Costs to Form a Legal Entity
The cost of business incorporation is relatively minimal when compared to how much money you could save yourself and your company. Each state has its own fee structure for incorporation, but they remain comparatively the same.
The cost of incorporating a business could range from $99 to more than a couple thousand dollars depending on if you use an online vendor, or if you work with your attorney. If you choose to work with an attorney, remind yourself that the legal fees are minimal compared to the assurance that each step and all paperwork have been done correctly. If you choose to work with a different vendor service to form your legal entity, do research and shop around to make sure you are happy with the incorporation fees.
As a general rule, corporations may cost less in legal and accounting fees to initially organize, but could cost more to maintain over time. LLCs set up internal rules and regulations so upfront analysis and preparation can be more expensive, but maintenance fees can be less expensive over time because they do not require separate taxable entity tax returns. There are other additional costs to consider such as when corporations introduce multiple classes of stock or voting restrictions or when new members are added to LLCs.
If you hire an attorney that specializes in start up businesses to help you incorporate your company, these rates can range from $500 to $700 as a flat rate up to $5,000 in accumulated attorney fees. The attorney will be able to help you fill out the necessary documents for incorporating your business, explain in detail the process, and review your paperwork before submitting. You will also pay a higher attorney fee if your firm has more than one partner or shareholder. These rates are based on the law firm and its important to remember that incorporation does not require an attorney.
Filing the Articles of Incorporation with the Secretary of State is required and also has a cost associated with it. Depending on the state, registration fees range from $25 to $1,000. Once the certificates of incorporation and required documents have been filed with the secretary of the state, the corporation becomes official.
Required government filing fees range from $50 to $200 and are based on the type of business and the state in which the business is incorporating. Some states will require that the business obtain a business license, which can be purchased at a nominal fee. Annual report fees will range from $25 to $200, depending on the state. Keep in mind that Arizona, Georgia, Nebraska and Pennsylvania require a new corporation to pay a publication fee, which ranges from $150 to $300. The Secretary of State offices will also charge $100 to $250 in necessary fees.