There is a cost to do business in every state. Some entity types have more costs than others, and the fees your business may owe the government are determined by many factors.
If you are thinking of starting a business, you should be familiar with the fees and costs associated with forming and maintaining a company. Below, we have compiled a list of the most common fees you will encounter as you start your business.
State Fees for Initial Filing
Each state requires a filing fee to form “statutory entities,” which are businesses registered with the state, such as limited liability companies (LLCs), corporations, limited partnerships, limited liability partnerships, etc. Common law entities are businesses like sole proprietorships and general partnerships, which usually don’t require any paperwork to be filed or fees to be paid to the state before doing business.
Initial filing fees are what statutory entities pay to the state to officially form the business entity. The amounts vary depending on the state and the type of business you are forming.
Most states offer expedited filing for an additional fee, which means your business is registered much more quickly. Some states even have multiple expedited filings in which you can pay more for an even faster turnaround time.
To form your LLC or corporation in days instead of weeks, ZenBusiness offers expedited and rush filing services. Our fast filing speed service completes the filing for you as soon as possible.
Click here to learn more about your state’s filing fees and expedited filing options.
If you are not ready to file your formation paperwork but you want to reserve a business name, most states allow you to register a name for your statutory business. There is a fee to do this, and the name is reserved for only a set period of time. However, this prevents someone else from claiming your reserved business name.
With ZenBusiness’s name reservation service, we can reserve your business name for you, so no one else can take it while you prepare to file your paperwork. We will also research the name to make sure it is not in use by another business and that it meets your state’s requirements.
A common requirement among states — for example, Georgia and Maryland — for LLCs is that their name includes “limited liability company” or an allowed abbreviation of that phrase at the end.
DBA Name Fees
A “doing business as” (DBA) name allows you to operate your business under a name other than its legal name. Some states refer to DBA names as trade names, fictitious names, or assumed names.
Sole proprietorships and partnerships often use DBAs to appear more professional and to be able to do things like accept checks made out to the business name instead of the owner’s name. Unless you have a DBA, most states require you to use your own name in the business name. For example, if your name were Sarah Jones, you could operate a sole proprietorship only under the name “Sarah Jones.” But if you want to name your business “Eclipse Photography,” you will most likely need a DBA.
LLCs and corporations can also benefit from a DBA name if, for example, they want to start offering another type of service that their legal business name does not describe. If your business name is “Paul’s Windows, LLC,” but now you also want to offer roofing and siding replacement services, you may want to register the DBA name, “Paul’s Home Improvements, LLC.”
DBAs are not a requirement unless you are operating a business under a name different from its legal name. Even then, not all states require you to get a DBA, and some states have no DBA process at all. See if ZenBusiness can register your DBA in your state.
Employer Identification Number
An employer identification number (EIN) is essentially a Social Security number for your business. These are sometimes called federal employment identification numbers (FEIN) and are issued by the IRS. Most statutory and many common law entities (especially those with employees) are required to have an EIN. You may also need an EIN to open a business bank account, hire employees, and obtain business licenses.
You need to register your business before applying for an EIN. Although the EIN is free to obtain online from the IRS, ZenBusiness has an EIN service that can do it for you for a fee and save you the hassle.
Operating Agreements, Partnership Agreements, and Corporate Bylaws
Every business could benefit from a set of rules that governs the internal affairs of the company. Depending on your business type, you may adopt an operating agreement, partnership agreement, or corporate bylaws. These are not the same as your formation documents and do not need to be filed with the state.
Although often not legally required by the state, operating agreements and bylaws are incredibly important when it comes to running your business, establishing duties, avoiding conflicts, and distributing profits.
LLC Operating Agreement
An operating agreement is a document that outlines the operations of the LLC and states the obligations of all members. Operating agreements typically include the following information:
- Profit sharing,
- Percentage of ownership,
- Management structures,
- Roles and responsibilities of members,
- Ownership interest transfers, and
- Dissolution procedures.
Most states do not require that you create or file an operating agreement, but we highly recommend that you do. Having a single document that lays out the rules and expectations makes for a much smoother and successful business operation.
Much like an operating agreement, a partnership agreement is a legal document that governs a partnership’s business functions and the partners’ relationship. Generally, partnership agreements include the same information as operating agreements. Depending on whether your business is a general partnership (GP), a limited partnership (LP), or a limited liability partnership (LLP), you may have to file your partnership agreement with the state.
For a GP, just as there is no requirement to formally register, you do not need to file a partnership agreement. For LPs and LLPs, on the other hand, some states do require that they register their business with the state and create a partnership agreement. Regardless of whether you have to file your partnership agreement or not, it is good business practice to formalize a partnership agreement.
Corporate bylaws describe the organization and operation of a corporation. Each state has its own rules for corporate bylaws, regarding things like organizational meetings and board of director requirements. However, these documents generally include the following provisions:
- Basic corporate information, such as business name, address, and purpose;
- Board of directors appointment, removal, qualifications, and term limits;
- Officer (president, vice president, secretary, and treasurer) duties, appointment, and removal;
- Shareholder information, such as number of shares, voting rights, and transferability of shares;
- Annual meeting information for shareholders and board of directors;
- Fiduciary responsibilities of directors, including conflict of interest disclosures; and
- How to amend the bylaws.
Corporate bylaws must be approved by the board of directors and should always be available for review by the state or IRS.
You can hire a lawyer to draft governing documents for you, but this is expensive. With all the other costs of starting a new business, it can be hard to swallow the cost of a lawyer as well. You can save legal costs by writing your own documents from scratch, but this is not advisable. You could negatively impact your business down the road by accidentally leaving out important terms.
If you want to save money while also ensuring that you have an agreement that will support your company both now and in the future, consider using a template like ZenBusiness’s online LLC operating agreement template or our corporate bylaws template. Our templates will help guide you as you draft an agreement that meets the needs of your business.
Licenses and Permits
Most businesses will need licenses and/or permits of some sort to operate. Some states, counties, and municipalities even require a general business license, which you must obtain before conducting any kind of business in that region. These usually involve an initial fee and periodic renewal fees.
Because licensing can happen on the federal, state, and local levels and varies by industry, location, and other factors, there is no one-stop shop to tell you every license or permit your particular business needs or what the fees for those will be. So you’ll have to do some research.
If you’d rather have the research done for you, ZenBusiness’s business license service can help you figure out what licensing you need. Our experts will provide a summarized report of local, county, federal, and state licensing requirements for your particular business.
Fees for Foreign Businesses
A foreign business is not what you may think. Foreign businesses aren’t necessarily those from other countries. Any company that conducts business in a state other than the one it is registered in is a foreign business.
When you want to do business in a different state, you usually need a foreign qualification or certificate of authority, which requires a fee paid to the state where you’re planning on operating. Keep in mind that some states call these certificates something different, but the purpose is the same.
Each state has its own qualifications for foreign entities, but here are some factors to consider:
- Do you employ anyone from another state?
- Does your business own real or tangible property in another state?
- Do you have any physical presence in another state?
- Does a substantial portion (25% or more) of your revenues come from another state?
- Do you take orders in another state?
- Do you have a bank account in another state?
If you answer “yes,” “maybe,” or “kind of” to any of these questions, you should read up on your state’s qualifications for foreign businesses.
Most states will also require you to provide a “Certificate of Good Standing” from your state of origin before doing business there. These certificates indicate that your business is legitimate, authorized to transact business, and up to date on filing state reports and paying fees. Again, these may go by a different name depending on the state.
If you think you may need to register your business in another state, we can help.
Annual Report Fees
Most states require statutory business entities to submit an annual report and fee each year to update the state’s records. Some states instead have a biennial report (due every two years) or some other type of periodic report that may go by a different name. There are a few states that have no such report at all, such as Ohio. The purpose of these reports is to ensure the state has the most current information about the business. Failure to file your annual report may result in fines, loss of good standing status, or forfeiture of the business.
With all the business filing fees and deadlines, it’s easy to get overwhelmed and lose track. The experts at ZenBusiness can help you stay on top of your filings through our annual report service. Never miss a deadline again!
Reporting Changes to Your Business
To make certain changes to your business, you may need to file paperwork with the state, which also includes a fee. Maybe you want to change your business address or appoint a new registered agent. At ZenBusiness we can handle this for you. With our amendment service and Worry Free Compliance service, which includes two amendments every year, we can make the changes necessary for your business.
Our Business Formation and Compliance Services
Filing your business’s formation documents properly and keeping up with the reporting requirements may be overwhelming. Let us put your mind at ease. With our Business Formation service, you will feel confident knowing your business’s documents are filed correctly and timely. ZenBusiness can also help you avoid costly mistakes and fines with services like our Worry Free Compliance service. Let us help with your compliance obligations while you focus on growing your business.
Frequently Asked Questions
Are there penalties for paying my fees late?
States will not register your new business without receiving the formation fees, so it’s not possible to pay those fees late.
There are penalties, however, for filing your annual report fees late. Failure to pay the annual fee could result in late fees, loss of good standing status, and, eventually, administrative dissolution of your business.
What happens if I can’t pay my fees to the government?
If you are financially unable to pay your annual fees, states typically have a grace period where they will extend the time for you to pay and impose a penalty. During this grace period, however, your business may lose its good standing status.
What agency usually receives the fees for forming my business?
Typically, the Secretary of State receives the fees when forming your business. Some states have other offices and departments designated to process business formations and ensure compliance.
What is usually the biggest fee I will pay when I form my business?
The state filing fees are typically the largest fee you will pay to form a business. These vary based on the state and entity type. For example, LLC filing fees are anywhere from $40 to $500 depending on the state where you register your business.