
Ask HN: Cost of 1 Person LLC - buggy_code
Hi!<p>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.<p>I want to know how much this will cost me, in the form of $BASE + $RECURRING_PER_YEAR .<p>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.<p>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.<p>Thanks!
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gojomo
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-...](http://www.nolo.com/product.cfm/ObjectID/15B382A6-2013-4BD0-B0B66C80743CD9D0/111/182/)

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

~~~
lnguyen
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...](http://www.ftb.ca.gov/businesses/bus_structures/LLcompany.shtml)

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.

~~~
jdminhbg
> Minimum Franchise Tax - $800 (annual)

Wow, that's miserable.

~~~
SwellJoe
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).

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payne92
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.

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

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teej
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.

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dangrover
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.

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zaidf
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.

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jerryji
"What state should I incorporate in?" --

[http://www.startupcompanylawyer.com/2009/03/03/what-state-
sh...](http://www.startupcompanylawyer.com/2009/03/03/what-state-should-i-
incorporate-in/)

by Yokum Taku (Startup Company)

------
tannerhiland
As another reference...

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

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

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icey
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.]

~~~
evgen
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...](http://live.prokhorenko.us/2009/04/how-to-incorporate-
startup-in-ca-and.html)

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

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ALee
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

~~~
wooster
"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.

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jonursenbach
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.

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jeffunger
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!

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iamelgringo
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.

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jauderho
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.

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dot
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.

