How much does it cost to start an LLC?

LLC formation cost by state

To legally form your LLC, you must file formation documents with the Secretary of State or the department that handles business filings in your state. This document is typically called Articles of Organization, Certificate of Organization, or Certificate of Formation.

The filing fee for forming an LLC varies by state. Montana has the lowest fee at $35, while Massachusetts has the highest at $500. Most states charge between $50 and $200.

Keep in mind that the filing fee does not include other costs related to creating a new LLC. These may include optional name reservation fees, registered agent services, attorney fees for drafting an operating agreement, business licenses, franchise taxes, and more.

Don’t choose a state simply because it has a lower formation fee, especially if you plan to do most of your business in your home state. If you operate in your home state, you will also need to pay a registration fee there, which is typically the same amount as a formation fee.

For more information, see Key issues in choosing a state of formation.

The following table breaks down how much it costs to form an LLC in each state:

   
LLC post-formation costs

In addition to the initial LLC formation filing fee, starting and operating an LLC incurs other costs that should be included in your business budget. These requirements and costs vary by state.

Post-filing requirements

Some states have extra steps to complete after forming an LLC. This may include filing with the county, submitting an initial report, or publishing an announcement about the LLC in a local newspaper.

For example, California LLCs must file a Statement of Information within 90 days of registering with the Secretary of State. They need to do this again every two years, and the filing fee is $20.

In New York, new or registered foreign LLCs must publish an announcement about their formation in two newspapers for six weeks. This publication can cost between $600 and $2,000, and there is a $50 filing fee for the Certificate of Publication that goes to the Department of State in New York.

Arizona and Nebraska also require LLCs to publish notices.

Franchise tax

Some states impose a franchise tax, which is a fee for the privilege of operating an LLC in that state. The way franchise tax is calculated varies by state, but it usually depends on the business's revenue or the number of shares and their par value.

Despite its name, a franchise tax is not a tax on franchises and is distinct from federal and state income taxes that businesses must file every year.

Some states only charge a franchise tax to corporations. However, LLCs that choose to be taxed as corporations by the IRS may also have to pay this tax to the state. For example, Georgia has a net worth tax on corporations that essentially functions as a franchise tax.

An LLC is only subject to net worth tax if it is treated as a corporation for income tax purposes.

DBA

If you want your LLC to do business under a name different from its legal name, you must file for a DBA. DBA means “doing business as.” A DBA is also called a “trade name,” “assumed name,” or “fictitious business name.”

Depending on the state, you may need to fill out DBA forms and pay a fee to a local or county clerk’s office, a state agency, or both. A city or county might also ask you to take extra steps, like publishing your DBA in a local newspaper.

DBA filing fees can range from $5 to $150. If your LLC operates in multiple areas (like different counties in the same state or different states), you may need to file for a DBA in each of those locations.

Business license

Every business, whether small or large, must meet certain requirements to operate legally. This includes obtaining business licenses, permits, and registrations for reasons like public safety and taxes.

Most businesses need a general business license, which is usually issued by a county or city. This license allows you to conduct business in that area. If you work in different locations, even within the same state, you may need a separate license for each one.

If you have an LLC and work in specific industries, such as construction, food service, or healthcare, you may face additional licensing rules at the state or local level.

Registered agent

Every LLC must have a registered agent.

A registered agent, also called a statutory agent, receives important legal and tax documents for the LLC. This includes notifications about lawsuits or wage garnishment for employees and other key paperwork.

Most states do not allow LLCs to be their own registered agent.

You or a family member or business associate can be the registered agent if you meet all state requirements.

You can also choose a professional third-party registered agent. An experienced registered agent will have established procedures for handling documents they receive on behalf of your LLC.

Some service providers also provide tools and alerts to help stay on top of compliance obligations. 

Annual report

An LLC annual report provides basic details about your company. This includes the names and addresses of your registered agent, directors, and managers. States require you to file this report every year or every two years to ensure this information is public and any changes to your business are recorded and available.

Filing fees for annual reports can vary widely, ranging from no fee to $300 or more.

What is the best state to form an LLC?

When choosing the best state to start your LLC, consider several factors. Look at the cost to set up the LLC, ongoing fees, state taxes, and compliance rules.

If you form your LLC in a different state than where you plan to do business, you must register to operate in the state where you will be active.

The extra costs of following business laws and tax rules in both states can often be higher than any benefits of forming your LLC in a state far from where your business is located.

Related articles and resources:

• Choosing the best state to incorporate a business or form an LLC  
• Guide: How to form an LLC
• LLC state guides