Forming a limited liability company (LLC) protects your personal assets and maintains limited liability. An LLC gives you flexibility to choose how you want to be taxed and allows you to easily transfer ownership. But forming an LLC can be expensive and time-consuming. Fortunately, there are ways to get your LLC for free or at a discounted rate.
Steps to Form an LLC for Free
- Get a business name and address not used by another business in the state.
- Get the formation document from the Secretary of State website.
- Get a registered agent.
- Fill out and file the formation document.
The main cost of forming an LLC is the state filing fee, which ranges between $40 and $500 depending on the state.
To form an LLC for free, use an online service provider and pay only the mandatory state filing fees. Be wary of companies falsely claiming free LLC registration.
LLC Costs and Salary
The cheapest state to start an LLC is Kentucky, with a forty dollar filing fee. Arkansas is second cheapest. Check your state for financial incentives.
Some states are better for LLCs but the best is often your home state. Using a lawyer can help decide the optimal state. Suitability depends on business type, location and taxes.
LLC termination gain or loss is determined per member. Track your investment basis, adjusted annually per your K-1. Compare final distribution to basis to determine capital gain or loss.