What LLC Startup Costs Should You Bank On? DoNotPay Explains!
Registering a Limited Liability Company is an easy way to separate your private from your business finances, giving you control of your company with reduced personal risk.
An LLC is a simple business structure, and you can set one up quickly and relatively cheaply.
Registering your LLC is only the first step in setting yourself up for success, though.
DoNotPay takes you through the LLC startup costs you can expect and gives you top advice on how to get your business off to a flying start!
When you embark on your business journey, you need to understand—and plan for—all the upfront costs you will incur. Failing to plan really does mean planning to fail.
In planning your LLC startup expenses, you should differentiate between:
- Upfront costs
- Ongoing expenses
These are the amounts you will need to pay before you can start trading. They are highly business-dependent but may include the following:
|LLC registration costs||Depending on the state you are registering in, your registration costs will be between $40 and $500|
|Licensing, permit, and other fees||Your state might have specific licenses and permits you need to obtain when registering your LLC. Examples of these are:
Your type of business could also require you to register with a local, state, or federal professional body
|Tax compliance costs||You may have to register for:
|Premises||You might need to lease office space, workshops, or other premises, which often involves:
|Equipment||Any equipment you need for your business will have to be acquired upfront. Negotiating extended payment terms with your suppliers can ease cash flow in the startup phase|
|Recruitment and staff costs||If your business needs staff, you will need to recruit and employ them before launch. You may take several months to generate enough turnover to cover their costs—this needs to be factored into your financial planning|
|Stock, inventory, or raw materials||Any items you need to produce sellable goods have to be purchased in advance|
As soon as you have registered your LLC and set your infrastructure up, you can start trading.
You may have to work for a considerable time between opening your doors and the first profit coming in.
Your ongoing expenses don’t take a break during this time—meaning that your planning has to factor in your outgoings for as long as it will take to generate income.
These outgoings can include:
- Lease payments
- Salaries and wages
- Infrastructure costs, such as internet, utilities, phone lines, and office equipment rental
- Insurance, including liability cover, workers compensation, and health insurance
The number one killer for any startup is your business running out of cash before you can generate profitable income.
This is an avoidable mistake—solid financial planning before you embark on your journey should tell you how much cash on hand you will need to remain solvent.
Once you have budgeted this figure, you can start looking at options for financing your LLC startup.
Registering an LLC is not an expensive step, so you may get away with not needing finance.
You may be able to self-finance your startup if you have savings or have established a solid credit score and your LLC is a:
- One-person show
- Service organization
- Virtual business requiring no stock or raw materials
If your plan involves significant upfront costs, though, you may have to investigate financing your startup through a:
A startup loan advances your money based solely on your business plan.
As your LLC has no trading history, a financial institution will use its expertise and experience to evaluate your plans and decide whether your business is an acceptable risk.
Depending on the viability of your plan, the institution may set a higher interest rate to offset the risk they are taking on.
If you are opening a new branch of an existing business and registering it as an LLC in a different state to the parent company, you may qualify for a small business loan.
- Your financial history
- The credibility of your projections
- Your presentation of yourself and your business plan
Your options for securing a loan are:
- Credit unions or other lending institutions
- The Small Business Administration (SBA)
- Angel investors or strategic partners
Whichever financier you opt for, you will have to formally apply for the loan—the more convincing your application, the better your chances of securing the startup money you need.
DoNotPay understands this, and we can help you create the perfect loan application letter to secure your financing.
First impressions count, and your business loan application is no exception.
DoNotPay can ensure that your loan application comes across as:
We will help you understand the documentation you need and will draft a letter that sets out:
- Your credit score and financial history
- Your business plan for your LLC
- The loan amount you require
Follow these steps to get your letter generated:
- Sign up to become a DoNotPay subscriber
- Navigate to our Business Loan Request Letter feature
- Give us the details of your business, your growth plans, and the loan you need
- Upload your documents
DoNotPay will take it from there—we will create a customized loan request letter that covers all the bases your chosen financier requires. You can also find top online lenders through an integrated feature—Find Online Business Loan Lender.
If you are wasting time on endless administrative tasks, you are also wasting money. We can help you save both.
With DoNotPay’s assistance, many processes will last and cost less, including:
- Business loan applications
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- Employer Identification Number (EIN) registration
- 83(b) election form submission
In a few clicks within the same app, numerous tasks will come easy for you and your business.
DoNotPay is your go-to if you plan on trademarking your company—name, slogan, or logo. We can also help keep your trademark protected from any future violation.
If things get ugly, our AI-powered app will assist you. In case a client is refusing to pay and thus breaches their contract, use DoNotPay to send a formal demand letter. You can even escalate the issue to small claims court with our help if necessary.
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