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How Much Does an LLC Cost Per Year?

Attorney Thomas B. Burton answers the following question: How Much Does an LLC Cost Per Year?

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Hello, I'm Attorney Thomas Burton and today's question is the following - "How much does an LLC cost per year?"

In most states, the annual cost of maintaining an LLC is called the annual report fee and here in Wisconsin, the annual report fee is currently $25 per year and what you need to do each year on the anniversary date of filing your LLC, you must file the annual report and pay the $25 annual report fee, in order to remain active and in good standing with the state of Wisconsin and you can do both of these activities online.

When you're considering setting up an LLC, it's important not to just think about the cost of filing LLC but then what are my annual compliance costs going to be each year?

I'm going to switch here to my screen and you'll see here on the Wisconsin department of financial institutions, this annual report highlighted of $25.

That's the fee you pay every year after you form the LLC. The first year to file it, it's either $170 filing on paper which I recommend you save money and file online for $130 instead and then every year, after the year of formation, you must file the annual report and pay the $25 annual report fee.

A lot of states call this an annual report fee but just be aware, because LLCs are a creation of state law, you must file it at the state level. For example let's go to California here, they charge $70 to file the articles of organization and then they say the statement of information is required within 90 days of initial registration and then every two years thereafter and that's only $20 with the secretary of state. So that doesn't look too bad on first glance but I have heard people say, it's expensive to have an LLC in California and the reason is if you go over here California has a separate annual tax, every LLC that is doing business or organizing California must pay an annual tax of $800. The tax will be due even if you're not conducting business until you cancel your LLC. They don't call that the annual report but the annual tax is quite significant and then they have an annual fee, if the LLC's income is above this $250,000 you pay an annual fee of $900 and you must pay it each year. There's the tax and then the annual fee and you don't have to pay, if you cancel in the first year, you'll not be subject to the annual $800 tax.

But anyway, check in your state because I'm just saying at first glance in California, it seems very reasonable, the annual fee but then when you see the annual tax over here, that's quite a lot more than Wisconsin. In Wisconsin, there's no separate annual tax, all you pay is the annual report filing fee of $25.

Now one more example, Wyoming which is known as a business friendly state, they charge the same as Wisconsin, an annual report fee of $25. If Wyoming is only charging $25, then you know that's a pretty reasonable fee in Wisconsin as well because Wyoming is known for being pretty LLC and business friendly and they charge $100 to set up the LLC, also very reasonable and that makes the Wisconsin $130 filing fee online seem pretty reasonable, pretty good for doing business as well.

Now, again, there's 50 states and there's 50 state laws, so you need to check depending what your state and what the annual fees would be but the annual report fee here in Wisconsin is currently that $25 and if you're in another state, if you google LLC annual report fee with your state name or something like that, you should be able to find the state website that lists it. Usually it's either the secretary of state or in Wisconsin department of financial institutions, whatever the legislature has by law, granted these duties to will administer the LLC filings and the LLC annual report fees.

So great question and thank you for asking. I hope this video was helpful to you and we'll see you next time.

© 2022 Burton Law LLC. All Rights Reserved. Transcript and captions provided for ease of access for the hearing impaired. For questions about this topic, or to suggest a topic for a future blog post, please contact the office.

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