Small-business owners are often encouraged to incorporate their business when the company is in its infancy. One of the biggest reasons promoted by accountants and tax experts alike is the lesser tax burden faced by small-business owners once their business has been incorporated, such as in the formation of an Limited Liability Corporation (LLC). However, that isn’t the only reason that the US is viewed as an ideal place to form an LLC.
Without question, the greatest benefit to forming an LLC in the US is the lack of capital required to do so. In states such as Delaware, Nevada, and others, you can easily setup an LLC without much fuss or cost. For the DIYers out there, you can fill out the required LLC formation paperwork and just pay the filing fees. Before you know it, you’ll have your business up and running.
Even if you have to pay a professional to prepare your filings, the low initial filing fees are a one-time charge that shouldn’t impact your company’s bottom line over the long haul. Entrepreneur notes that six states in the US (Arkansas, Colorado, Hawaii, Iowa, Oklahoma, and Mississippi) all tie for the lowest formation filing fee at just $50. If you incorporate in Texas, it will set you back $310, and the most expensive state to date is Connecticut at $455.
Low to No Annual Fees and Filings
Formation of an LLC requires annual fees and filings with the state in which your business is incorporated to keep your business registered. Here again you’ll find that many US states make it incredibly easy and affordable to form, and maintain, an LLC. The typical annual filing is a one-page report due to the secretary of state’s office, to be submitted with your filing fee. By in large, the filing fees are extremely low.
Some example fees include $325 in Nevada, $300 in Delaware, and $52 in Wyoming? If that strikes you as too expensive, you could always form your LLC in South Dakota, California, or New York, where you’ll pay only $50, $21, or $9 respectively for your annual filing fees.
Form in the US
There’s no competition overseas to the formation of an LLC in the US. Other countries have significant capitalization requirements when forming an LLC or other corporation that put an undue financial burden on smaller businesses in particularly. For example, the European Union has a set amount required in capital to form a business, while China and Vietnam (for example) require capital related to operating costs going forward in order to start a business. In Beijing, companies must contribute one lump sum within six months of corporation issuance or pay installments not less than 15% of the fees within 90 days and the remainder within two years.
The formation of an LLC in the United States requires zero significant capital investment, and can easily be done on your own without the assistance of a tax/accounting professional if you wish to further reduce your costs.