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What’s the Cheapest Way to Form an LLC?

By IncNow | Published January 19, 2016

  • What are the minimum required costs to form an LLC in Delaware?
  • Why choosing a Registered Agent based simply on price is risky
  • What criteria you should use to select a Registered Agent

benefits vs costs“Dear IncNow,

I have seen registered agents that ask for around $300 per year and Delaware asks for around $300 per year for my LLC…is there a way to avoid these fees?”

Dear Customer,

Every LLC that is registered in the State of Delaware must pay a flat tax of $300 each year, regardless of business activity or non-activity. This “tax” is really more of a fee for the privilege of having a Delaware LLC and being able to access its laws and courts, which are considered the most pro-business in the country. It must be paid the year after your LLC is formed and is due on or before June 1 of every year. Delaware bills for the prior tax year; so for example, tax year 2015 would be due by June 1, 2016.

The advantages of forming a Delaware company are numerous and many of the top companies in the world have chosen to form an LLC in Delaware (see 11 advantages here: https://www.incnow.com/delaware-llc/delaware-llc-benefits-11-advantages/.) The cost to form an LLC in Delaware is among the lowest in the country and its maintenance fees are also low compared to other states. For your company to be incorporated in Delaware, it must name a “Delaware Registered Agent” who serves as a physical presence in the state and will provide services between you and the Secretary and State, such as forward notice of when the annual tax payment is due. Since Delaware does not require you to disclose Member information on the filing or when you make the annual payment, an agent is your liaison with the state. Another role of the agent is to be available during business hours to accept legal process in case your company is sued.

The registered agent has the ongoing role for the life of the company, even if mostly disconnected to the underlying business. When selecting an agent, it is risky to select one simply based on price. You want a reliable agent who will forward notices to you in a timely manner. Should your company or its officers, directors or managers be sued, the Registered Agent is the first to receive the lawsuit. Your Registered Agent then forwards this notice to you. Some Agents can be unreliable or slow in the forwarding of lawsuits. Your Registered Agent’s receipt starts a time period of usually 20 days to respond. Failure to respond to the lawsuit in a timely manner will result in a judgment by default and financial liability for the defendants.

IncNow charges $99 for registered agent services and we are backed by attorneys who have 70+ years of combined experience with Delaware law. Companies choose us because we provide reliable service at a competitive price.

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When deciding where to form your company, consider that Delaware has advantages over your home state that may benefit you. Go