LLC Expenses: Costs to Maintain an LLC in the US

When starting a business, like an LLC, one of the first questions that comes to mind is about the costs. Is it really worth the investment? When and where do I have to spend money to maintain my company? This is also quite important to consider if you’re thinking about starting a business in the US, whether you live there or not.

Both direct and indirect fees vary from state to state. Often entrepreneurs get confused about what to pay for and how much it costs to maintain an LLC in the US. In this guide, I will discuss the average cost associated with starting and maintaining an LLC.

Shall we begin?

Understanding the Cost of Forming an LLC

When thinking about the benefits of personal protection from business debts and liabilities, small business owners often choose LLCs for greater operating flexibility. This business structure is relatively affordable to establish compared to other startup costs.

Understanding the cost of forming an LLC may influence the decision on which state in the US you want to form your business. This cost can vary depending on several factors from state to state, including both direct and indirect costs. Some of these are initial obligatory and others are optional.

For example, you might have to include a foreign LLC registration fee in your list of operating expenses if you choose to register your LLC in another state different from the one where your company is now located.

Why It’s Important to Learn about LLC Cost 2024?

You might be wondering why it’s important to learn the costs of maintaining an LLC in the US, right? Take a look to get your answer:

• Making Decisions: Understanding the cost of maintaining an LLC is necessary for making informed business decisions. When you are aware of the advantages of a course of action against its associated costs, you can make the decision as objectively as possible.
  
  
• Assess Profitability: When you are aware of the costs of maintaining an LLC, you can determine the business’s profitability state-wise. You can also decide which state is best for the business formation and registration, as well as select the best LLC services according to your budget.
  
  
• Clear Picture: Knowing about the costs of maintaining an LLC can help you create an accurate business plan. Your decisions will be better when you have a clear and precise prediction.
  
  
• Prioritizing Investment: You may prioritize your investments and make sure you focus on actions that return the highest value first by knowing the costs to maintain an LLC in the US.

How Much Does It Cost to Start an LLC?

Before moving to our main topic, it’s better to have a clear idea of which method you will choose to set up a limited liability company (LLC) in the US as a resident or a non-resident. The options you choose here can significantly impact both your initial spending and how smoothly the process goes.

Setup Options

When deciding to start an LLC, the very first stage is choosing setup options for how you want to form your business.

• Do It Yourself (DIY): When setting up an LLC, choosing the DIY route can save you money upfront. But in this case, you need to handle all the complicated paperwork, from filing the Articles of Organization to creating an operating agreement yourself that may cost you amounts state-wise. Make sure to research the requirements thoroughly or consult resources to avoid common pitfalls.
  
  
• Using an Online Service: Many entrepreneurs opt for online LLC formation services. These services often provide a middle ground between DIY and professional assistance. They can help you file the necessary documents and may offer additional services like registered agent services or operating agreements. Though the fees range from $169 to over $1000 in Business Globalizer according to your needs and choices, our experts will ensure everything is done correctly.
  
  
• Hiring an Attorney: Hiring a professional service or attorney can simplify the process. When you hire dedicated attorneys, they will handle all the paperwork and ensure compliance with state laws. In fact, often they offer additional services like registered agent representations. While this setup option is quite expensive, it can save you time and stress.

Now that we’ve covered the setup options, let’s move on to the main topic: the initial costs associated with starting your LLC.

Initial Costs to Start an LLC in the US

When you form an LLC, there are several key expenses you will need to budget for. For your better understanding, I will give you a clear breakdown of the initial costs you may expect:

1. State Filing Fees

When starting an LLC in the US, the first and most unavoidable cost is the state filing fee. Filing the Articles of Organization with the state is a mandatory step you can’t skip. This fee varies differently depending on the state in which you are going to form and register your LLC. Such as, if you go for Kentucky, it might be about $50. On the other hand, Massachusetts will cost around $500.

Note: The tagged price list is based on the present database. You must check the specific state’s fee while forming your limited liability company.

2. Name Reservation Fees

A business name is crucial for any kind of business entity for its identity both in local and global markets. LLC isn’t also different from these. You will need to choose a unique business name before you can officially file your LLC. There are opportunities to reserve your name with the name reservation service in some states. This usually costs up to $50 based on the state.

Note: Though this step is optional, it’s useful for utilizing your estimated time to complete your LLC formation.

3. Registered Agent Fees

When starting an LLC, every limited liability company needs a registered agent who is responsible for receiving legal documents on behalf of the company. If you are a resident who associates with the LLC—such as a director or officer and available during standard business hours—you can act as your own registered agent in some states of the United States.

Non-residents need to appoint a professional registered agent service who may charge between $100 and $300 per year. Hiring a professional registered agent service can ensure your legal compliance with smooth operations and solid privacy.

4. Operating Agreement

An operating agreement for an LLC is crucial for outlining the ownership and management structure of the business, which helps to prevent future disputes among members. You can make this agreement yourself at no cost, or you can choose an attorney to draft one. Hiring an attorney may cost you between $200 and $1000, depending on the complexity of your business.

5. Obtaining an EIN Registration

Non-residents or individuals—who aren’t eligible for Social Security Numbers but are going to start an LLC in the US—who want to hire employees, file taxes, or open a business bank account will need to obtain an Employer Identification Number (EIN).

The good news is that getting an EIN is free if you apply by yourself for this to the IRS. But in this case, you may face complexity and make mistakes. To avoid these, it’s wise to appoint a US company formation service, an IRS-Certified Acceptance Agent like Business Globalizer. They may charge a specific fee for handling the process on your behalf.

6. State-Specific Publication Fees

When forming an LLC (limited liability company), you must check the state’s specific requirements to see whether you need to publish a notice of your LLC formation in a local newspaper. This may cost you between $40 and $2000, depending on publication and the state’s requirements.

Note: At the moment I am writing this guide, Arizona, New York, and Nebraska are the states that charge fees and have publication requirements for LLCs in the formation stage.

7. Business Licenses and Permit fees

When starting a limited liability company, ensure you have all the necessary licenses or permits upfront, depending on your business type and location, to operate legally—which costs can vary widely from $50 to several hundred dollars. This will save you from future fines and legal trouble down the road.

Ongoing Costs to Maintain an LLC in the US

Once your LLC is formed and operating, there are many ongoing costs to keep your business in good standing with the state. Here are some of the common expenses you need to be prepared for:

1. Annual or Biennial Report Fees

When running an LLC in the US, most states require you to file an annual report to keep the business information up to date—such as the business address, registered agent, and member. If LLCs fail to file the annual report on time, this can result in penalties and dissolution. The annual fee may vary from state to state and typically ranges from $20 to $500.

2. Taxes

Whether your LLC is set up as a sole proprietorship, partnership, S-corp, C-corp, or another entity will determine what taxes it must pay. You might be required to pay state and local taxes—such as income tax, employment tax, and sales tax—in addition to federal taxes. These costs may vary widely based on the location you operate and the income you make for your LLC. It’s wise to consult a business legal expert or tax attorney to understand your tax obligations.

3. Franchise Taxes

Certain states impose a franchise tax on LLCs, which can be a flat fee or based on income. This is essentially a fee for the privilege of operating your LLC in those states. For example, California has an annual minimum franchise tax of $800, while Texas charges a franchise tax based on your revenue.

4. Registered Agent Fees (Ongoing)

If you use a professional legal registered agent service, you’ll need to pay the annual fee, typically between $100 and $300, as mentioned earlier. This ongoing expense ensures you remain compliant and receive important documents promptly.

5. Business License Renewals

You will need to renew your business licenses and permits annually, just like when you first started your LLC. The renewal fees vary in the cost range of $20 to $500 depending on your location and industry, so it’s important to keep track of when your licenses need to be renewed to avoid penalties.

6. Additional Compliance Costs

Maintaining an LLC might also involve legal and accounting services to ensure you’re complying with state laws, handling taxes correctly, and managing any other business issues that arise. These costs can vary widely depending on the complexity of your business and the services you require. They are necessary to protect your business and ensure smooth operations.

Optional LLC Fees

While some costs are mandatory to start and maintain an LLC, others are optional but may become necessary depending on your business needs. These optional costs can include hiring an LLC formation service, registering a “Doing Business As” (DBA) name, obtaining certified copies of your business documents, or securing a certificate of good standing.

DBA or FBN Registration

Your LLC’s legal name is what you file with the state, but that doesn’t mean you have to operate under that name exclusively. If you prefer to do business under a different name, you can register a “Doing Business As” (DBA) or “Fictitious Business Name” (FBN). These allow you to market your business under a more consumer-friendly name. Costs for filing a DBA or FBN vary by state.

Note: At the moment I am writing this guide, Virginia charges $10, while California’s fees range from $25 to $50, depending on the county. Some states, like New Mexico, don’t require or allow DBA registration at all.

Certified Copies of Business Documents

Certified copies of your business documents are often required for tasks like opening a bank account or applying for business funding. The fees for these copies vary by state. For example, Florida charges $30, Delaware charges $30, while in Colorado, the service is free. You can typically request these documents online or by mail, depending on the state’s process.

Certificate of Good Standing

A certificate of good standing sometimes called a certificate of status, is a legal document proving that your LLC is properly registered and in compliance with state regulations. You might need this certificate for various business activities, such as securing financing or entering into contracts.

The cost varies by state; for instance, Virginia charges $6, and Wisconsin adds a small fee of $0.25 per page in addition to a $10 base fee.

Registering a Foreign LLC

A foreign LLC is not what it sounds like—it’s actually an LLC formed in one state but moved to register business in another. The costs to register a foreign LLC differ from state to state. For example, registering in Delaware will cost you $200, while in Florida, the fee is $100.

LLC Cost by State as of 9, 2024

At this point, you are aware that costs to maintain an LLC in the US vary from state to state in the US. Among all these I discuss above, certain things like reserving your LLC name are optional, while others like state filing fees are unavoidable.

A table summarizes these costs, including state filing fees and any required annual fees, which are necessary for maintaining your LLC in compliance with state regulations:

Note: Remember, these fees may change over time. With our US company formation service, you can form your LLC smoothly, where your overall expenditures will be lower and you will have more money for those essential extras! Some of these include business names, registered agents, and, of course, basic tax consultancy by following state compliance.

FAQs

Q1: Does my LLC need to be renewed annually?

Answer: Yes, you must pay a charge ranging from $0 to $800 to renew your LLC every year or every two years in the majority of states.

Q2: Can I form an LLC by myself?

Answer: Yes, you can create an LLC on your own, but employing a formation provider can save errors and offer more assistance.

Q3: Is obtaining a DBA for my LLC required?

Answer: You only need a DBA if you wish to conduct business using a name other than the registered name of your LLC.

Q4: How much does an LLC cost per year for non-residents?

Answer: The costs associated with LLCs per year for non-residents in the US mainly depend on the state where you are running your LLC and the company formation services and registered agent you choose to work on behalf of.

Final Words

In a nutshell, if you want to plan a successful business, it’s important to know how much it costs to maintain an LLC in the US. When you have a clear idea of both initial and ongoing expenses to maintain an LLC, you can make choices to reach your financial goal effectively.

Whether you are starting a new limited liability company or handling an old one, keeping up-to-date knowledge about the costs is important to keep your business legal and profitable.