperwork because they believe that filing an LLC will cost them more money than they’re willing to spend, there could be a justification for not paying the state filing fees. One example of this rationale comes from the time-consuming nature of incorporating an LLC. If you’re planning to incorporate your business without spending the time and money required by incorporating an S-Corp, you may need to look into professional incorporation services. Some services provide a free initial consultation, which allows you to get a better understanding of how the formation process works before committing to paying additional fees. Because a business can’t run itself, an LLC requires a lot of time and attention to detail.

It’s also important to understand what penalties might be incurred if you neglect to register your LLC. Anytime that you incorporate a business, you must file a state report of information (IRS Form 1040). This must be filed within two weeks of the filing of your business name reservation. Your filing fee applies to the first such filing. If you later forget or don’t properly file your report, the state agency will issue a fine. The penalties for late filings are in addition to the actual fees you pay for incorporating your LLC.