Louisiana is an international tourist destination and a vital part of the American south. It has a large, diverse population throughout its cities and rural areas and offers a wide variety of business opportunities. Before you can make any money, though, you’ll have to spend some money setting up your business.
Forming an LLC is one of the most cost-effective ways to get started. In this article, we’ll help you figure out where you need to spend your money, as well as other purchases you’ll want to make that can make your life easier, both now and in the future.
This article will help you make a budget for starting an LLC in Louisiana.
- The required costs for every LLC
- Extra costs we recommend you incur
- The different ways you can form your LLC, as well as the pros and cons of each
Total Louisiana LLC Cost – $100
In Louisiana, the least money you need to form an LLC is $100, which is the filing fee for your LLC’s articles of organization and initial report. Although they are legally two documents, they are filed as one with the state.
See the Louisiana Secretary of State’s fee schedule for more information.
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How Much it Costs to Start a Louisiana LLC
It might only take $100 to get started, but there’s more that you need to think about. After you get the papers filed, there are other costs you will likely need to incur. Often, it makes sense to pay a little more for some extra services to make starting your company a little easier.
Articles of Organization and Initial Report – $100
The articles of organization are what creates your LLC. Without them, you don’t have a company. After they’re filed, your LLC can buy, sell, borrow money, and conduct other lawful business. Thus, making sure that you have them correctly drafted and filed is your first major step.
The initial report tells the state who your registered agent is, as well as the address where they can be located. You must file it along with your LLC’s articles, and it is a part of the fill-in-the-blank form on the Secretary of State’s website.
The filing fee is $100. You can file them online, in person, or by mail. Processing times will be discussed under “Expedited Filing Service,” below.
Louisiana LLCs – Optional Costs to Consider
Beyond the bare minimum, you need to think about paying a bit more for things that will make your life easier.
Expedited Filing Service – $30 or $50
Expect two to three business days of processing time for your articles and initial report. If you would like to do it in less time, the Secretary of State offers two options:
- Within 24 hours: $30 fee
- Walk-in processing while you wait: $50 fee
Also, you will likely get things done more quickly by filing your documents online.
Business License – variable
The state does not require your LLC to get a business license. Your city or parish, though, may have its own license laws.
In New Orleans, for example, every business must be licensed. There is a wide variety of licenses, some of which are based on gross receipts, and others that can be procured for a flat fee. A video arcade, for example, would only require a $50.00 license, while an investment bank would need a $500.00 license.
Also, keep in mind that some jobs, like the practice of law or medicine, will also need special licenses from the appropriate state board. The state also has a list of regulated professions you can consult to see whether you might need a license.
Registered Agent Fee – $100/year for a registered agent service
The next “optional” cost you’ll want to consider is a fee for a registered agent. Though the agent itself is required by state law, you get to decide if you will do it or hire someone else.
A registered agent is a person or company you name that must publish its address. You need to have an agent so that, if the state or someone else needs to contact your company, there is one place they can always go. Though it’s not fun to think about being sued, if that happens, your agent is the one who gets the legal papers.
Many owners are tempted to serve as their LLCs’ agents to save a bit of money. This is not a good idea. It involves making your address public and always being available just in case someone wants to sue your LLC.
It’s an easier and more cost-efficient plan to hire a Louisiana registered agent service. These agents usually charge $100 per year and take care of all your registered agent needs. It’s money well spent.
Check out our Best Registered Agent Services article for some of our recommendations.
Operating Agreement – Variable
An operating agreement is a contract that sets down the rules of your LLC. It says how the people in charge should do their jobs, when meetings must be held, how members can enter and exit the LLC, and almost any other thing you can think of.
Unlike some other states, Louisiana won’t force you to have one if you don’t want it. But we strongly urge you to think about it. Without one, you have much less control over what happens to your LLC.
Though you could put legal terms in your articles instead of an operating agreement, we recommend drafting a separate agreement anyway. Because your articles are filed with the state, any changes to them will require an amendment, which will cost you an extra $100 filing fee!
If you choose to have a separate LLC operating agreement, on the other hand, you don’t have to file it with the state. You can write it yourself, but unless you are a lawyer or know for sure what it’s supposed to look like, we don’t recommend that option.
A lawyer would likely charge you by the hour for drafting a contract. While a contract drafted by a lawyer would likely be a good one, that could also run you at least a few hundred dollars. You can have a good one drafted, though, for as little as $39.
DBA fee – $75
Even though you may have found an okay name for your LLC, it still may not be quite what you wanted. Or, maybe you’ve gone into business and you need to tweak your LLC’s name a bit so that it isn’t confused with a competitor.
This is a common problem with a common solution. You can get a fictitious business name or trade name for your LLC, also known as a “doing business as” name (DBA).
This process is addressed by Louisiana Revised Statutes section 51:214. That law allows you to register a DBA with the Secretary of State by filing a document with:
- Your LLC’s name and address
- The business your LLC does, including what kinds of goods or services it provides and how
- The date the DBA was first used anywhere, and the first time it was first used by you or someone else in this state
- A statement that your LLC owns the DBA and no one else in the state has the right to use it
The Secretary of State offers a form application and instructions. The filing fee to register a DBA is $75.
Name Reservation Fee – $25
Maybe you have a great plan and the perfect name for your LLC, but you’re not quite ready to start the business. If you want to make sure that a certain business name is still available, you can file a Reservation of Name with the Secretary of State.
After you’ve filed the request, you must file your Louisiana articles of organization and initial report within 120 days.
Domain Name — about $20 per year
In this day and age, you need a presence on the Internet. The first step in creating a good website is to get your own domain name. While this might have been pricey in the past, it is now quite affordable.
You should secure your domain name as soon as you can, even if you don’t have plans for a website right now. If you don’t, a competitor could buy your ideal domain and its variations to block you from using them. Domain squatters also sift through newly registered LLC names and will buy their domains only to relist them with huge markups.
In general, a domain ending in .com will be more expensive than a .net or .info domain, and some names will likely be taken, meaning you will have to do some searching (and perhaps some compromising).
A domain name from GoDaddy.com or a similar registrar may cost you between $20 and $50 per year, with regular specials and sales where you can get big discounts.
Registering with the State Tax Office – Free
Though most LLCs elect to be treated as “pass-through” entities for the purposes of income taxation, your small business will still have to pay some taxes to the state, including sales and use taxes and employer withholding taxes. To do this, you have to be registered with the state Department of Revenue.
Louisiana makes registering with the Department quite easy. You just have to file your articles and initial report online, and you will register with the state tax office and obtain your state tax ID number at the same time.
Getting an Employer Identification Number (“EIN”) – Free
An EIN is a number created and assigned by the Internal Revenue Service to a business for paying taxes. (Think of an EIN as a social security number for a business.)
Regardless of whether the IRS says you need one, we recommend that you get an EIN. Many banks won’t allow your company to have its business bank account without one. Having an EIN can also be important when your business is trying to get credit.
You can apply online and get an EIN for free in minutes, or you can apply for one through the mail or fax. Whatever you do, don’t pay someone else to get an EIN for you. It’s too easy to pay someone else to do it unless it is part of a broader service package.
Foreign LLC Qualification Fees – about $100 per extra state
If your business starts doing well, you may want to expand. If one of the places to which you expand is in another state, you’ll have to pay to do business there. You won’t have to form your LLC again, but you will have to register with the Secretary of State there as a foreign limited liability company and pay some extra fees.
The exact fees will depend on the state in which you are registering. As a rule of thumb, expect to pay about $100 in filing fees to register your limited liability company as a foreign LLC in another state.
Writing Formation Costs Off
The costs we’ve discussed so far are vital to forming and running your Louisiana LLC. For that reason, they can be deducted from your taxes as business startup costs. The IRS has a lot of guidance on this matter, and you should compare your specific costs to the materials on the IRS website.
In most cases, an LLC is taxed as a pass-through entity. In other words, your income and deductions will go on your personal taxes, rather than a separate income tax return for the LLC. The IRS allows LLC owners to deduct $5,000 of their business startup expenses in the first year.
Title 47, Section 62 of the Louisiana Revised Statutes appears to allow business startup deductions from state income taxes as well, so you should submit the same costs to the state as you did to the IRS, provided that you incurred them in the current tax year.
Eric wants to start a hardware store in his native city of New Orleans. He forms a limited liability company called New Orleans Tools and Renovation LLC. Eric will operate the entire business by himself, with no other workers. After consulting with the city, he figures that his business license will cost $650.
Shortly after filing his paperwork, Eric realizes that the name of his shop is too long to easily remember. He wants to get a DBA and simply rename it Eric’s Hardware. He files for his DBA and pays the $75 fee.
Eric’s sister-in-law is a general contractor who will be moving to New Orleans in the next year. When she does, she may want to join the business and offer her services through it. To prepare for that possibility, Eric has an operating agreement drawn up that allows him to expand the business if he wants to let his sister-in-law be a part of it.
Eric also gets a registered agent service and a web domain for his LLC.
His formation costs are as follows:
- Louisiana LLC Articles of Organization and initial report: $100
- New Orleans Business License: $650
- Registered agent company fee (first year): $100
- DBA fee: $75
- Louisiana LLC Operating Agreement draft: $39
- Web domain costs (first year): $50
For income tax purposes, the IRS and the state will tax Eric directly. In other words, Eric will get paid by his LLC, and from that money, he will pay his personal federal and state income taxes. Thus, Eric will report both his income and deductions for the business on his tax returns, and he will submit the federal schedule with his deductions to the state as well.
The total amount of Eric’s deduction in this example is $1,014. Before the deduction, his total taxable income for the year was $35,000. After the write-offs, the taxable income went down to $33,986.
In Louisiana, Eric would be in the 3.50% tax bracket, meaning that a $1,014 deduction would save him $35.49 in his state taxes. On his federal taxes, where Eric is in the 12% tax bracket, he would save $121.68. Thus, his total tax savings from write-offs is $157.17.
Keep in mind that if Eric had spent more than $5,000, he would likely be able to write off all of that money on his federal, but not all in the first year. Instead, he would have to break out his deduction over multiple tax years.
Cheapest Way to Start an LLC in Louisiana
Now that you know the costs, the question remains: what’s the cheapest way to go, while still making sure you aren’t cutting corners? Here are your options.
Formation Service – $39 + state fees
A business formation service is a popular and inexpensive way for new LLC owners to get started.
These companies help entrepreneurs bring their visions to life. They have not only the knowledge of all the state laws you need to know, but also forms, documents, and procedures to make your life as easy as possible.
Formation services are a good way to handle formation needs for most LLCs.
- They’re easy. In most cases, a formation service will have helped hundreds of people through the exact process you are struggling with now. They have all the forms, information, and expertise you need right on hand.
- They don’t cost much. Because these services have such a large volume of business, they don’t have to charge their clients that much money.
- They’re reliable. All of the services’ products and procedures have been tested hundreds of times over in the real world. That fact should give you peace of mind and confidence going forward.
- They’re fast. Formation services have seen almost every business arrangement already. Chances are, they have many solutions for you that are ready right now before you even know you need them.
While formation services can be great for most people, they are not always the best choice. Some cons for these services are:
- They’re not the best solution for complex LLCs. If you are forming a complicated company or one in a heavily regulated industry, you will probably need more focused expertise in that area of business.
- Even if a formation service is a good fit, you can expect upselling. Formation services have to make money too, and some of them may pressure you to buy products you don’t need. Even when you are using the service, you need to be a smart and informed consumer.
Using a professional LLC formation service can be a great way to set up a business. Check out our Best LLC formation services article for some of our suggestions.
Attorneys are licensed, reliable, and powerful resources for business formation. They are also quite pricey. New Orleans, where Eric is opening up his hardware store, is a particularly expensive area for lawyers. Eric could easily spend $700 per hour (or more) on a good lawyer. Given his limited income, that is not a good option for Eric.
A wealthy LLC owner, though, could benefit from having an attorney if their business was at all complicated. For that reason, a few choose this option.
Despite the expense, sometimes hiring a lawyer is the best choice.
- Lawyers help you manage risk. An LLC with complicated legal issues needs a lawyer. If Eric were trying to set up an investment bank instead of a hardware store, the additional laws and regulations might require him to get a lawyer to make sure everything is okay.
- Lawyers offer more customization when you need it. Do you need specific things put in an operating agreement? Is your company going to have a unique ownership structure? You may need an attorney to make sure these issues are handled properly.
For most people, getting an attorney comes with considerable downsides that outweigh any benefits.
- Lawyers cost more than any other option. The price tag alone should convince you that if you don’t need a lawyer, it’s not worth hiring one.
- Finding a lawyer takes a long time. Getting a lawyer who specializes in what you need, costs what you’re willing to pay, and can work with you well is a tall order.
- Lawyers also take longer to form a business than a formation service. Because lawyers are also very caring people, they will generally take much longer to form your company than non-lawyers would. Fortunately, most people don’t need a lawyer. In 90% of cases, a formation service will do just fine.
Do it Yourself
Many people, after searching the Internet for the information they need, decide to try forming their new LLCs themselves. This process can make you an expert, but remember that time is money. If you are spending hours on your business formation, that’s time you’re not spending on the substance of your business.
In most instances, then, it is more cost-effective to just pay an LLC formation service, with confidence that everything has been done correctly, rather than try to reinvent the wheel yourself.
- Personal knowledge. A DIY business owner will learn a lot about the process while forming their own business, and they probably will retain that knowledge for years to come.
- It costs less upfront. If you don’t figure out the value of your time, a DIY solution is the cheapest option.
- You’re losing money when you consider how much time it takes to DIY. If you figure out that your time is worth $30 per hour, and you take 20 hours to complete your business formation, you have essentially spent $600 on business formation.
- There’s the risk of making a mistake. DIY business owners can easily make a mistake with all the paperwork that then costs them more time and money.
- It’s a headache. State workers are helpful, capable people. But they will also tell you that the laws and rules governing business formation are not easy, and they follow those rules for a living. It’s going to be even harder for you.
Annual Louisiana LLC Fees: How Much Will it Cost to Maintain your LLC?
Once you’re off the ground, you will have to pay money every year to keep your company in good standing with the state. You’ll also have to pay money to make sure that your LLC gets the services it needs. The items you will need to pay for include:
- Annual Report filing fee: $30
- Business License renewal: varies according to local laws
- Registered agent service fee: $100
- Domain name: $20
Make sure you file your LLC’s annual report every year no later than your LLC’s anniversary – the date its articles were filed. Otherwise, you will violate the law and may have to pay a penalty.
Also, keep in mind that any small business should have an accountant. Costs for accounts vary significantly, but you should spend an average of $2,000 to $3,000 per year on an accountant in most cases.
How Much are LLC Taxes in Louisiana
According to the Louisiana Department of Revenue, your LLC will be taxed and treated by the state in the same way that it is treated by the federal government for income tax purposes.
Because LLCs are “pass-through” entities by default, they are usually not taxed directly on their income. Rather, members are taxed on the income they each receive from the company. You may elect different tax treatment, but you should consult with a Louisiana lawyer or accountant if you are thinking about that option.
If your LLC has employees, you will need to pay employment taxes and withhold taxes as well. If you sell goods or services, you’ll also need to collect and pay sales and use tax.
LLCs are not subject to franchise tax in Louisiana.
For more information on taxes, contact the Louisiana Department of Revenue.
Louisiana LLC Formation Costs Quick Links
- City of New Orleans — Business License Information
- Department of Revenue — Create an Account
- Department of Revenue — LLC Tax Information
- IRS — apply for an EIN online
- IRS information regarding the federal tax treatment of LLCs
- Secretary of State — Business Search
- Secretary of State — File Business Documents
- Secretary of State — Forms & Fee Schedule
- Secretary of State — Form Application to Register Trade Name/DBA
- Secretary of State — Form Articles of Organization and Initial Report
- Secretary of State — Form Reservation of Name
- State of Louisiana — Professional Licenses
Louisiana LLC Formation Costs FAQs
How much does it cost to start an LLC in Louisiana?
The minimum cost is $100. You must pay at least this amount to file your LLC’s articles of organization and initial report.
What is the cheapest way to start an LLC in Louisiana?
A do-it-yourself approach will have the lowest price tag, but it isn’t the cheapest in terms of your time. The best balance of price and time, for most people, is to use a formation service.
Do I need to hire an attorney to form an LLC in Louisiana?
No. Most people will not need to invest the considerable expense and time of hiring a lawyer. A formation service or a DIY approach will work for most business owners.
Can I pay to form an LLC more quickly in Louisiana?
Yes. Formation services will generally complete formation tasks faster than business owners acting on their own. You can also pay $30 or $50 to expedite the processing time of your documents to within 24 hours or almost instantly, respectively.