How Much Does It Cost to Start an LLC?
The state filing fee gets all the attention. The annual report fee is what catches people in year two. Here's every cost — one-time and recurring — before you file a single form.
"I keep seeing wildly different numbers for forming an LLC — $50, $500, $1,000. What does it actually cost? And are there fees every year after that?"
One of the most frequently asked questions across r/smallbusiness and r/entrepreneur. The confusion is understandable — every state is different, and formation services advertise their fee separately from the state fee, making the total hard to pin down.
View discussions on RedditNot legal or tax advice. This article is for informational purposes only. Fee figures are drawn from official state Secretary of State and revenue department fee schedules. Rules vary by state and change periodically — verify current fees at your state's official website before filing.
Here's why the numbers look so different everywhere you look: forming an LLC has three separate cost layers, and most articles only talk about the first one.
- Layer 1 — One-time state filing fee. Paid once when you form the LLC. Ranges from $35 to $500 depending on state.
- Layer 2 — Annual or biennial report fees. Paid every year (or every two years) to keep your LLC in good standing. Often larger than the formation fee over time.
- Layer 3 — State franchise tax or privilege tax. Some states charge a minimum tax on LLCs regardless of revenue. California's is $800/year. Delaware's varies by structure.
Add those three together for your state and you have the real cost of an LLC — not just the day-one cost, but the cost of keeping it alive.
The Full LLC Cost Breakdown
| Cost Item | Typical Range | Frequency |
|---|---|---|
| State filing fee (Articles of Organization) | $35 – $500 | One-time |
| Registered agent | $0 – $150 | Annual (free if you serve as your own) |
| Annual / biennial report fee | $0 – $300 | Annual or every 2 years |
| State franchise / privilege tax | $0 – $800+ | Annual (varies widely by state) |
| Formation service (optional) | $0 – $300 | One-time (DIY is free) |
| Operating agreement (optional) | $0 – $500 | One-time (free templates exist; attorney-drafted costs more) |
| Year-one total (DIY, no franchise tax) | $35 – $650 | Filing fee + report fee |
| Year-one total (California) | $870+ | $70 filing + $800 minimum franchise tax |
Every LLC doing business in California owes a minimum $800 franchise tax per year under Revenue and Taxation Code § 17942 (leginfo.legislature.ca.gov) — even if the business made no money. This applies to LLCs formed in California AND out-of-state LLCs registered to do business there. Many founders form in Wyoming or Delaware to avoid this, only to discover they still owe the California tax if they operate there.
Calculate Your State's LLC Filing Fee
LLC Formation Cost Calculator
Select your state to see filing fees, annual report costs, and formation gotchas.
Cheapest vs. Most Expensive States — 5-Year Total Cost
The filing fee alone is misleading. The real cost comparison requires adding up 5 years of annual fees and franchise taxes. Here's how the popular states actually stack up:
| State | Filing Fee | Annual Fee | Franchise Tax | 5-Year Est. |
|---|---|---|---|---|
| New Mexico | $50 | $0 | $0 | $50 |
| Wyoming | $100 | $60 | $0 | $340 |
| Montana | $35 | $20 | $0 | $115 |
| Texas | $300 | $0 | $0* | $300 |
| Florida | $125 | $138 | $0 | $677 |
| Delaware | $90 | $300 | $0 | $1,290 |
| California | $70 | $20 | $800/yr | $4,070+ |
| Massachusetts | $500 | $500 | $0 | $2,500 |
*Texas has a franchise tax but most small LLCs fall below the $2.47M revenue threshold that triggers it.
If you form your LLC in Wyoming but operate in California, you'll owe California's franchise tax AND need to register as a foreign LLC in California — paying both states' fees. For most small businesses operating in one state, forming in your home state is simpler and often cheaper than a "tax haven" state.
Form Your LLC Without the Paperwork Headache
ZenBusiness and Northwest Registered Agent handle your Articles of Organization, registered agent service, and operating agreement — for a flat fee that includes the state filing cost.
Start My LLC with ZenBusiness →DIY vs. Formation Service — What You Actually Get
Filing directly with your state's Secretary of State costs nothing beyond the filing fee. For a simple single-member LLC, it takes 10–30 minutes online. Here's what each path looks like:
Northwest Registered Agent — Privacy-First Formation
Northwest doesn't upsell aggressively and uses their own address on public filings to protect your privacy. Flat $39 + state fee for formation, $125/year for registered agent service.
Form with Northwest →Get your EIN free at IRS.gov — don't pay a service to do it.
EIN applications are free directly from the IRS and take 5 minutes online. Any service charging you for this is marking up a free government service.
Frequently Asked Questions
What is the minimum cost to form an LLC?
Are there ongoing fees after forming an LLC?
What state is cheapest to form an LLC?
Do I need a registered agent and what does it cost?
Can I form an LLC myself without a service?
Sources & References
- California Revenue and Taxation Code § 17942 (leginfo.legislature.ca.gov) — $800 minimum franchise tax for LLCs
- California Secretary of State — Business Entity Forms & Fees (sos.ca.gov) — current LLC filing fees
- Texas Secretary of State — Business Organization Forms (sos.state.tx.us) — Texas LLC filing fees and forms
- Wyoming Secretary of State — LLC Filing Information (wyobiz.wyo.gov) — Wyoming formation fees and annual report requirements
- IRS — Apply for an EIN Online (irs.gov) — free EIN application for new businesses
- SBA — Register Your Business (sba.gov) — U.S. Small Business Administration guide to LLC formation
- USA.gov — Start a Business — federal overview of business registration requirements