The total cost of forming a limited liability company (LLC) depends upon several factors; the primary factor that will determine your total cost is your ability to file documents on your own. The use of attorneys and third party filing agents will greatly increase the cost of setting up an LLC. However, business owners who have a limited understanding of what is required in forming an LLC as well as the benefits and detriments of this legal business entity should consult with a professional.
The first step in forming an LLC is selecting a name for your organisation. The name must be different from any other business that has subsequently registered with your state. To ensure that your business name is unique, you will need to search your state's business name database. In many states, a searchable database is available online at the Secretary of State website. An attorney or business consulting company will also perform the name search for you. Having a third party perform this task will likely cost between £16 and £65, as of January 2011.
To form an LLC in your state you must file an "Articles of Organization" form with the Secretary of State. This form can generally be obtained by either contacting the Secretary of State's office or downloading the form from the secretary's website. If you complete the form yourself, your total cost will consist of the filing fee that is required by your state. The majority of filing fees for an LLC range from £65 to £162, depending upon the state. If you hire an attorney or business consultant to draft your Articles of Organization you can expect to pay an additional £32 to £325, depending upon the rates of the drafter. (Estimated fees are as of January 2011.)
Some states require limited liability companies to create an operating agreement that sets forth the rights and obligations of the members of the organisation. If your state does not require an operating agreement for formation, consider having one drafted for your company, especially if your LLC consists of more than one member. If you enlist the services of an attorney to draft your operating agreement you can expect to pay between £130 and £975 depending upon the complexity of the agreement. You may also choose to use a non-attorney business service as an alternative. The average price for such services ranges from £65 to £130. (Estimated fees are as of January 2011.)
Employer Identification Number
Limited liability companies that intend on hiring employees or elect to be taxed as a corporation will need to obtain an Employer Identification Number (EIN) from the Internal Revenue Service. It is recommended that single member LLCs obtain an EIN as well so that they do not need to provide their own Social Security numbers to lenders, banks and vendors. An EIN can be obtained for free by contacting the IRS. An attorney or accountant can obtain an EIN for you for an additional fee.
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