How to Form an LLC for Cheap by Belle Wong, J.D.

How to Form an LLC for Cheap

During the start-up phase of your business, start-up costs can be a major challenge. One of the ways you can watch your costs is by forming an LLC for cheap.

by Belle Wong, J.D.
updated June 07, 2021 ·  2min read

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, you need to watch your seed capital diligently. Fortunately, LLC formation doesn't need to be one of the big-ticket items on your budget.

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, and many states also allow you to form an LLC online.

These forms are generally fairly straightforward 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 inexpensive 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 make up for the additional costs of forming your LLC in another state. For example, if your new business will be a local one, with most 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 also be tax implications of forming your LLC in another state. In addition to corporate income taxes, you will have to deal with various other taxes, including franchise taxes, sales taxes, employment taxes, and 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. A tax professional can help you 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.

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Belle Wong, J.D.

About the Author

Belle Wong, J.D.

Belle Wong, J.D., is a freelance writer specializing in small business, personal finance, and marketing topics. Connect … Read more