How Much Does an LLC Cost? (All State’s Fees Revealed)


Starting a Limited Liability Company (LLC) is a favored option among entrepreneurs because it combines the personal liability shield of a corporation with the tax advantages and operational ease of a sole proprietorship.

Yet, it’s essential to be aware of the related expenses. These encompass state filing fees, recurring charges such as annual report fees, and occasionally, franchise taxes.

Additionally, your business might need a registered agent service, which further contributes to the total cost.

While fees vary by state, certain costs like business name registration and opening a bank account are generally consistent.

To provide you with a comprehensive overview of the typical costs associated with forming an LLC, our team of experienced financial advisors has created this guide. Let’s dive in!

Brief Overview

  • Forming an LLC typically costs between $35 and $520, varying by state, with possible additional fees increasing the total to about $1,000.
  • LLCs incur ongoing costs like annual report fees, franchise taxes, and registered agent fees, which can range from $100 to $300 annually.
  • Other expenses include legal fees for setup (up to $2000), tax preparation (average $457 for Schedule C), and potential publication fees in some states.

How Much Does It Cost to Form an LLC?


The expense of forming an LLC differs from state to state and is influenced by the nature and purpose of the business. Typically, the fees for forming an LLC fall between $35 and $520. Nonetheless, additional charges specific to your business might raise the total cost of setting up an LLC to as much as $1,000.

Let’s take a look at the expenses you’ll need to consider when starting an LLC for a restaurant, Airbnb, or other types of small businesses.

LLC Name Reservation Fees

You may need to secure the business name of your LLC by registering it with the Secretary of State. This requirement varies by state, so make sure to check if your government mandates it. Certain states, such as Alabama, California, Delaware, and Texas, have made this process obligatory.

Filing Expenses

The main cost associated with this process is the state LLC filing fee for submitting the LLC Articles of Organization (also known as Certificates of Organization or Certificates of Formation).

Each local government has a different fee structure, and the price tends to vary based on the nature of your LLC. For example, in California, the state filing fee is $70 while in New York, it’s $200.

Also, if you prefer having your LLC getting approved faster, then you need to pay extra for expedited filling.

Additionally, you can use these cheap LLC formation services with packages starting from 0$.

Registered Agent Fees

All 50 states require LLCs to designate a registered agent responsible for receiving legal documents. You can act as your own registered agent or use a professional service. If you decide to hire, expect registered agent costs to vary, with $100 to $300 annually being the norm.

Operating Agreement Costs

While not filed with the state, the LLC operating agreement outlines the regulations and capital contributions of owners and should be kept in your company’s records.

If you create the agreement yourself, it can be virtually free. Just ensure you cover all necessary details accurately. Online resources provide templates as a starting point.

Alternatively, hiring an attorney to draft the agreement may cost between $200 to $1000, depending on your business structure’s complexity and the attorney’s rates.

Our expert analysis indicates that investing in a professionally drafted operating agreement is the wisest decision, as it helps to prevent possible disputes and confusion in the future.

Employee Identification Number (EIN) Fees

The Employer Identification Number is a unique nine-digit number assigned to your business that is essentially used as a social security number for the LLC. Applying for this is free of charge and you can complete it online via the Internal Revenue Service (IRS) website.

On the other hand, if you decide to apply for an EIN through a professional service, expect to pay a fee, which can vary from one service provider to another. For example, Northwest Registered Agent charges $50 for this service while ZenBusiness’ fee is $99.

See also: Can an LLC Have Employees?

Publication Fees

Publishing an announcement about the formation of an LLC is a mandate limited to a handful of states, such as Arizona, Nebraska, New York, and Pennsylvania, and is not a widespread requirement.

The expense for this publication can differ significantly, starting from $50 and potentially reaching several hundred dollars, based on the chosen publication and the advertisement’s size.

The purpose of this fee is to publicly disclose information about the newly established business and its members.

Opening a Bank Account

LLCs should open a bank account to differentiate their business transactions from personal funds. This requires valid identification and paperwork proving the business exists. Most banks waive these fees, but more specialized accounts can carry an initial cost of up to $50.

Ongoing LLC Fees

It’s important to understand that the costs associated with limited liability companies don’t end when it is formed. You’ll also need to pay ongoing fees such as LLC annual report fees and franchise taxes.

Annual/Biennial Reports

In the US, 48 states require annual reports or biennial reports from LLCs, accompanied by a fee. These annual fees vary significantly, with Idaho on the lower end at $0 and Alaska requiring a hefty $100 annual fee.

Franchise Taxes

In certain states, you’ll also need to pay an annual franchise tax. This is essentially a fee you have to pay for the privilege of doing business in that state and is based on the LLC’s total income.

The ongoing LLC costs of this can range from $300 to several thousand dollars each year, depending on the specifics of your business.

State Business License Renewal Fees

You may also need to renew your license or permit every year. The cost of this process will vary depending on the type of business you are running and the specific state regulations. In New Jersey, for example, you might have to pay up to $75 for a license renewal.

Hidden Costs of Forming an LLC

While the LLC startup costs and ongoing expenses of maintaining a small business are generally well-known, there are three less obvious expenses that prospective small business owners should be aware of.

Legal and Professional Commissions

Whether you hire a lawyer or use a formation service, expert help is a significant but necessary expense. They can advise on the best business structure, help write an LLC operating agreement, and ensure the correct filing of all formation papers.

According to data from LegalMatch, attorney fees for creating an LLC can range from $500 to $2000.

Tax Preparation Expenses

While LLCs don’t pay corporate income tax like an S corp or C corp, members need to report their LLC’s profits or losses on their personal tax returns.

However, the complexities of the income tax may be challenging to navigate. Hence, many small business or LLC owners opt for tax preparation services.

The National Society of Accountants reported that, in 2020, the average state fee to prepare a Schedule C (profit or loss from business) tax form was $457.

State-Specific Filing Fees for Starting an LLC (2023)

Considering the wide range of costs associated with forming an LLC, it is very important to understand the fees for your particular state. Below, we have included a breakdown of formation fees in all 50 US states so that you can budget accordingly.

StateFiling Fee
Alabama$236
Alaska$250
Arizona$85
Arkansas$45
California$70
Colorado$50
Connecticut$120
Delaware$110
Florida$125
Georgia$100
Hawaii$51
Idaho$104
Illinois$154
Indiana$98
Iowa$50
Kansas$166
Kentucky$40
Louisiana$105
Maine$175
Maryland$155
Massachusetts$520
Michigan$50
Minnesota$155
Mississippi$54
Missouri$52
Montana$35
Nebraska$104
Nevada$436
New Hampshire$102
New Jersey$130
New Mexico$50
New York$205
North Carolina$128
North Dakota$135
Ohio$99
Oklahoma$104
Oregon$100
Pennsylvania$125
Rhode Island$156
South Carolina$125
South Dakota$150
Tennessee$309
Texas$310
Utah$54
Vermont$125
Virginia$100
Washington$200
Washington DC$99
West Virginia$100
Wisconsin$130
Wyoming$100

Ways to Save on LLC Formation Costs

Let’s discuss some key strategies you can employ to reduce LLC costs. Being alert and proactive can help you control your expenses effectively, ensuring that you get your new venture off the ground without unnecessary financial stress.

DIY Formation

Undeniably, one effective strategy to reduce the additional LLC costs associated with the filing process is opting for a do-it-yourself (DIY) approach. By taking charge of the process, you can eliminate the need for lawyer commission and other service charges.

Even tho, this is the cheapest way to start an LLC, our careful evaluation of the topic reveals that the DIY route is not always the most suitable as it requires a thorough understanding of the state rules and the process involved.

Online LLC Formation Services

An online LLC formation service offers an appealing middle ground between hiring a business attorney and the DIY approach. Companies like ZenBusiness and IncFile provide services starting from 0$ to guide you through the process, including preparing and filing your paperwork.

Wrapping Up

In conclusion, starting a business comes with both initial and ongoing costs. These include filing the Articles of Organization, annual fees, and state taxes.

Maintaining a sole proprietorship business also involves paying annual LLC fees, which vary depending on your state and industry.

Based on our experience, there are ways to reduce formation costs.

Consider options such as DIY formation or hiring online LLC filing services. These services often include the LLC’s registered agent service with their formation packages.

Just remember to explore all available options to find the best fit for your unique business needs.

FAQs

Can I Start an LLC for Free?

Yes, it is possible to start an LLC for free. However, you will still need to pay for the cost of filing the paperwork with your state government and any additional fees associated with the process. Additionally, depending on where you live, there may also be ongoing costs associated with operating an LLC such as federal taxes and annual registration fees.

Do I Need to Hire a Lawyer to Form an LLC?

No, you do not need to hire a lawyer to form an LLC. However, many business owners opt for professional advice since the process can be complex and require detailed knowledge of state regulations. Additionally, if your LLC will have multiple members or undertake complex operations, it is especially important that you consult a lawyer for guidance regarding pass-through taxation.

Which State Has the Lowest LLC Filing Fees?

The state with the lowest LLC filing fee is Montana, which charges just $35. Kentucky and Arkansas also have relatively low state fees of $40 and $45 respectively.

References:

  1. https://www.legalmatch.com/law-library/article/how-much-will-a-business-lawyer-cost.html
  2. https://higherlogicdownload.s3.amazonaws.com/NSACCT/725010a8-142f-4092-8b5d-077c2618c728/UploadedImages/Membership/IncomeandFeeSurvey/NSA2020-2021_IncomeandFees_FullStudy.pdf
  3. https://www.state.gov/secretary/
  4. https://www.irs.gov/
Thomas Wilson

Thomas Wilson

An accomplished business guru, our CEO holds a degree from Philadelphia's esteemed Fox School of Business, accredited by AACSB. With a knack for practicality, they've orchestrated the launch of diverse small enterprises and guided fellow entrepreneurs in optimizing their ventures. Trust their seasoned insights for invaluable advice tailored to new businesses and LLCs.