Whether you already have a small business or are looking to start one, you have the option to become an LLC – a Limited Liability Company.
It’s a legal shield to keep your personal assets away from a lawsuit if your business were to be sued. It’s easy to become an LLC, and we think it’s worth it!
At CSI Accounting & Payroll, we’ve worked with small businesses for over 50 years. From startups to established operations, lots of small business owners have asked us the following questions about LLCs:
- How much does it cost to register as an LLC per state? What about annual renewals?
- What does LLC insurance cost? Do I need it?
- Which entities tend to be LLCs? What are the costs of starting those businesses?
LLC Registration & Annual Renewal Fees Per State
To get an LLC, you need to go through your state. We use Minnesota as an example since it’s where our first CSI Accounting & Payroll office is located, but we work with clients across the United States. Approximately 90 percent of our clients who register with the state of Minnesota do so as an LLC because:
- It’s simple to do.
- It costs only a small fee.
- It’s generally a good move to protect yourself.
Fees by State
Every state will have a different fee for the initial registration of your LLC. Then, most states require annual renewals – many with associated fees.
This site shows a great chart of each state’s LLC filing fee and renewal fee.
Why Registration and Renewals Matter
Registration and renewals of your LLC are done so the government can see that you’re still in business and have a record of where you’re located.
It’s best to stay on top of your renewals! For some states (like Minnesota), if you don’t renew after two years, the state will dissolve your business’s name. Then, anybody in the state can legally take the name from you.
Cost & Requirements of LLC Insurance
A lot of people ask about LLC insurance. What they usually mean is plain old liability insurance used to protect your business.
Liability Insurance Cost Factors
The cost of liability insurance will range widely and depends on how much revenue you bring in (how much you have to lose) and how much inventory you have (to protect it).
LLC Insurance Requirements
Business liability insurance is not required to start a business, although some industries require licensing that needs insurance policies.
Other than that, the only insurance required for businesses are unemployment insurance and workers’ compensation insurance. We offer Pay As You Go workers’ compensation insurance, and we can refer you to our trusted insurance partners who can help you find a variety of other coverage.
Entities Likely to Be LLCs & Costs for Starting Them
LLCs – Limited Liability Companies – are not a type of business entity; they’re legal formations. Becoming an LLC is a way to “legally incorporate” a business without the entity type needing to be a corporation. That means any entity – Sole Proprietorships, Partnerships, S-Corporations, and C-Corporations – can become an LLC.
Which Businesses Become LLCs
Are any entities more likely to do this than others? Not really! These days, it’s very common for businesses of all types to become LLCs.
However, there are other variables that can indicate who is more likely to be an LLC. It mostly depends on how the business was formed and what the goal is.
A business would usually not be an LLC if they plan to get purchased or go public – like a small medical device company planning to get bought out by a larger company, as they often do. They may choose to form as a corporation right away to gather investors.
Need other examples? Software companies also tend not to be LLCs, whereas attorneys and accountants do tend to be LLCs.
Starting a Small Business
Since most small businesses tend to become LLCs, let’s forget about the LLC title for a moment. How much does it cost to start any small business?
The largest variable is the industry your small business will be in. If you don’t need to purchase a business building or inventory, it can cost as little as $500 to $1,000 to start a small business. However, for things with larger starting costs – like buying into a franchise – you could need up to $200,000.
How do you get that money? We usually advise starting with your personal funds, then moving on to family loans, and then pursuing an SBA loan if you still need more. If you work with an accountant, they can even help you obtain a loan!
Start an LLC With Expert Guidance!
Now that you know the costs to register and renew LLCs per state, that you don’t need specific insurance for an LLC, and that all entities can be LLCs and have different variables to start, are you ready to check out monthly accounting services?
If so, please consider CSI Accounting & Payroll! To see if we can be a good fit for your business, click the button below for a free consultation:
Not ready to talk? That’s okay! First, learn more about what it’s like to work with CSI by clicking the image below:
