An LLC is an easy form of corporate structure for your business to give you legal protection and professionalism when starting your business. In this post, we’ll look at what an LLC is, how to start an LLC in every state, and answer some common questions about LLCs.
What is an LLC?
An LLC, or Limited Liability Company, is a business structure designed to protect its owners’ assets. An LLC is a blended business structure, combining the tax simplification of a Sole Proprietorship with the structural advantages of Corporations and Partnerships.
Why an LLC?
Because of the hybrid structure of an LLC, you’re afforded some protections that you wouldn’t otherwise get with a Sole Proprietorship. On the one hand, the company’s debts and liabilities are not automatically the responsibility of the LLC’s owner or members. If the LLC goes out of business or enters bankruptcy, you and your assets may be protected. On the other hand, depending on how the LLC is taxed, the member (if a single-member LLC) sees all of the LLC’s income and profit appear on their tax return on Schedule C. Multi-member LLCs formed as a partnership see the revenue of the LLC distributed on paper via Form 1065, depending on the ownership percentages each member has.
Optionally, an LLC can elect to be taxed as a Corporation, in which case the LLC would complete standard corporation tax returns and be responsible for paying its members accordingly through wages and dividends. Check out this blog post on the differences.
How to Start an LLC: State by State
We’ve put together guides on registering an LLC in every U.S. state. Click your state below to get instructions specific to that state. Otherwise, keep reading, and we’ll talk about the general steps that go into LLC registration in every state.
Frequently Asked Questions
We’ve compiled a list of folks’ most common questions when they want to start an LLC in their state.
How much does it Cost to Start an LLC?
The costs for an LLC vary from state to state, starting as low as $50 to as much as $900, with two separate costs for each: the initial filing fee and the recurring fee. Most states have an annual recurring fee, while some are bi-annual. We’ve broken down the costs for the initial filing and recurring filing fees for each state in the table below.
|State||Initial Filing Fee||Report Filing Fee||Notes|
|Arizona||$50||N/A||No regular reporting is required.|
|Missouri||$50||N/A||No regular reporting is required.|
|New Mexico||$50||N/A||No regular reporting is required.|
|Ohio||$99||N/A||No regular reporting is required.|
|South Carolina||$110||N/A||No regular reporting is required.|
|Texas||$300||$0||for most LLCs|
|The District of Columbia||$100||$60|
Which State Should I Form My LLC In?
While there’s an allure to registering in business-friendly states like Wyoming and Delaware, generally, we recommend forming the LLC where you’ll be doing business or reside. If your LLC was formed in a different state than you lived or worked in, many states have “foreign entity” requirements that would mandate you to register with your home state, anyway. This leads to duplicate effort, costs, and headaches.
What is a Registered Agent?
When registering and maintaining your LLC, a registered agent represents you before the State in matters about your LLC. It is not necessary, but strongly advised, to use a registered agent. Your Registered Agent receives any court documents, or other legal papers served on your company promptly, ensuring that your company complies with the law and operates lawfully. Having a registered agent also guarantees that your contact details, such as your home address and phone number, are omitted from the court filings. Remember that the paperwork submitted to the Secretary of State is public information. You’d be better off employing a registered agent for everything, as most also provide LLC creation services.
What Are the Benefits of Hiring a Registered Agent?
There are several benefits to hiring a registered agent:
- Your personal information is kept out of the public record. Since a physical address is required when forming your LLC, not having a separate registered agent–and acting as one yourself–means your address and phone number may be listed in public documents for years.
- Your Registered Agent is intimately familiar with your state’s legal procedures and requirements and can help file things such as annual reports, business licenses, etc.
- If your business is served with legal paperwork, your Registered Agent can receive those documents properly and comply with your state’s law.
Can I be My Own Registered Agent?
Yes. A registered agent can be just about any person of adult age in your state, be it a friend, neighbor, or family member. We don’t recommend any of those options, though, and instead, hire a professional to act as your Registered Agent.
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