The cost of starting an LLC can vary significantly. The costs are broken down into two main categories: startup fees and ongoing expenses.
State filing fees are the first major initial cost to consider. These vary by state, but they can be a big factor when it comes to your startup costs.
Articles of organization
To start an LLC, you need to file articles of organization with your state. This is an official document that outlines basic details about your business, such as its purpose and the names of its members.
Each state has a specific set of rules for filing articles, so it’s important to understand the laws in your state before you begin. It also helps to consult a lawyer who specializes in this area of law.
The information you need to include in the articles of organization varies by state, but it generally includes the name and address of your company’s principal location, the company’s purpose, and the registered agent’s details (name, street address and email). It’s also important to note that some states require a description of what types of services your LLC will provide.
Most states require that one of the founders sign and date the documents, although some states allow other people to do this as well. Additionally, some states require you to indicate whether your LLC is member-managed or manager-managed.
Registered agent service
A registered agent is the individual or business entity who receives all official legal and tax documents on behalf of a business. You can choose to be your own registered agent, or you can hire a service to do the work for you.
The registered agent’s role sounds simple, but it can be complex and time-sensitive. For example, if a court sends your business a lawsuit notice or subpoena, the agent must forward that information to you promptly so that you can respond in a timely manner.
Moreover, it’s important that the registered agent is available at your company’s principal address during normal business hours. If you operate a home-based business, have an unpredictable schedule, or don’t live or work at the same place every day, it can be challenging to fulfill this requirement.
Luckily, many professional registered agent services are available at affordable rates and provide worry-free compliance. Several of our favorite options include ZenBusiness, Northwest, and Incfile.
Annual report filing
An annual report is a document that provides updated information about your LLC. This is important for things like government correspondence, lawsuits and more.
The filing process itself isn’t difficult, but it can be time-consuming if you’re required to file in multiple states. Fortunately, some service providers offer managed annual report services.
These companies are experts in compliance and can take care of all your reporting needs. They also track due dates and ensure you file on time.
For example, Harbor Compliance is a national compliance firm that offers a managed annual report service for LLCs at an affordable price. They’ll contact you before the deadline and ensure your reports are filed on time.
While it might seem like an unnecessary cost, not filing your annual report in a timely manner can lead to serious consequences, including administrative dissolution of your LLC by the Secretary of State. This could affect your company’s ability to secure loans and may cause potential buyers or creditors to avoid doing business with you.
Franchise tax
If you want to start an LLC in New York, you must pay the franchise tax. The tax applies to all business entities, including C corporations.
The franchise tax is also known as the corporate levy, and it’s one of the many taxes you’ll have to pay to the state. Other tax responsibilities include payroll and income taxes, as well as sales and use taxes.
Choosing an LLC can be a good move for your small business. It’s usually a cheaper alternative to forming a sole proprietorship or general partnership, and it doesn’t have as many compliance requirements as a corporation.
In addition, it can help you establish a higher level of credibility than a sole proprietorship or general partnership.
In most states, LLCs are treated as pass-through entities for income tax purposes. The LLC’s owners are not subject to state corporate or personal income taxes on the business’s profits, but they can elect to be taxed as a corporation instead.