Ask HN: Cost of 1 Person LLC | Hacker News Reader

Ask HN: Cost of 1 Person LLC

30 pointsbuggy_code24 comments

Hi!

I would like to form a LLC, with me owning the company (and no investors; and no plan for future investors) -- mainly for releasing iPhone, facebook apps, and silly web 2.0 apps.

I want to know how much this will cost me, in the form of $BASE + $RECURRING_PER_YEAR .

I live in CA, and am willing to file the LLC in Deleware (I hear it's much easier in Deleware?). I'm also a student (so only permenant address is a PO Box), so I need some other company to officially be the 'location/address' of my LLC.

If you have gone through this, or know of a good article on this (I keep on getting crap like "Come to our website, we'll file for you for $199.99") please let me know.

Thanks! </p>

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The case for Delaware isn't costs so much as corporate law, if professional investment or mergers/acquisitions are expected later. I doubt those are relevant for your one-person LLC.

By operating in California you'll essentially still owe the same franchise and other taxes, so you might as well form in California.

If you're interested enough in having an LLC to ask the question, perhaps you want to get a reference guide, like perhaps one of the Nolo Press guides. One example (they have a few):

http://www.nolo.com/product.cfm/ObjectID/15B382A6-2013-4BD0-...

And remember, legal advice you get for free in discussion threads is worth no more, and possibly less, than what you paid for it.

Here's the breakdown of fees/taxes for California:

Secretary of State

http://www.sos.ca.gov/business/bpd_forms.htm#llc

Organizing(domestic)/Registering(foreign) - $70 (one-time)

Statement of Information - $20 (immediate, then biennial)

Franchise Tax Board

http://www.ftb.ca.gov/businesses/bus_structures/LLcompany.sh...

Minimum Franchise Tax - $800 (annual)

Corporations (domestic CA or foreign) but not LLCs apparently get a waiver on the minimum tax for the first year.

So $890 first year, then $800/$820 subsequent.

You can do all the filing yourself via mail if you're willing to wait roughly 30 days (see http://www.sos.ca.gov/business/bpd_processing_times.htm) or go to Sacramento and submit everything in person (plus a special handling fee of $15/filing) and still wait about 5 days.

If you were going to C-corp route or registering the LLC in another state (Delaware or Nevada), you generally do need some company to act as your agent there so you have an in-state address for the filings.

Can't you waive the first year's min. franchise tax if you don't have any income?

As an corporation you can, but not as an LLC. I'm not sure about LLCs opting the s-corp taxation though.

> Minimum Franchise Tax - $800 (annual)

Wow, that's miserable.

Yeah. California is stunningly hostile to new small businesses. It's also more complicated and expensive to pay salaries and such here than in many places. It continues to be strong in business (new and old) mostly because it's a fantastic place to live (by accident of nature, mostly, not because they have more tax revenue; many places have great schools and such).

I use BizFilings for a single-member (me) LLC incorporated in DE. I think it costs $200-400/year, mostly in DE fees. It's all Schedule C expenses, of course, against your income -- make sure keep good records.

If you're doing an LLC and not planning on any future investors, Delaware isn't really critical, IMHO. (Many investors want a C-corp in DE).

Finally, even though it's just "paperwork",I found having an LLC with a real EIN (and a phone number and FAX number and a real address), added some legitimacy that has been very useful in a few circumstances.

For example, health insurance for a one-man business (me) was cheaper for the same coverage than the "direct" plans for individuals. But they wanted a bunch of proof, like my certificate/articles of incorporation in DE. Go figure.

Payne, who did you get your biz health insurance through?

I filed for a Delaware LLC through Intuit's MyCorporation.com. It ran me a one time fee of ~$300 and a fair amount of time. One easy savings on a business filing is to get your own Federal EIN. It's online and takes 15 minutes, definitely not worth paying someone else to do. It costs $250 a year to run an LLC in Delaware. I think I may pay a yearly fee for having a "Registered Agent" (i.e. an address in Delaware) but I don't recall how much it is.

When I went to open a business checking account, I checked out banks with brick-n-mortar branches near me, compared the accounts online, and stopped by. The person who helped me said that the only out-of-state corp they deal with is a Delaware corp. She was less familiar with the "system" for setting it up, but it didn't set me back more than 10 minutes. To set up the bank account, I needed a real local address.

I've had a sole proprietorship in Vermont (where I grew up) for the past couple years and recently went LLC.

I wasn't sure what state to incorporate it in -- I had friends who were knowledgeable about this stuff and basically said any state that I do an LLC in that I suggested was bad, so I just went with VT.

I used MyCorporation.com and, using a coupon code, I was able to pay ONLY for shipping and state fees. They try to upsell you on a bunch of shit you don't need, but I filed for about $100.

I've had a Delaware LLC for my freelance design/programming work since high school. I think it costs $200-300(my partner/brother would know the exact amount).

What I do know is that it is a piece of cake to get one. I think it took us less than 30mins to submit our form.

"What state should I incorporate in?" --

http://www.startupcompanylawyer.com/2009/03/03/what-state-sh...

by Yokum Taku (Startup Company)

As another reference...

In Arizona it is $50 (LLC filing fee) + $35 (newspaper publication fee) and $0 annual recurring.

My home state, filled to the gills with republicans and centrist 'crats

I don't know that it's necessarily easier to form an LLC in Delaware than anywhere else. Companies usually prefer to incorporate in Delaware because it has the longest history of corporate law, so that more precedents have been set than in other states. By forming an LLC, it kind of removes the benefit of having that long history of precedence since LLCs are relatively new.

As always, this is where getting a professional involved is worthwhile. A lawyer or accountant who specializes in this sort of work can tell you what the various legal liabilities you'll have to deal with in each state are, as well as how your choices impact your tax liabilities.

[Edit: This previously had a sentence about code formatting in the submission; the formatting has since been fixed.]

Delaware is not a prime choice for corporate filings due to its history in corporate law, it is the prime choice because it has low costs, few requirements on businesses incorporated in the state, and its existing corporate regulations are very management-friendly.

One thing that the original poster should note is that even if he incorporates in Delaware if he does most of his developement and operation in California then he will still be required to register as a foreign entity in California and pay CA franchise fees (and maintain a registered agent in CA.)

I short, go ahead and register in CA if you are not going to be seeking outside investment and will be operating in CA. Take a look at the various steps and advice at the following: http://live.prokhorenko.us/2009/04/how-to-incorporate-startu...

I don't really understand what the point of having to put an ad in the newspaper is. Same with H1B's. As if having an ad in a newspaper is somehow supposed to be validation. Don't get it at all.

Used legalzoom.com and incorporated in Wyoming. It's the best price to do it and best LLC law anywhere.

I did this same thing when I was in college and when we developed our first web app. It shouldn't cost you a lot. Usually only the filing fee, if you operate from CA, it will cost you a franchise fee, but if you incorporate somewhere else you should be okay.

Google nolo press

"it will cost you a franchise fee, but if you incorporate somewhere else you should be okay."

No. If you operate in CA, you have to pay the minimum franchise tax regardless.

If you live in California, a LLC might not be the right choice, as California charges a "gross receipts fee" on LLC revenue (even if you form in Delaware, you are stuck with California's fee structure because you live and operate in California). A corporation might work better for you. I have written about this extensively at www.eminutesonline.com. Good luck!

LLC == Liability protection

Is there a reason that you're doing that as opposed to a sole proprietorship? I filed mine in Santa Clara county for less than $50, by walking down to the courthouse and filling out a form. That allows you to open up a business bank account as well. And, you save yourself the $800 franchise fee/year if you're in CA.

Also check that the county or city that you live in does not have a separate business license fee.

I live in San Mateo which does have that requirement, so YMMV.

If you are not concerned about unlimited liability, you can consider a sole proprietorship else LLC is probably the way to go.

As always, I'm not a lawyer and merely speaking from my experience.

You could just start with a "fictitious business name" under your name. That way you can conduct business under any name you choose. You can even use your personal bank account to receive payments. It's cheap and fast and leaves all the options on the table.

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