In this article, we’re going to answer “How much does it cost to start an LLC?”
Not surprisingly, the answer is “it depends”…
More specifically, it depends on a number of different factors including where you plan to register, which services you require, your banking and payment processing needs, and more.
We’ll explore all of these factors to help you calculate how much it will cost to start an LLC below.
This article is part of our free series on corporate banking, specifically opening a business bank account for an LLC, which you can access using this link.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- How Much Does It Cost to Start an LLC?
- How to Start an LLC?
- Will an LLC Cost Differ Between States?
- Frequently Asked Questions
- Ready to Open Accounts With Banks in the USA?
How Much Does It Cost to Start an LLC?
How much it costs to start an LLC will depend on where you register, your chosen service provider, and if you require specific banking or payment processing services. In most cases, LLC registration can be completed for between $200 to $800. And, ongoing annual maintenance costs typically range between $300 to $500.
Importantly, there is a wide range of service providers available that cater to both residents and non-residents looking to start an LLC. In most cases, state residents can start an LLC without the help of service providers, including by acting as their registered agents. However, non-residents of US states are not permitted to be their own resident agents. In other words, resident agents must be local individuals or companies.
Many online service providers offer competitive pricing that includes all of the necessary services to start, run, and maintain your US LLC. This is true regardless of the state where you’re considering registering. In the next section of the article, we’ll take a closer look at how the costs to start an LLC differ between certain states.
But first, it’s important to note that any US corporation with 25% or more foreign ownership that has a reportable transaction during a tax year must file the appropriate documents, including Form 5472. We share the Form 5472 instructions at the link above.
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Will an LLC Cost Differ Between States?
Yes, LLC costs differ between states. However, the cost differences extend beyond the cost to start an LLC and also include differences in the costs to maintain an LLC. Additionally, the taxes that are imposed on an LLC vary from state to state.
Of course, if you’re planning on operating an LLC locally as a resident, you will need to register with the relevant Secretary of State. This is true whether your LLC is originally registered in the state where you plan to operate or not. For your reference, LLCs that are originally registered in one state but operate in another are referred to as “foreign LLCs”.
That said, foreign non-residents looking to register a non-resident US LLC can choose to register in whichever state they like. With this in mind, we’re going to explore a few of the high-level cost differences between two of the most popular states for foreign non-residents below.
Popular States for Registering US LLCs + Costs
It’s important to note that service provider fees are in addition to the state fees referenced below and will vary depending on the provider you choose.
How Much Does it Cost to Start an LLC in Wyoming?
- Articles of Organization: $100
- Annual Report: $60
- Annual State Taxes: $0 minimum for FOSM US LLC
- Annual Federal Taxes: Depends on the business activities
- Total Annual Cost: $60 minimum
How Much Does it Cost to Start an LLC in Delaware?
- Certificate of Formation: $90
- Annual Business License: $75 minimum
- Annual State Taxes: $300 minimum for FOSM US LLC
- Annual Federal Taxes: Depends on the business activities
- Total Annual Cost: $375 minimum
As mentioned, these two cost breakdowns do not include the costs related to your registered agent, accounting and tax filings, mail forwarding, address, or phone number.
To help you navigate all the extra costs, here’s a list of all the applicable LLC formation and maintenance costs you’ll need to consider.
Determine the LLC Formation Costs & Other LLC Costs
LLC State Formation Costs
The following are examples of the basic costs you should expect when registering a US LLC as a foreign non-resident.
- LLC Formation (State)
- Annual Report (State)
- Annual License (State)
- Annual State Taxes (State)
- Annual Federal Taxes (Federal)
Other LLC Formation & Maintenance Costs
The following costs are relevant for both the formation of a US LLC and operating the LLC from abroad.
- Registered Agent
- Registered Address
- Accounting & Tax Filing
- Mail Forwarding
- Local Business Address
- Local Phone Number
Costs to Obtain Required Documents
The following documents can sometimes be requested by banks and prospective business partners, which typically come at an extra cost.
- Certified Copy of State Filings
- Certificate of Good Standing
- Proof of Registered Address
How to Set up an LLC Formation
To set up an LLC in the US, you first need to decide on the state of formation. Then, you’ll need to follow a number of steps in order to complete the process. For most foreign non-residents, the first step is selecting a service provider. Then, they’ll be able to begin the process of forming your US LLC.
The Process of Setting Up a US LLC Includes:
- Choosing a registered agent to form your US LLC
- Paying the necessary fee to start the process
- Selecting a name for your US LLC
- Providing all of the necessary documents
- Receiving confirmation of the formation
- Opening bank accounts and payment processing
- Meeting federal and state filing requirements
- Paying federal and state fees and taxes
Business License
In certain states, your LLC may be required to obtain a business license. However, it’s important to note that this is not a requirement in each US state. For example, if you choose to form an LLC in Delaware, you will need to pay an annual license fee of $75. However, if you form an LLC in Wyoming, no business license is required.
Operating Agreement
Operating agreements are standard in all states and are effectively the constitution of the LLC. In addition to identifying the ownership of an LLC, they also describe how the LLC intends to operate and the responsibilities of the LLC members.
Frequently Asked Questions
Below are three of the most common questions that we receive from people wondering how much it costs to start an LLC. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
Is It Possible to Set up an LLC for Free?
No, it is not possible to set up an LLC for free. All US states have filing fees that must be paid in order to register an LLC. Additionally, foreign non-residents (or non-residents of a particular state) will need to hire a local registered agent, which adds additional costs to forming and maintaining an LLC annually.
Is It Better to Have an LLC or Corporation?
Whether it is better to have an LLC or a Corporation depends on the purpose of the entity, the number and type of owners, and the expected activities of the business. One of the most commonly overlooked considerations is whether a business will be resident or non-resident and whether the business will have effectively connected income (ECI) or not. This is an important consideration if you are looking to register a US entity as a single foreign non-resident owner with no business activities in the United States.
What’s the Cheapest Way to Start an LLC?
The cheapest way to start an LLC as a resident of a state is to complete the filings yourself and act as your own registered agent. However, if you are a non-resident, the cheapest way will likely be to form an LLC in Wyoming and find the most cost-effective service provider available. In addition to being a low-cost state for LLC formation, Wyoming also offers enhanced privacy (quasi-anonymity), reduced filing requirements, and easy maintenance.
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In fact, GlobalBanks USA even helps non-resident US LLCs and foreign & offshore entities.
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