Is it worth setting up an LLC?

Yes, especially for the liability protection LLC owners receive. When you form your business as an LLC, your personal assets are protected should your business fall on difficult times. Owners of LLCs also enjoy pass-through taxation and deal with less administrative red-tape than corporations.

What is the downside to an LLC?

The primary downside to forming an LLC is the maintenance cost. Unlike a sole proprietorship which doesn’t require registration with your Secretary of State, LLCs must file Articles of Organization and usually have to file annual reports and pay respective state fees. These costs can add up to several hundred dollars a year.

What are the benefits of becoming an LLC?

Since an LLC is a separate legal entity from the business owner, you receive extra protection of your personal assets should your business have any legal or financial troubles. Additionally, an LLC lets you add members (business partners) to raise capital, ensure more efficient profit distribution, and project greater credibility to customers.

What documents are needed for an LLC?

To create an LLC, you’ll need to fill in the Articles of Organization form and file it with the Secretary of State. This document will list critical information about your company, like the name and address of the business, the registered agent’s contact information, and the LLC’s members’ names and addresses. You’ll also want to create an LLC operating agreement that documents how the company will be managed and operated.

Is an LLC a one-time fee?

You’ll pay a one-time fee to file your Articles of Organization which form your LLC. After that, there are recurring fees you’ll pay for things like annual reports and state franchise taxes (if these apply).

What state has the cheapest LLC cost?

The initial LLC registration costs are the cheapest in Arkansas, with just a $45 filing fee. Followed by Colorado, Hawaii, Iowa, Michigan, Mississippi, and New Mexico, where you can register a company for $50. However, there are also recurring LLC fees involved, such as annual reports and taxes. If you factor these in, the overall cheapest state to register and maintain an LLC is Wyoming. With a $100 initial filing fee and annual report fees starting at $50 and no income taxes, Wyoming is one of the cheapest states to have an LLC.

An LLC can expire or become inactive if it fails to file periodic reports (due annually or biannually) and pay the associated fee. When this happens, the LLC loses the right to do business in the state, and more importantly, LLC members lose their personal liability protection. The LLC generally can be reinstated by filing the delinquent reports and paying a late fee or penalty.

Does an LLC really protect you?

Because the LLC is a separate legal entity, your personal assets are off-limits if your company faces legal or financial trouble. But, your company’s assets are not protected. For example, if your business is sued, its bank accounts, real estate, equipment, and inventory can be used to pay any legal settlement. However, your personal bank accounts and personal assets can’t be touched.

State-by-State LLC Formation Guides

A limited liability company (LLC) is a popular business structure for small business owners as it’s cost-effective, tax-friendly, and scalable alongside your business operations.

You’ll need to file the required paperwork with your local secretary of state (SOS) to form an LLC.

The exact requirements vary from state to state, but overall establishing an LLC is a straightforward process.

Here are the step-by-step instructions explaining how to form an LLC in each state.

Do It Yourself Guides:

You can register your LLC in any of these locations, but starting your LLC where you live and do business is usually the best option for most new business owners.

If you plan to have operations (e.g., warehouse, storefront, employees, etc.) in other states, you’ll need to register your business as a foreign LLC in those states.

In-state vs. out-of-state registration comparison

Out-of-state registrations mean you’ll need to comply with laws and regulations in both your home state and your registration state.

On the more positive side, you may be able to reduce your tax bill if you incorporate an LLC in a different state.

Delaware, Nevada, and Wyoming are some of the best states to form an LLC for companies that want to limit their tax exposure legally.

In-state vs. out-of-state registration comparison
In-state	Out-of-state
Only one set of state laws to comply with	Two or more sets of laws to comply with
Registration fees may be more expensive	Registration may be cheaper
Pay taxes in only one state	The tax bill can be cheaper or more expensive, depending on the state

State-by-State LLC Formation Guides

Do It Yourself Guides:

In-state vs. out-of-state registration comparison

Nikki Winston

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