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Overview of LLC Formation and Costs
- A limited liability company (LLC) protects personal assets and maintains limited liability. Forming an LLC gives flexibility to choose taxation and allows easy transfer of ownership.
LLC Formation Costs
- To get an LLC for free, use an online service. Pay only mandatory state fees, which range from $40 to $500 depending on the state. Some companies falsely claim free registration.
- The primary cost of forming an LLC is the state filing fee, which also ranges from $40 to $500 depending on the state. Kentucky has the lowest LLC filing fee at $40.
Benefits of LLC
- Owners of sole proprietorships and general partnerships have unlimited personal liability for business debts. Partners in a general partnership can also be liable for their partners’ actions. In contrast, the LLC is a separate entity, limiting members’ personal liability to personal guarantees.
- Suitability of LLC depends on business type, location, and tax considerations. Business insurance is recommended to minimize liability and compliance with proper licensing is essential.
Steps to Form an LLC
- Get a business name
- Choose a registered agent
- File formation documents
- Create an operating agreement
- Obtain an EIN
- Open an LLC bank account
Additional Considerations
- Consulting with a reputable LLC service provider is advised to ensure compliance with all requirements.
- Always secure necessary licenses and permits before commencing business operations.
- Check with local municipalities for specific requirements and regulations.
