The Limited Liability Company is a popular entity choice for many startups because of the ease of operation, tax flexibility, and protection of personal assets they provide. The cost to form an LLC varies by state and may include the state formation fee, name reservation fee, and publication fee, in addition to ongoing annual state fees.
State LLC Formation Fees
To form an LLC, the Articles of Organization (called a Certificate of Organization, Certificate of Formation, or Articles of Formation. in some states) will be filed with a state agency (typically the Secretary of State). This cost to file the Articles of Organization for an LLC costs between $40 and $500.
Before filing, you will need to make sure the LLC name is available to register, as each entity has to have a unique name.
In addition to the various LLC filing fees, you may incur service fees if you use a business lawyer or formation company to set up your LLC. Several LLC formation companies provide no-cost services, giving new small business owners some additional peace of mind when filing their LLC.
In addition to the state LLC processing fees, there are several other costs and filing requirements for setting up an LLC you may need to consider.
Business Name Reservation Fee
The ability to reserve an LLC name is available in every state (for a fee). Alabama is the only one that requires the name to be reserved at a cost between $10-$28. Reserving the name is optional in all other states but is usually not worth the expense unless it will be some time before you plan to start your LLC.
Some states like Arizona, Georgia, Nebraska, Nevada, New York, and Pennsylvania require new LLCs to publish a legal ad notifying the public of the LLC formation in a local newspaper and supplying the affidavit of publication. Publishing costs vary depending on the state and newspaper.
After the LLC is formed, most states also have a fee for filing the Annual Report (sometimes referred to as Periodic Report or the Statement of Information). Most states charge an annual fee, though there are some states with no reporting fees. Filing the annual report and paying any fees is essential to keep the LLC in Good Standing and keeping the liability protection intact.
A few states also have what’s known as an annual franchise tax, which is a yearly tax on the privilege for doing business in that state.
A few states require creating an Operating Agreement, which are written rules for how the LLC will operate. Even for states that don’t require one, it’s usually a good idea to have one to minimize internal disputes between LLC members, how profits and losses are allocated, etc.
In most states, you will have to renew the LLC and file an annual report. The state fees to renew an LLC range from $0 to $500 annually. Also, there are several additional costs to running an LLC as well.
Registered Agent Service: A Registered Agent is a person or company who accepts Service of Process on behalf of the LLC. In many cases, the owner or a family member will be the agent; however, hiring a commercial registered agent service may provide additional privacy for the members. Annual registered agent fees usually range from $100-$125.
Business Licenses: Regardless of the business entity, a variety of licenses and permits such as a sales tax id number, business license, certificate of occupancy, and others may be required. Learn more about licenses and permits in your state.
Federal Employer Identification Number – While there is no cost to apply for an EIN, most LLCs will need to file for one for tax purposes and open a bank account.
Forming an LLC in Another State
As you look over the list of costs to start an LLC in each state below, a common question is, why don’t I form in the cheapest state or form in one of the “popular” states like Delaware, Nevada, or Wyoming. While there may be advantages to forming in another state, more than likely, it’s going to cost more in taxes, fees, and time to administer than the benefits those other states provide.
Even after accounting for state laws and states with no income tax, in general, it’s usually going to be best to form your LLC in the state where you reside.
By forming an LLC in another state, you not only end up paying the state filing fees from the other state, but you will likely have to register as a foreign LLC with the state you reside on top of the additional fees when dealing with multiple states.
Don’t want to form an LLC by yourself?
How much does it cost to form an LLC?
|State||Filing Fee||Recurring Fees|
|Alabama||$200||$10 Annual Report|
$100 Annual Privilege Tax (minimum)
|Alaska||$250||$100 (every two years)|
|Arizona||$50 (plus publishing costs)||$0 (report due annually)|
|Arkansas||$45 online, $50 by mail||$150 Franchise Tax Report (annually)|
|California||$70||$800 – Franchise Tax (annually)|
$20 – Statement of Information (annually)
|Delaware||$90||$300 Franchise Tax (annually)|
|Georgia||$100 online, $110 by mail||$50 (annually)|
|Idaho||$100 online, $120 by mail||$0 (report due annually)|
|Indiana||$95 online, $100 by mail||Biennial report – $32 online, $50 by mail|
|Iowa||$50||$60 (biennial report)|
|Kansas||$160 online, $165 by mail||$55 (annually)|
|Minnesota||$155 online, $135 by mail||$0 (report due annually)|
|Mississippi||$50||$0 (report due annually)|
|Missouri||$50 online, $105 by mail||$0|
|Nebraska||$100 online, $110 by mail||$10 (biennial report)|
|Nevada||$75, plus $150 for the initial list of officers||$150 Annual List of Members & Managers|
|New Hampshire||$100||$100 (annually)|
|New Jersey||$125||$75 (annually)|
|New York||$200 (plus publishing costs)||$9 (biennially)|
|North Carolina||$125||$200 (annually)|
|North Dakota||$135||$50 (annually)|
|Pennsylvania||$125 (plus publishing costs)||$70 (decennial report)|
|Rhode Island||$150||$50 (annually)|
|South Dakota||$150 online, $165 by mail||$50 (annually)|
|Tennessee||$300 (minimum)||$300 (minimum)|
|Texas||$300||$0 report |
|West Virginia||$100||$25 (annually)|
|Wisconsin||$130 online, $170 by mail||$25 (annually)|
|Wyoming||$102 online, $100 by mail||$50 minimum (annually)|
Some people will look at the cost of starting an LLC as too expensive and want to form a Sole Proprietorship instead. Learn the differences between an LLC and Sole Proprietorship to see which one is right for you.
[sc_fs_multi_faq headline-0=” h3″ question-0=” How much does it cost to maintain an LLC?” answer-0= “The “Recurring Fees” column in the table above shows the costs to maintain an LLC in each state. This fee is generally the Articles of Organization and Franchise Fee if applicable.” image-0=”” headline-1=” h3″ question-1= “Do you have to pay for an operating agreement?” answer-1= “While anyone can generate an operating agreement, it may be worth considering having an attorney help draft one to ensure it covers the owners.” image-1=”” headline-2=” h3″ question-2=” What is the processing time to form your LLC?” answer-2= “The time to form an LLC varies by state, but can range between minutes to four weeks. In many states where processing takes longer, expedited processing is available for an additional fee.” image-2=”” headline-3=” h3″ question-3= “Do you need a registered agent for an LLC?” answer-3= “Each state requres LLCs to have a registered agent (called a resident agent in some states). The registered agent can be the owner of the business, accountant or anyone who lives in the state and is generally available during normal business hours. Some businesses will pay a registered agent service for additional privacy and peace of mind knowing someone is always available to receive service of process should the LLC be sued.” image-3=”” count=” 4″ html=” true” css_class=””]