The first step of forming an LLC is understanding what it means
If you’re looking to protect your business then an LLC is the way to go. LLC simply means Limited Liability Company. An LLC business structure can only be secured in the United States. Furthermore, the company’s debts and liabilities are not held liable by the owners and it allows the owners to protect their assets. Just like any other business an LLC can have up to several members which is known as a multi-member LLC. The characteristics which an LLC have are combined with a corporation, partnership or even a sole proprietorship. Furthermore, the regulations regarding an LLC differ depending on each state. Keep in mind that not every company or organisation can form an LLC this includes banks or even insurance companies. Even though it may be easy to form an LLC there are also costs involved.
What are the costs incurred when forming an LLC?
Just like the regulations may differ from state to state, the costs of forming an LLC may differ depending on the state. The minimal payable amount for forming an LLC can start from $50 or even $500. Furthermore, the annual maintenance of an LLC can amount to $100 keeping in mind that the amount may increase if professional services are used as a lawyer. The costs of an LLC are sometimes itemised depending on which package is chosen in the process of forming an LLC. On the other hand, the costs may also include the names available for the usage of the LLC.
All the important steps you need to know when forming an LLC
The name getting verified is the first step. Once the name is selected the articles of the organisation need to be filed. The filing for each may differ but, it costs from $50 up to $800. Once the articles have been filed there is a publication process that takes place. The publication is when a statement needs to be published which can range from $40 to $2000 and is all dependent on the state. Once the publication has taken place an affidavit of the publication needs to be filed with the state.
Once the LLC is formed an operational agreement document needs to be created which sums up the way the LLC does business and how the profits and losses will be divided amongst its members. Luckily, this document does not need to be filed by the state but needs to be kept safe at the business premises of the LLC. The fee to create this document can amount to $99.
Are there additional costs incurred when forming an LLC?
For tax purposes of the LLC, an Employer Identification Number (EIN) also forms part of the costs to form an LLC. Furthermore, once the LLC is up and running it will have ongoing costs to maintain the LLC. In some states, the LLC will be required to pay an annual franchise tax which usually costs $800 yearly however, in states like Delaware it amounts to $250 every year. A reporting fee is also required yearly, and in states like New York the fees tend to increase depending on the number of members in the LLC. The minimal amount can cost $325 and the most you can pay for the annual franchise fee can be $1000. On the other hand, compliance may not have a payable fee but, to stay compliant, the filings of the LLC need to be up to date. Before you even start digging into your pockets there are five crucial steps needed when starting an LLC. Learn more here: what is an LLC.
