How to Form an LLC for Cheap

How to Form an LLC for Cheap

by Belle Wong, J.D., March 2015

Deciding to form an LLC is one of the first steps you’ll take in forming your business, and like many new business owners, costs may be an issue. When you haven’t started making any money yet, you need to watch your seed capital diligently. Are there ways for you to form an LLC for cheap?

How to Form an LLC: The Do-It-Yourself Way

Depending on the LLC filing fees charged by your state, filing your own incorporation statements may be the cheapest way to form an LLC. For LLCs, incorporation statements are generally the articles of organization, although the name of the document can vary depending on your state. Many states have the necessary forms for filing available online for you to download, and some states also allow you to form an LLC online. These forms are generally fairly straight-forward to fill out, and the filing procedure, whether you’re filing online, by mail or in person, should not be too complicated.

Use an Incorporation Service

If you’d prefer not to file the papers for your LLC yourself, an incorporation service may be another option for cheap LLC formation. There are many companies online which specialize in helping people incorporate or form an LLC. However, while these companies can provide you with assistance in forming an LLC, it’s always wise to remember they will not be able to provide you with true legal advice.

Can You Save More by Filing in Another State?

Because LLC filing fees and other related fees and service charges vary from state to state, another option is to form your LLC in another state which offers cheap LLC filing fees. However, the lower filing fees may not compensate for other costs that might be associated with forming your LLC in a state other than the one in which you reside and plan to carry on business. For example, if your new business will be a local one, with the majority of your clients or customers coming from within your state, and you decide to form your LLC in another state, you will have to obtain foreign qualification in your home state. This means additional fees and additional paperwork which may outweigh the benefits of a cheaper initial filing fee.

There will likely also be important tax implications to forming your LLC in another state. In addition to corporate income taxes, you may have to deal with a variety of other taxes, such as franchise taxes, sales taxes, employment taxes or property taxes. Assessing a state’s various tax requirements and comparing them to the taxes collected by your home state can be a complicated process, one for which you may want to engage the services of a tax professional to help determine whether filing in another state is the right choice for you.

When you’re in the start-up phase, costs can be a major challenge. Finding ways to lower your start-up costs can help you keep your cash available for other necessary costs, such as developing your LLC’s operating agreement.

If you need help starting an LLC, LegalZoom offers LLC formation services at an affordable price. When you form an LLC through LegalZoom, you will receive a personalized operating agreement and provisions to safeguard your personal assets.

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