Are you ready to give your business ideas wings they need? Then you should consider forming an LLC. A Limited Liability Company (LLC) is a legal way to structure your business. The legal structure protects the personal assets of the owners (often called members) if the LLC gets sued or otherwise finds itself in financial trouble.
LLCs are something of hybrid entities. They offer the liability protection that is often seen in corporations. At the same time, they offer the flexibility and lack of formalities seen in partnerships or sole proprietorships.
It’s worth noting, while LLCs are good for running businesses, they’re also good for holding assets. It’s often a good idea to create an LLC to hold assets like real estate and vehicles.
How Can I Form An LLC?
Starting an LLC is comparatively easy. Given the lack of formalities involved, you only have to complete a few steps to form an LLC. The process is quick and you can have your shiny, new LLC in just a few days (for most states).
The key parts are choosing a name, appointing a registered agent (or what your state calls them), and filing the documents with the appropriate government department.
What Is The Cost Of Forming An LLC?
LLC costs vary, depending on the state. To put it simply, the cost of forming an LLC is largely the same as the filing fee the state requires. The exact numbers can vary. For example, Kentucky has the lowest filing fee at $40. On the other hand, Massachusetts is the most expensive state with a filing fee of $520.
It should be remembered that while the cost of formation is deeply associated with the cost of forming an LLC, it’s not the only option that matters. You’ll also have to consider relevant options like state taxes, business license requirements, and annual reports.
Also, the cost of forming an LLC shouldn’t be your sole motivation for registering the LLC in any state. Always remember that there are legal requirements and obligations to handle. So it’s always a good idea to form your LLC based on legitimate business requirements, not costs or perceived taxation benefits.
Costs And Obligations After Forming An LLC
The legal and monetary obligations of a business towards the state will continue even after the LLC has been formed. Generally these may include things like:
- Annual reports
- Taxes (state tax, franchise tax, etc.)
- Business permits and licensing costs
Most states don’t require you to fulfill all three of these obligations. For the most part, you’ll need to handle some of these requirements, depending on the state. While most states require an annual report, some states don’t. A few states make a small shift and might want LLCs to file biennial reports.
Many of these costs are recurring, so it’s important to include them in the cost calculations for forming your LLC.
Registered Agent Requirements
All states require every LLC to appoint an agent for the service of process. This agent serves as the point of contact between the state and the LLC. They’re expected to receive service of process (court documents like lawsuits, summons, etc.) on behalf of the LLC in case the company gets sued.
This agent can be a person or a business entity. Most states use the term “Registered Agent”, though some might call them “Resident Agent” or similar names.
If you choose to hire a commercial registered agent for this role, their annual fee should be part of the cost assessment. It’s possible to do this job yourself or ask friends/family to do it, so you may not necessarily have to spend on a commercial agent.
Ready? Select A State Below And Learn How To Go About Forming Your LLC: