Every new business owner longs to find the cheapest LLC state to file their business in. As a new business owner yourself, you may be struggling with this. Perhaps you are overwhelmed with the resources pointing to different states and economic indicators. Some say one state is the cheapest, while the next article disagrees. When it comes down to it, there is not one single cheapest LLC state for every business. You need to consider various factors to find the one that is right for your specific company. Continue reading to learn how to find the cheapest LLC state for long-term growth.
Consider Your Home State
To find the cheapest LLC state for your business, consider your home state first. Disregard all of the sources that point to other states. Instead, look into the state you live in. The price may seem to be higher than those other states. However, you might be able to save money in the long run. By filing a limited liability company in your home state, you will be responsible for one set of fees. Since you are looking at long-term usage, this is a crucial element. File your LLC in your home state if you conduct majority of your business there. In this case, you are not required to register your business as a foreign LLC. These are ways filing in your home state can be a great option for finding the cheapest LLC state.
Understand What Other State Filing Entails
Consider other states to file your LLC in if your home state does not seem like the right decision. As said above, other states may have lower filing fees. Before jumping into what seems like a cheaper decision, understand the entirety of what out-of-state filing entails. Firstly, acknowledge that you will have to file your LLC as “foreign”. Furthermore, you will be forced to pay two sets of fees when setting up a corporation or LLC. You will pay fees in your home state as well as the state you incorporate in. If most of your business transactions take place in your home state, this is not a wise decision. However, if you plan to do business in both states, the extra fees may pay off. Contemplate the details of incorporating in other states to find the cheapest LLC state for long-term use.
Look For Business-Friendly Laws
Business-friendly laws can benefit your corporation’s finances in the long-run. Delaware stands out in this category. It is the only state with a Chancery Court. This specific type of court is responsible for business-related decisions. With a court dedicated to business, company owners do not have to wait as long to settle disputes. Additionally, your case is more likely to have a fair outcome. This is due to a business-specialized judge making the decisions, rather than a jury. With this in mind, consider how much you can save with a fair case outcome. Look for states with business-friendly legal systems like Delaware to ensure your company’s legal fate is well-handled. This is an important factor for finding the cheapest LLC state.
Compare Asset Protection Policies
Asset protection is yet another component for finding the cheapest LLC state. Protection is critical when owning a limited liability company. Consider a business owner losing or damaging essential assets. Without asset protection, that business owner loses more than just their assets. They lose a lot of profit. Furthermore, they are still required to pay their LLC fees. To refrain from digging yourself a financial hole, look for a state with excellent asset protection policies. The cheapest LLC state for long-term use will have a policy that will save you financial crisis.
Determine Annual Fees
Since you are looking to file an LLC for long-term use, annual fees must be determined. Majority of US states require a fee to be paid annually. Usually, the fees for an LLC filing is more expensive than a DBA business requirement. However, there are a few that do not require any annual fees for maintaining an LLC. These states include Ohio and Alabama. If you choose to file in states that do require fees, understand what comes with the fees. You are required to provide annual reports with your yearly payments. States charge filing fees for the reports as well. While some states may have lower annual fees, their other factors may be more costly. Consider the entire bundle together to find the cheapest LLC state.
As a business owner, you want to register your company in the least expensive way. To do so, consider filing an LLC in your home state. Then, understand what filing in other states will entail. Look for business-friendly laws in each state. Compare the different asset protection policies as well. Lastly, determine the annual fees of each state. Consider all of these variables to find the cheapest LLC state for long-term use.