When considering the transition from a sole proprietorship to an LLC, many business owners wonder, "What's the cost?" Businesses often have been operating as sole proprietorships for some time before deciding to form an LLC. Concerns about up-front and ongoing costs sometimes keep business owners from doing so.
Let's take a look at what it costs to form a Delaware LLC and what the ongoing costs are to maintain one.
Cost to Form an LLC in Delaware
The cost to form a Delaware LLC varies depending on which service you use. If you decide to utilize The Incorporators for your LLC formation, we offer a variety of package options. You can see all of our package options and pricing here.
Our least expensive package is our Basic E-Kit, which is $175. This kit is an electronic only package, meaning all documents will be delivered to you via email. All state fees and the first year of Registered Agent fees are included in all packages. You can order your LLC Basic E-Kit here.
If you would prefer physical copies of all of your documents, our baseline kit is the Basic LLC Package, which is $225. You can order your Basic LLC Package here.
We offer several upgraded packages depending on how many accessories you need. Examples of accessories include a corporate binder, electronic seal, corporate seal, membership certificates, and more. You can view all of our packages here.
For all packages, the process looks like this:
Upon receipt of your order and payment, The Incorporators Ltd. will prepare and file your Articles of Incorporation/Formation with the Delaware Secretary of State.
For any of our E-Kits, you will receive a file-stamped copy of your Articles via email within 3-5 business days. For our physical packages, packages are shipped within 3-5 business days, and you will receive package tracking information when your package ships.
Why It's Worth It
You might be wondering, if being a sole proprietor carries no yearly cost but an LLC does, why form an LLC?
There are plenty of reasons why business owners opt to form an LLC.
The biggest advantage is that LLC's provide limited liability for its members and managers. Business owners also cite passthrough taxation and fixed annual state franchise taxes as advantages to forming an LLC. Read more about the pros and cons of LLC's vs. Sole Proprietorships here.
Ongoing LLC Costs
It's important to note that maintaining your LLC has ongoing costs. Luckily, Delaware is one of the states where these ongoing costs are minimal and the pros of LLC formation generally outweigh the costs. If you're unsure if forming an LLC is the right move for your business, contact your attorney or accountant.
Delaware LLC's are required to pay an annual tax of $300 to the state of Delaware. Unlike corporations (whose taxes are based on the number of shares or assumed par value capital), the annual state franchise tax for LLC's is the same for all, regardless of the size or number of members.
In addition to the state fees, the State of Delaware requires you to have a Registered Agent. Delaware Registered Agents charge an annual fee for their service. Learn more about what a Registered Agent does here. The fee ranges from agent to agent. The Incorporators offers Registered Agent Services for $99 per year and an easy online system to make your payment. If you'd like to use us as your registered agent, you can change your registered agent here.
Most importantly, staying on top of your annual taxes and Registered Agent fees will keep you compliant and can save you a ton in late fees and penalties. Learn more about how corporate compliance saves you money here.
We hope you've found this post helpful in determining what your costs for LLC formation and ongoing compliance look like for your business. If you have any questions, feel free to give us a call at 800-223-3928 or contact us here.