One of the most common questions I get from entrepreneurs looking to incorporate their business is, "How much does it cost to incorporate?"
If you’re looking to find out how much it’ll cost you to incorporate, you are on the right page…
Many business owners and entrepreneurs assume that the cost to incorporate a company is high, but the costs of incorporation are not typically excessive.
Before I go into detail about how much business formation services cost, only after we discuss your specific situation can I give an exact estimation of how much the service for you.
So if you have any questions about how much it’ll cost to incorporate specifically for your situation, please email me.
The cost to incorporate depends on 8 factors...
1. Filing Fee for Filing Articles of Organization (for LLCs) or Articles of Incorporation (for Corporations)
To start a new LLC or Corporation, you have to file Articles of Organization (also called Certificate of Formation) for an LLC or file Articles of Incorporation (also called Certificate of Incorporation) for a Corporation with the Secretary of State.
Every state has its own filing fee.
So the filing fee for filing the Articles of Organization or Articles of Incorporation will depend on which state you will be incorporating in.
Typically, filing fees for Secretary of State filing fees are between $50 and $800, depending on the state in which the business is incorporation.
You can determine how much your state charges for filing fees by Google’ing "Articles of Organization [your state] filing fee" for LLCs or "Articles of Incorporation [your desired state] filing fee."
2. Annual Franchise Tax Fees
After you incorporate, there are ongoing yearly fees of maintaining the LLC or Corporation.
Typically, LLCs and Corporations have to pay an annual franchise tax from $200 to $1,000 for having the privilege of doing business as an LLC or Corporation in that particular state.
Note that not all states, such as Nevada, charge this tax making it more attractive for business owners.
In California, every LLC or Corporation must, after its first taxable year, pay an annual franchise tax at a minimum of of $800.
Delaware has a similar rule, though the amount of the minimum franchise tax is lower ($175, plus the annual report filing fee of $50, for a $225 minimum).
Note that these are the minimums if you pay your taxes on time. If you pay late, or not at all, you can be liable for some substantial penalties.
3. Service & Attorney’s Fees For Incorporation
It is usually highly recommended to hire an experienced business lawyer to incorporate on your behalf.
When business owners try to incorporate on their own, they make mistakes that does not hold up in court if the business is put under legal inquiry.
Typically, we charge a flat-rate service fee for incorporating an LLC or Corporation.
LLCs are typically more cost-effective, ranging from $500 to $900 and Corporations are between $1,000 an $1,200 and S-Corporations are around $1,500.
The service for incorporating includes filing the required necessary forms and documents with the Secretary of State and providing the necessary documents that are required for incorporation to the business owners.
At MollaeiLaw.com, we’ve worked hard to keep the cost to incorporate a business very cost-effective. You’ll find our services to be very affordable, and much less confusing than trying to do it yourself.
Looking to incorporate your business? Email me.
4. Other Ongoing Costs (Depending on State)
Nearly all states have an annual reporting obligation.
These annual reports are sometimes required, depending on which state you will be incorporating your business.
In California, a Statement of Information must be filed annually (for a Corporation), or bi-annually (for a LLC) with the Secretary of State if you are doing business in California.
Check with a business lawyer to determine other ongoing costs.
5. Publication Fees (Only for Some States, i.e. New York)
Some states, most notably New York, require a statement of formation to be published in one or more newspapers that operate in the county in which you choose to form.
In New York, §206 of the Limited Liability Company Law requires an LLC to publish, within 120 days of its formation, a notice in two general-circulation newspapers (one daily, one weekly) in the county where the LLC was formed.
The notice must run once a week for six weeks and include a number of facts concerning the company and its formation. If an LLC doesn’t fulfill the publication requirements, the company’s authority to do business in New York can be suspended.
While we can’t advise you to ignore the law, we can tell you that some research hasn’t revealed a single case in which an LLC suffered any negative consequences because it failed to comply with the New York LLC publication requirement. Check with your business lawyer regarding this.
Publication fees can range in price between $40 to $800, depending on the state, county, and the number of weeks the run is required.
After publication, a certificate or affidavit of publication must be filed with the state.
6. Operating Agreement
Operating Agreement which is an agreement between the members of the LLC or Corporation that details the management and operations of your business. This is a necessary document for your business to get personal liability protection.
An operating agreement is needed to describe your LLC's way of doing business and the division of profits and losses among members. This form is generally not required to be filed with the state, but should be kept at your main business location.
Operating Agreement costs typically between $100 to $1,000.
If you need an Operating Agreement, let me know.
7. Employer Identification Number (EIN)
Employer Identification Number (EIN) is a number issued by the Internal Revenue Service (IRS) to identify a business. Think of an EIN as the social security number for your business.
Just as a social security number is important for U.S. citizens to have, an EIN is necessary for a business to lawfully conduct business in United States.
If you have a U.S. Social Security Number (SSN), you may apply for your EIN here.
➡ However, if you need an EIN but do NOT have a U.S. Social Security Number, feel free to contact me at firstname.lastname@example.org and I can help you get your EIN.
8. Rush Service Fees (Depending on State)
Typically, most states will offer rush service for incorporation.
Standard turnaround time for incorporating an LLC or Corporation will depend on each state but it typically takes 1 to 4 weeks.
However, some states offer rush incorporation service in as short as same-day incorporation service, ranging from $50 to $800.
Incorporation Fees by State
States vary when it comes to formation and annual report fees.
While it's tempting to choose the lowest costs available, keep in mind that the cheapest state to form an LLC or a Corporation won’t necessarily save you money.
When you incorporate in one state and then are physically located or do business in another state, you’ll need to register in the other state as well. And that means paying those state filing fees and taxes.
Below is a compilation of the incorporation costs and the annual maintenance fees for each state. Keep in mind this data is current as of January 2017 and is subject to change...
How Much Does it Cost to Incorporate in California (CA)
In California, the cost to incorporate and file an LLC is $70 and the filing fee for a Corporation is $100.
Then, within 90 days after filing the LLC or Corporation (and bi-annually after that for LLCs and annually for Corporations), the business must also file a Statement of Information, setting forth certain specified information, including the LLC’s designated agent for service of process in the state. The filing fee for the Initial Statement of Information is $20.
Also, in California, every LLC and Corporation has to pay an annual minimum tax of $800 to The California Franchise Tax Board for every year that they are in business. Technically, the $800 minimum tax prepayment is due by the 15th day of the 4th month after formation.
The next tax year, the $800 minimum tax is due on April 15. So if you form an LLC or Corporation on December 1, and you file taxes on a calendar year basis, the $800 minimum tax is due by March 15. Another $800 payment would be due again on April 15.
How Much Does It Cost to Incorporate a Business in Texas (TX)
In Texas, the LLC filing fees is $310 and the LLC Annual Report will depend on gross annual revenue).
In Texas, Incorporation filing fees is $310 and the Corporation Annual Report will again depend on gross annual revenue.
How Much Does it Cost to Incorporate in Illinois (IL)
In Illinois, the cost to incorporate an LLC is $500 and the LLC Annual Report is $305.
In Illinois, the cost to incorporate and form a Corporation is $175 and Corporation Annual Report is $155.
How Much Does it Cost to Incorporate in Pennsylvania (PA)
In Pennsylvania, the cost to incorporate an LLC is $125 and there is no LLC Annual Report.
In Pennsylvania, the cost to incorporation a Corporation is $125 and there is no Corporation Annual Report $0 but the incorporation Publication fees is $299.
How Much Does it Cost to Incorporate in Florida (FL)
In Florida, the cost to incorporate an LLC is $155 and the LLC Annual Report is approximately $139.
In Florida, the cost to incorporate a Corporation is $79 and the Corporation Annual Report is $150.
If you are in another state, contact me and I will let you know how much it costs to incorporate in your state.
Looking to Incorporate Your Business?
As a leading incorporation service company of incorporating businesses, I have the experience to guide you through the process one step at a time while keeping the cost to incorporate your company as low as possible.