Cheap LLC filing – What you need to know!
Starting an LLC, just like any other type of business entity, will cost you money.
When starting a business, you already have a myriad of startup costs including basic supplies and equipment, perhaps an office space, operating costs, and more.
But before you can do all that, you first have to file your LLC and that also costs money.
If not properly accounted for, the cost of filing your LLC can start to eat up your startup budget that was supposed to be for business operations.
That’s why it’s important to know of ways to keep it at a minimum.
Here’s our Favorite Picks to get your going Immediately:
What’s an LLC – Brief Description
Before we start with ways to minimize the cost of filing an LLC though, let’s have a brief description of what an LLC is so that we can be sure that we’re on the same page.
An LLC is a type of business entity that combines certain aspects of a sole proprietorship or partnership and a corporation.
It enjoys a “pass-through entity” status just like a sole proprietorship or partnership and offers limited liability protection to its owner(s) just like a corporation.
It can be formed by one or more persons, which makes it suitable for almost all types of business ventures.
The filing fee for registering an LLC will vary from state to state.
The following table is a list of LLC filing fees per state:
|Alabama||$200 ($208 if online)|
|Georgia||$110 ($100 if online)|
|Idaho||$120 ($100 if online)|
|Minnesota||$135 ($155 if online)|
|Missouri||$105 ($50 if online)|
|Nebraska||$110 ($100 if online)|
|South Dakota||$165 ($150 if online)|
|Tennessee||$50.00 per member (minimum $300, maximum $3,000)|
|Washington||$180 ($200 if online)|
|Wisconsin||$170 ($130 if online)|
|Wyoming||$100 ($102 if online)|
Now that we know how much it costs to file an LLC, we’ll discuss how you can register your LLC at a cost that is the same as the filling fees above, or if not, be as close as possible.
The Do-It-Yourself Way
Okay. Let’s put it on the table.
The cheapest way to file an LLC is to do it yourself – provided that you know or at least have an idea of what you’re doing.
If you have no idea of what you’re doing, you may incur costs that you’re not supposed to.
Thankfully, we already live at an age where almost anything can be found online.
For example, there is this very article that you’re reading.
So how do you file an LLC the “do-it-yourself” way?
Step 1. Decide in which state you’ll be forming your LLC, preferably your home state.
But if you’re planning to operate in a different state, then you should form your LLC there.
Step 2. Decide on what you’ll name your LLC. Make sure that it’s available.
You can’t name an LLC that is the same or deceptively similar to the name of a qualified or an already existing LLC or other business entity.
Most states have a tool that can help you check if a name is available.
Step 3. Choose a registered agent.
You can either choose yourself or another person, preferably a registered agent service provider, to serve as your LLC’s registered agent.
The cheaper option is to choose yourself as your LLC’s registered agent, but whether it’s the best choice will depend on how well you know the functions of a registered agent.
To learn more about the risks of being your own registered agent, read our post: Risks of Being Your Own Registered Agent.
Step 4. Prepare your LLC’s operating agreement and make it in writing.
While this step can be skipped in most states, trust me when I say don’t skip this one.
You’ll be saving yourself a lot of headaches in the future.
If you have no idea how to write one, you can find templates online that will give you an idea of what should be included in an operating agreement.
(For reference, only five states require LLCs to have a written operating agreement: which are California, Delaware, Maine, Missouri, and New York.
In other states, if your LLC does not have a written operating agreement, then the LLC state laws will apply.)
Step 5. Lastly, file your LLC with the state. To do this, you need to file LLC charter documents (articles of organization, certificate of organization, or certificate of formation depending on the state) with the department that handles business filings.
It is usually the Secretary of State’s office.
All states allow you to form an LLC online, so if you can, do it online.
Aside from saving you transportation costs, the filing fee for online filing is usually cheaper if not the same as filing in person.
Use a legal assistant or incorporation service
Seeking the services of an attorney to form your LLC will probably- no, scratch.
It will definitely cost you tons of money.
If you’re only starting your business, you wouldn’t want to spend that kind of money on just registering your business.
Thankfully, there are several legal structure consultant companies that offer basic legal assistance for way less (we’re talking about as low as $25).
Even better is that you can reach them online, saving you not only money but also time.
These legal structure consultant companies specialize in building business structures of new business.
Although they do not totally substitute the legal advice of a lawyer, the legal assistance they officer is often enough for the formation of an LLC.
If you don’t want to file your LLC yourself, then using the incorporation services offered by several legal structure consultant companies is the cheapest option (the other is to let an attorney do it for you).
The following companies are commonly found in lists of recommended or best incorporation services:
- Northwest Registered Agent
- Inc Authority
- Rocket Lawyer
Filing in another state – will it save you money?
Take another look at the table above that lists LLC filing fees per state.
Did you notice that some states charge less than the other states?
For example, Kentucky only charges $40 while most of the other states charge at least $100.
Makes you think that it’ll be cheaper if you file your LLC in Kentucky huh? But is it really?
Well, the answer is – it depends.
For example, if you plan to have your LLC operate in Kentucky, then yes, it’ll be cheaper if you file your LLC there.
However, if you plan to file in Kentucky because it’s cheap, but will actually operate in another state, then it will cost you more.
See, if you file an LLC in a state other than where it would operate, you’ll have to file your LLC at least two times.
The first time you file your LLC is for it to exist as a legal entity.
The other is to foreign qualify your LLC in the state where it will operate.
Foreign qualifying your LLC itself comes with additional costs such as franchise taxes, income taxes, etc. along with additional paperwork.
All of these can outweigh the advantage of a cheaper filing fee.
So unless you’re planning to operate in the state where you’ll file it, filing in another state will not save you money.
In summary, the cheapest way to file an LCC is to do it yourself.
However, if you’re willing to pay more so that you don’t have to file it yourself, then using an incorporation service is the next cheapest way.
Lastly, filing in another state isn’t always cost-saving.
It only is if you plan to you’re your LLC operate in that state too.
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