Starting a Business: Every Legal Cost You'll Face

Legal costs catch many new business owners off guard. While you can start a basic business for under $500 in legal fees, growing beyond a side hustle requires more substantial legal investment. Here's what to budget for.

Business entity formation: sole proprietorship ($0-$50 for a DBA), LLC ($50-$500 in state fees), S-Corp election ($0 federal, varies by state), C-Corp ($100-$500 in state fees). Attorney assistance adds $500-$2,000.

An LLC is the most common choice for small businesses. State filing fees range from $50 (Kentucky) to $500 (Massachusetts). Online formation services (LegalZoom, Incfile) charge $0-$300 plus state fees. An attorney charges $500-$2,000.

Operating agreements for LLCs cost $500-$2,000 through an attorney. Multi-member LLCs absolutely need one — without it, state default rules govern disputes and dissolution. Single-member LLCs benefit from them for liability protection.

Trademark registration costs $275-$350 per class per mark for the USPTO filing fee alone. Attorney-assisted trademark applications cost $1,000-$2,000 total. A comprehensive trademark search before filing costs $300-$500.

Business contracts you'll likely need: client service agreements ($500-$1,500), independent contractor agreements ($500-$1,000), non-disclosure agreements ($300-$800), website terms and privacy policy ($500-$1,500), lease review ($300-$500).

Business licenses and permits vary wildly by location and industry. General business licenses run $50-$400. Professional licenses (contractors, healthcare) cost $100-$1,000+. Annual renewal fees apply to most.

Ongoing legal costs: annual report/franchise tax ($0-$800 depending on state), registered agent ($100-$300/year), contract reviews ($300-$500 each), legal consultations ($200-$500/hour). Budget $1,000-$3,000/year.

When to hire a business attorney: taking on partners, receiving significant investment, signing a commercial lease, getting sued or threatening litigation, negotiating acquisitions, or dealing with employee disputes.

Insurance is a legal necessity: general liability ($400-$1,500/year), professional liability/E&O ($500-$3,000/year), workers comp (required with employees, varies by state and industry). Operating without required insurance can result in fines and personal liability.