Incorporating a business typically involves a range of costs, but the initial state filing fees are generally not prohibitive. While the exact expense can vary significantly based on the state and the level of professional assistance you choose, incorporation is often a manageable investment for the legal protections and benefits it offers.
Initial Filing Fees
The primary cost to legally establish your corporation is the fee paid to the Secretary of State office (or equivalent state agency) when you file your Articles of Incorporation. These administrative and filing fees usually range from $100 to $250, depending on the specific state where your business is incorporating. For precise figures and details, you can typically find this information on your specific state's Secretary of State website, which outlines the general costs of incorporation.
Other Potential Costs of Incorporation
Beyond the mandatory state filing fee, several other expenses might arise during and after the incorporation process. Understanding these can help you budget effectively:
1. Registered Agent Service
Every corporation is legally required to have a registered agent in the state of incorporation. This agent is responsible for receiving legal and tax documents on behalf of the company.
- Cost: If you appoint an individual or yourself, there's no direct cost. However, professional registered agent services typically charge $100 to $300 per year. These services can be beneficial if you don't have a physical address in the state, want to maintain privacy, or require reliable document handling.
2. Legal and Professional Fees
While it's possible to file incorporation documents yourself, many business owners opt for professional assistance.
- Legal Counsel: An attorney can draft and review your Articles of Incorporation, create bylaws, assist with shareholder agreements, and provide legal advice. Their fees can vary widely based on complexity and location, potentially ranging from a few hundred to several thousand dollars.
- Accounting Services: An accountant can help set up your company's financial structure, obtain an Employer Identification Number (EIN), and advise on tax implications, particularly if you're considering an S-Corp election. Fees for these services also vary.
- Online Incorporation Services: Platforms that assist with filing documents often charge service fees in addition to state fees, typically ranging from $50 to $500 or more, depending on the package of services chosen (e.g., registered agent, EIN application, basic bylaws).
3. Ongoing Compliance Costs
Incorporation isn't a one-time expense. Corporations have annual obligations:
- Annual Reports or Franchise Taxes: Most states require corporations to file an annual report and/or pay an annual franchise tax to maintain their good standing. These fees can range from $0 to $500 or more annually, depending on the state and sometimes the company's revenue or assets.
- Business Licenses and Permits: Depending on your industry and location, you may need various federal, state, and local business licenses and permits. The costs for these are highly variable.
Breaking Down the Costs
Here's a simplified overview of the typical cost components involved in incorporating:
| Cost Type | Typical Range | Notes |
|---|---|---|
| State Filing Fees | $100 - $250 | Mandatory initial fee paid to the Secretary of State; varies by state. |
| Registered Agent Service | $100 - $300 per year | For professional service; can be free if you act as your own agent (with a physical address in the state). |
| Online Incorporation Service | $50 - $500+ | Optional fee for platforms that prepare and file documents; often includes additional services. |
| Legal Advice/Document Prep | Varies significantly | Optional; for complex structures, custom bylaws, or specific legal guidance. |
| Accounting/Tax Consultation | Varies significantly | Optional; for tax strategy, EIN application, or financial setup. |
| Annual Report/Franchise Tax Fees | $0 - $500+ per year | Recurring state fees to maintain good standing. |
| Business Licenses & Permits | Varies significantly | Dependent on industry, city, and county; essential for legal operation. |
Cost-Saving Insights
- DIY Filing: If you have a straightforward business structure and are comfortable with legal forms, you can save on legal and online service fees by filing the Articles of Incorporation yourself through your state's Secretary of State website.
- Be Your Own Registered Agent: If you have a physical address in the state of incorporation and are consistently available to receive official mail, you can often serve as your own registered agent, avoiding annual service fees.
- Prioritize Essential Services: Start with the basics. You can always engage legal or accounting professionals for more complex needs as your business grows.
In conclusion, the initial state filing fee to incorporate is relatively low, typically falling within the $100-$250 range. However, the overall cost of incorporating can increase depending on whether you opt for professional services and the various ongoing compliance requirements.
