LLC Cost and Tax » Understanding the Costs of Starting an LLC

Before one decides whether to go ahead with an LLC or not, one should consider an LLC Cost. This is mainly because the operating agreement of an LLC contains provisions that require fees to be paid for services rendered by the LLC. These include the filing fees, assessments, state and county fees, as well as an annual franchise tax assessment. All these fees can amount to a huge hole in one’s pocket and so the incorporation of an LLC is a very sensible first step.

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Ways of Incorporating an LLC

There are two ways to incorporate an LLC – one is by going through the process with the help of a legal professional such as a lawyer. While this may end up saving you from paying huge fines, the fees involved could end up being very exorbitant depending on your situation. The second way to incorporate an LLC is to do it yourself. However, you should note that even if you are just doing a simple form for your tax purposes, you may want to consider getting the services of a professional so as to avoid making mistakes during the formation process.

Filing the Articles of Organization

As mentioned earlier, there are two basic types of formation options available. The first involves the filing of Articles of Organization with the state in which the LLC is set up. The second involves the filing of Articles of Organization with the state in which the LLC is set up but without the involvement of any third party. There are pros and cons to both, but most business owners prefer to go through with the filing of Articles of Organization first. This is because doing so first allows them to complete the necessary paperwork and get their business license. Also, the formation of the LLC immediately stops all actions or claims by other entities against the business owner.

Registering Business Entity

After filing the Articles of Organization, the next thing that will have to happen is for the business entity to get registered. This will involve paying the required filing fee plus a considerable administrative fee. Depending on the nature of the business, additional fees may be required. However, it is advisable for anyone thinking of launching an LLC to consider having a registered agent. This is because the LLC has to follow the laws closely, so having a registered agent helps ensure that the LLC follows the right procedures from the very start.

After filing the Articles of Organization, a three-month period begins during which time the LLC has to take care of all the formalities. During this time, the LLC has to submit annual reports to the office. These reports have to be filed with the office by June 1st each year. In addition to this requirement, there are also other state fees that have to be paid, including sales tax.

The Fees, Including Final Expenses

After filing the Articles of Organization, the LLC will then pay the filing fee. Then it will move to pay the preliminary filing fee. This fee is charged as a non-refundable fee, and the filing fee cannot be refunded. Additionally, the LLC will have to pay the appropriate administrative fees.

The final expense that has to be paid is the IRS Form 50, and this is charged according to the calendar year in which the LLC was registered. The state’s filing fee is not refundable and must be paid in full at the time of filing. In order to use the DIY route to set up a limited liability company, the person must be registered under the laws of the state where one business is operated. Once the paperwork is all submitted and processed, the LLC can now file its tax returns and begin paying state taxes.

As in any other state, a person who files a Franchise Disclosure Document for his business in North Carolina will need to pay a one-time filing fee, and he will be required to remit annual filing fees for his LLC. He will then be required to pay the prescribed state tax rate on the income he receives from his business. If his LLC does not earn income, he will not need to remit any tax. However, if his LLC does earn enough money to pay his annual reporting fee plus a profit, he may then be required by law to remit the applicable franchise tax.

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