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Those are by far the least important parts of your startup, and certainly not something you need to put money or effort into until you have the actually important stuff squared away. Partner is 100% correct, at least as far as priorities go.

Starting a business is more than filing an LLC and paperwork. Especially something in bio med. Lawyers are also expensive.

To start a company? Sure, it's cheap. A startup is an entirely different beast, however, in that you have expenses to get the MVP to even begin to hunt for investors

Good contracts are hard to write. Good contracts require good writers. Good work requires money.

Ask your partner for an itemized list if you think they will bilk you.

This seems incredibly steep and not real. EIN numbers are free on irs.gov. Registering your business is just a filing fee with the state($100 in Ohio). The other registrations as you mentioned are low in cost.

You would probably want an attorney to draft formation documents and an operating agreement which can have some serious fees behind it depending on exactly what you want and the complexity, but I wouldn’t think more than $10,000-$15,000 worst case. Most of its just standard language fill in the blank stuff for a reputable business attorney. You could try to do this on the cheap yourself if you are comfortable with that route and it lowers the cost to <$1,000.

>I feel he has a bit of a Boomer mentality

wow discriminatory much?

you're correct that the basic business licenses should be cheap. but that's not the only thing you need to start a company.

a business license is useless without employees, a storefront or office, a website, a product or service that people are willing to pay for, etc...

I formed my LLC back in the mid-nineties. Very little was required: 2 computers, 2 desks, a filing cabinet, a printer, a fax machine, business cards, some office supplies and advertising literature. It still cost me near 20K. With inflation 50K would not be unreasonable especially if you are buying lab equipment. I ran it out of a spare bedroom of my house. Being undercapitalized is almost a guarantee for failure.

As a lawyer, filing for an LLC and the accompanying docs (company agreement, etc) should not be anywhere near $50k. However, if you’re dealing with patent searches, drafting, etc. then that can get very expensive very quickly.

> it doesn't look like it would cost more than $1,000 for LLC, EIN, and the legal legwork. Maybe $500 more for trademarks through the post office. Am I majorly missing something here? I wanted to solidify our company asap to secure names, social media profiles, domains

sure, sounds ok. But that isn't "starting a business", that is just doing some paperwork.

If you want to do that stuff, then by all means go ahead, get a domain name, register an LLC. etc.

love the name obi wan jabroni! This is so true. My first LLC I went for the fancy binder and corporate seal along with the name search ein filing and it was just under $2k from Legal Zoom. My second one was a flat $1,000 from a lawyer.

The patent is a different story over a year and $250k before it issued.

It totally depends what you're trying to do. For biotech I'd imagine the costs for things like licensing, liability/insurance (could include retaining an attorney), patents, machines etc would stack up easily. Legal registration of the company itself, again it depends but wouldn't surpass more than a few thousand dollars at the absolute most. Trademarks can be pricey though, maybe he's including that?

Tdlr; it totally just depends

Start-up costs can be significant, registration costs with carry state to state but are usual a couple hundred or less. I recommend forming the company before seeking finding as it can protect you and your personal assets from your or your partners business mistakes.

I used BizFilings many years ago and I think it cost maybe $500 total for an LLC.

Registering a business itself is cheap (like less than a $1000 cheap), but you have additional considerations (namely IP).

Who’s the parent holder? Do you have grants, or perspective partners? The additional cost would come from setting up a proper operating agreement and putting some seed funding in place, but every situation is different.

If you’re doing a startup, some firms will do this sort of work for free. You’d have to pay the out of pocket filing costs. In return, you stay with them as you build the company. If you want Delaware formation and registration in Massachusetts to do business. The patent filing costs won’t be free. The actual filing fees are pretty reasonable but you should use someone knowledgeable to avoid headaches later. Granting founder shares is always interesting.

I’ve started several successful companies, both LLC and C-Corp, and the real answer to this question is what you consider “starting a business”

If you mean having a corporate structure that can begin raising capital for operations and allow you to start offloading tax liability as business expenses, then you absolutely do not need 50k - 10-15k max for an airtight functional business entity. This means limited expenditures on equipment/office space/social media or advertising and forgoing salary for anyone as an early partner.

If you mean having a physical location, production equipment, investing in a social identity/presence, retaining legal counsel for regular use, or paying salaries, then yes it is quite expensive, and even 50k would only get you a few months of operation.

The most important thing people forget about is that having a business is as much about offloading tax liability and providing legal protection. My business mentor and partner has 27 LLC companies and 5 C-Corps. One mistake that gets made a lot is keeping everything under one corporate entity. Every step of your business that costs money should be it’s own entity so that all elements of operation and production, as well as many of the partner’s personal expenses, become tax deductible. If done properly, none of the partners should see any significant tax liability from anything but salary and capital gains (when you are revenue positive).

Have them break it down for you. Creating a LLC is one thing, but what's the exit strategy? What state will it be registered in? Is it going to be just one company or layered? Are you both going to have to put money in to establish equity? Does starting the business start a specific timer they are concerned about? What does your partnership contract look like?

If they have gone through it before, it's probably the exit strategy. How you set up the company and what state you register it in can impact your value to potential purchasers (and how easy it will be to transfer ownership).

I started my subchapter S corporation 30 years ago for around $3000 in legal and office equipment costs. But that's just the legal framework. You need to think of working capital to hire those first people and provide them a place to work.

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• cost me $50 to incorporate a not for profit in Illinois with the state, I did all the paperwork online with the state. EIN is free and done online portal with IRS. Boiler plate bylaws you need if incorporating, not so much for LLCs
• $50,000 to create a business entity is bullshit

Only experience with this: operating agreement and subscription agreement for creating a couple business entities (since there was some considerations about the structure) cost about 25k for the first draft. then about 10k to adjudicate member/subscriber/investor feedback. in general, this stuff covers pay outs, governance, raising additional capital/dilution, etc, etc. there's boilerplate stuff to put in each section but which boiler plate thing to put in matters a lot to the investors, owners and management