The Limited Liability Company is a popular entity choice for many small businesses because of the ease of operation, tax flexibility, and liability protection 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 are using a business lawyer or formation company for setting up your LLC. Several LLC formation companies provide no-cost services, which can give 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.
Publication Fees
There are some states like Arizona, Georgia, Nebraska, Nevada, New York, and Pennsylvania that 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.
Annual Fees
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.
Operating Agreement
A few states require the creation of 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.
Ongoing Fees
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 may provide additional privacy for the members. The cost to hire a registered agent service is typically around $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 a FEIN, most LLCs will need to file for one for tax purposes and to 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 you reside in.
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.
State Costs to Form an LLC
| State | Filing Fee | Recurring Fees |
|---|---|---|
| Alabama | $150 minimum (varies by county) LLC Registration, Probate Judge, and name filing. | $100 Annual Privilege Tax – minimum |
| Alaska | $250 | $200 (every 2 years) |
| Arizona | $50 (plus publishing costs) | $0 (report due annually) |
| Arkansas | $50 | $150 (annually) |
| California | $70 | $800 – Franchise Tax (annually) $20 – Statement of Information (annually) |
| Colorado | $50 | $10 (annually) |
| Connecticut | $120 | $20 (annually) |
| Delaware | $90 | $300 Franchise Tax (annually) |
| Florida | $125 | $138.75 (annually) |
| Georgia | $100 | $50 (annually) |
| Hawaii | $50 | $15 (annually) |
| Idaho | $100 | $0 (report due annually) |
| Illinois | $150 | $75 (annually) |
| Indiana | $95 online, $100 by mail | $20 (biennial report) |
| Iowa | $50 | $60 (biennial report) |
| Kansas | $160 online, $165 by mail | $55 (annually) |
| Kentucky | $40 | $15 (annually) |
| Louisiana | $100 | $30 (annually) |
| Maine | $175 | $85 (annually) |
| Maryland | $100 | $300 (annually) |
| Massachusetts | $500 | $500 (annually) |
| Michigan | $50 | $25 (annually) |
| Minnesota | $135 | $0 (report due annually) |
| Mississippi | $50 | $0 (report due annually) |
| Missouri | $50 (online), $105 (mail) | $0 |
| Montana | $70 | $20 (annually) |
| Nebraska | $105 | $10 (biennially) |
| Nevada | $75, plus $150 for the initial list of officers | $150 (annually) |
| New Hampshire | $100 | $100 (annually) |
| New Jersey | $125 | $50 (annually) |
| New Mexico | $50 | $0 |
| New York | $200 (plus publishing costs) | $9 (biennially) |
| North Carolina | $125 | $200 (annually) |
| North Dakota | $135 | $50 (annually) |
| Ohio | $99 | $0 |
| Oklahoma | $100 | $25 (annually) |
| Oregon | $100 | $100 (annually) |
| Pennsylvania | $125 | $0 |
| Rhode Island | $150 | $50 (annually) |
| South Carolina | $110 | $0 |
| South Dakota | $150 | $50 (annually) |
| Tennessee | $300 (minimum) | $300 (minimum) |
| Texas | $300 | $0 report Franchise Tax |
| Utah | $70 | $15 |
| Vermont | $125 | $35 (annually) |
| Virginia | $100 | $50 (annually) |
| Washington | $200 | $60 (annually) |
| West Virginia | $100 | $25 (annually) |
| Wisconsin | $130 (online), $170 (mail) | $25 (annually) |
| Wyoming | $100 (mail), $102 (online) | $50 (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.
