How Much Does It Cost to Start a Company? A Founder's Guide to Startup Legal Fees
Most founders budget for product and marketing but leave legal out entirely. Here's what it actually costs to start a company: state filing fees, attorney formation packages, registered agent costs, and the first-year expenses that catch startups off guard.
The cost of legal fees to start a company is one of the most underplanned line items in any founder's budget. Most financial models account for product development and marketing spend but leave legal out entirely. That gap is expensive: a startup should expect roughly $15,000 to $20,000 in legal fees during its first year, covering formation, founder agreements, IP assignments, and core contracts, before any capital-raise work enters the picture. The good news: formation itself is the most predictable piece, typically a flat $2,500 to $5,000. This guide maps every cost category so you can budget for it before it finds you.
Why Startup Legal Fees Vary
The cost of legal fees to start a company shifts based on factors that are largely within a founder's control. According to practitioners at Velawood Law, the wide price range for formation work depends on state of formation, business structure, number of founders, and the documentation those choices require. Forming a Delaware C-Corp with three co-founders and a custom vesting schedule demands more attorney time than a single-member LLC filed in the founder's home state - and the bill reflects that difference directly.
Attorney billing structure is the second lever. Startup lawyer costs normally range from $200 to $500 per hour, which means a few extra hours of negotiation or revision can swing total fees by hundreds of dollars. Many attorneys and legal services platforms use flat fees for routine formation work, with the market range running from roughly $500 to $2,000 depending on complexity. Understanding which tasks carry flat fees versus hourly rates lets founders budget with precision rather than guessing at a final number.
Formation Costs by Entity Type
State filing fees are only one piece of the formation cost picture. Texas charges a flat $300 filing fee for both LLCs and corporations, with no registered agent requirement for companies maintaining a Texas office. Delaware's Certificate of Incorporation carries an $89 filing fee, but founders must also budget for a registered agent (typically $50-$300 per year) and a minimum annual franchise tax of $175, bringing the realistic Year 1 total to roughly $414 before attorney fees touch the picture. The table below breaks down each structure side by side.
| Entity Type | State Filing Fee | Annual Franchise Tax | Registered Agent | Approx. Year 1 Total |
|---|---|---|---|---|
| Texas LLC | $300 | $0 (below $2.47M revenue) | Not required if TX office maintained | ~$300 |
| Delaware LLC | ~$110* | $300/year (flat) | $50-$300/year | ~$460-$710* |
| Delaware C-Corp | $89 | $175/year (minimum) | $50-$300/year | ~$314-$564 |
* Delaware LLC filing fee and franchise tax figures are approximate; verify at corp.delaware.gov before budgeting.
What a Startup Attorney Costs
Startup attorney hourly rates run $200 to $500, which means an engagement billed by the hour can quickly become unpredictable for founders already watching every dollar. The alternative most startup attorneys offer is a flat-fee formation package. Law firm startup costs for these packages range from roughly $500 to $2,000 for a filing-only engagement that covers only the state filing. That base tier leaves founders without an operating agreement, equity plan, or initial resolutions - the documents that actually govern how the company runs and who owns what.
A full-service formation package from a startup-focused attorney costs $2,500 to $5,000 and includes the Certificate of Formation or Incorporation, bylaws or a Company Agreement, initial resolutions, and founder equity agreements. That is the range worth budgeting for. To put it in context, a startup's full first-year legal spend typically reaches $15,000 to $20,000, excluding any capital raise. Formation is the smallest and most bounded line item in that budget, and it is the one that sets the structure every subsequent legal expense builds on.
Other First-Year Legal Costs to Budget For
Beyond formation and equity documents, several smaller line items add up quickly in year one. Here is what founders typically overlook when building a legal budget.
- EIN (Employer Identification Number): $0. The IRS issues EINs at no charge through its online assistant, and the number is issued immediately upon completion. Any service charging a fee for this is marking up a free government filing.
- Registered agent service: $50-$300 per year. Commercial registered agent services generally range from $50 to $300 annually, depending on the provider and any bundled features. This is a required recurring cost, not optional.
- Founder NDAs: $500-$1,500 each. Standard non-disclosure agreements drafted by counsel fall in this range, with complexity driving the higher end.
- Founder agreements: $2,000-$5,000+. Co-founder relationship documents covering equity splits, roles, and IP assignment sit at this level and are worth the investment early.
- Federal trademark registration: $1,250-$2,850 per class (all-in). USPTO filing fees run $250-$350 per class of goods or services, and attorney fees for trademark prosecution typically add $1,000-$2,500 on top of that.
Can I Form an LLC Without a Lawyer?
For a single-member LLC with no investors, no co-founders, and a straightforward business model, yes. Online formation services are legally permissible and can get the job done. LegalZoom's LLC packages run $0 to $249 plus state filing fees, with registered agent service billed separately at $249 per year. That price point makes DIY formation look attractive, and for genuinely simple structures, it holds up.
Multi-member LLCs are a different story. Practitioners who clean up online-service filings report that operating agreement problems range from needing half the work redone to starting completely over; at attorney rates, that cleanup can require as much time as starting from scratch. The same services also routinely skip post-formation steps: obtaining an EIN and opening a dedicated business bank account are frequently overlooked, which can compromise the LLC's liability shield before the company earns its first dollar.
The most consequential gap is the 83(b) election. When founders receive equity subject to a vesting schedule, they have exactly 30 days from the grant date to file an 83(b) election with the IRS, a deadline the IRS enforces strictly. Once the window closes, the election is invalid and no extensions are available. Miss it, and every future vesting milestone becomes ordinary income taxed at fair market value at the time of vesting rather than at the grant-date value. Online formation services typically do not include guidance on the 83(b) election. There is no fix once the window closes.
What You Get With a Startup Formation Attorney
A full-service startup formation engagement from a startup-focused attorney typically falls within the $2,500 to $5,000 range that the market has converged on for early-stage companies. That fee covers the foundational documents your company needs to exist and operate: the Certificate of Formation or Certificate of Incorporation, bylaws or a Company Agreement, initial corporate resolutions, and restricted stock or unit purchase agreements for the founding team. At a flat-fee firm, it also includes the 83(b) election filing, EIN assistance, and equity plan setup - the pieces that are easy to skip and expensive to fix later.
The practical value of working with a startup-focused attorney is not just the documents themselves. It is the assurance that nothing is missing from the stack at the moment it matters most.
How to Plan Your Startup Legal Budget
Start by settling on entity type using the cost comparison in this guide, then honestly assess whether your situation is simple enough for a DIY filing. A sole founder launching a single-member LLC with no outside investors and no employees can often handle formation with minimal professional help. If your situation involves co-founders, equity splits, or a Delaware C-Corp, those variables compound quickly after the charter is filed, so the right time to consult an attorney is before you file, not after.