Breaking Down the Cost of Forming an LLC

Updated: Sept. 11, 2024

Many entrepreneurs want to start an LLC (limited liability company). However, the cost of creating one keeps people from pursuing that dream. So, how much does it cost to start an LLC?

Unfortunately, there’s no definite answer to that question. The cost of setting up an LLC varies by state, as do many of the annual fees.

In today’s blog post, we’ll answer the question, “How much does an LLC cost?” so you can confidently form your new business.

Table of Contents

• What is an LLC?
• How much does it cost to start an LLC?
  • LLC startup costs
    • State formation cost
    • Business name reservation fee
    • Employer Identification Number (EIN)
    • Publication requirement
    • Operating agreement
  • LLC maintenance costs
    • Annual fee
      • Taxes
      • Reporting fees
    • Registered agent service
    • Business licenses
• LLC costs by state
• In conclusion

What is an LLC?

To answer “How much does an LLC cost?” we’ll start by explaining what an LLC is and why you should get one in the first place. Because for many business owners, it doesn’t matter how much—to start an LLC is to get an edge.

An LLC is the most popular entity structure available to entrepreneurs. It blends specific aspects of corporations, partnerships, and sole proprietorships. It’s a simple and flexible business entity that protects its owner(s) from personal liability.

This isn’t possible as a freelancer or solopreneur because these types of businesses don’t separate business assets from personal assets. So if you’re ever targeted by a lawsuit (and business lawyers love targeting small business owners), you risk losing EVERYTHING—your bank account savings, home, retirement, and other personal property.

Creating and running an LLC also offers multiple advantages, including savings on federal tax returns, privacy, brand protection, and greater access to business funding.

Our LLC setup service fee is 100% free here at Inc Authority. We waive our service charges, labor costs, and overhead. You only pay the mandatory Secretary of State Filing Fees, which you’ll need to pay regardless of who forms your LLC for you!

How much does it cost to start an LLC?

When determining the LLC fee, you must consider these factors:

• State formation fee

• Business name reservation fee

• Annual fee
• Ongoing fees

Remember, the LLC cost by state varies for each aspect. We’ll provide a range of fees for each item and, later on, a comprehensive list of state LLC fees.

LLC startup costs

This set of LLC costs includes the following:

State formation cost

Every state has a unique LLC filing fee for forming an entity. What exactly is being filed? Your Articles of Organization.

This document is the most important (and costliest) form you’ll file to start your LLC. Your home state considers your business non-existent until you file its Articles of Organization.

Filing fees for an LLC’s Articles of Organization cost between $40 and $500. In most states, you’ll only need to submit the document and pay the filing fee once, as long as it’s accepted.

Business name reservation fee

While this step isn’t required (unless you’re forming your business in Alabama), it comes in handy if you have a business name in mind but aren’t ready to file your Articles of Organization. Reserving your LLC name ensures no one else can use it for a certain period, typically 30 or 60 days, depending on state guidelines.

Name reservation fees cost from $10 to $50. But if you’re ready to start your business, skip this step and simply file your Articles of Organization. This will automatically register your name.

Employer Identification Number (EIN)

The EIN, a nine-digit number given to businesses that must file different tax returns with the Internal Revenue Service (IRS), is free in all 50 states. To obtain an EIN, visit the IRS’s application portal and complete the form as instructed with your name and Social Security number. Once you’ve submitted your application, you’ll get an EIN.

Conversely, if you apply for an EIN through professional LLC services, you could be charged an additional fee. Many service providers offer EIN applications from $50 to $100.

Publication requirement

If you’re forming an LLC in Arizona, New York, or Nebraska, your chosen state will require you to publish a formation notice in one or more newspapers.

The length of publication varies across the three states we’ve mentioned. For instance, a Nebraska LLC must publish a formation notice for three consecutive weeks in a newspaper located near its designated office. Newspapers in Arizona, New York, and Nebraska can charge you between $30 and $300, with the actual cost determined by the publication and the content of your notice.

Finally, all three states may charge additional fees. In Nebraska, you must provide the state with proof of publication once your formation notice is published. Online submissions cost $25, whereas in-person or mail submissions cost $30.

Operating agreement

LLCs are also advised to write operating agreements to set how they should be run. It outlines the rules, regulations, and provisions applicable to the business.

Creating an operating agreement comes at no cost. Some LLC formation service providers will write this document with specific information about your company and its members. More importantly, after your operating agreement is written, consider hiring a business or corporate lawyer to review it. Local corporate lawyers offer this service at an average rate of $73 per hour.

LLC maintenance costs

Maintaining your LLC involves several ongoing fees. Here are some costs associated with this important step.

Annual fee

To keep your LLC in good standing with its home state, you’ll need to pay taxes and file an annual report (or take one of these steps). The yearly state fees for this process range from $25 to $4,500.

Taxes

LLCs offer “pass-through taxation,” wherein their owners are taxed instead of them. Essentially, LLC owners pay personal income taxes based on organizational profits.

Most states allow LLC members to file taxes based on their personal tax returns, but several also collect LLC franchise tax from these individuals. Let’s take California as an example: all LLCs formed there must pay $800 in annual franchise taxes. Meanwhile, Delaware LLCs must pay $300 yearly.

Reporting fees

These costs are associated with submitting annual reports to your state. Many states charge reporting fees yearly, which businesses must pay while operating in their locations.

Annual report fees vary by state, ranging from $0 to $4,500. Substantial penalties may also add to these ongoing costs.

To see the full list of state annual fees, go to the “LLC costs by state” section.

Registered agent service

A registered agent is a person or company that accepts legal documents and notifications from the state or other entities on your behalf. The designated individual or firm serves as your LLC’s representative in its area(s) of operation.

Typically, LLC owners hire commercial registered agents to increase the privacy of LLC members. Although you can find free registered agent services, expect most providers to charge an annual fee of up to $300. Your chosen company and the additional services and benefits it offers determine how much you’ll pay.

Business licenses

Regardless of the business entity, your state may ask you to obtain various licenses and permits. They include documents such as a sales tax ID number, business license, and certificate of occupancy.

In some cases, you’re required to renew certain licenses and permits. Contact your Secretary of State to learn more about business license fees and requirements, including those for renewal.

LLC costs by state

Below, we’ve listed the initial and annual LLC fees collected from businesses in each state.

State	LLC Filing Fee	Annual Fee	Exceptions or Conditions
Alabama	$200	Minimum of $50/year	–
Alaska	$250	$100	Paid biennially (every two years)
Arizona	$50	No annual fee	No information report is required.
Arkansas	$40	$150/year	–
California	$70	$800 in annual franchise taxes An additional $20/year	–
Colorado	$50	$10/year	–
Connecticut	$120	$80/year	–
Delaware	$90	$300 in annual franchise taxes	–
Florida	$125	$138.75/year	–
Georgia	$100	$50/year	–
Hawaii	$50	$15/year	–
Idaho	$100	No annual fee	Idaho LLCs must file an information report annually.
Illinois	$150	$75/year	–
Indiana	$95	$31/year	–
Iowa	$50	$30	Paid biennially
Kansas	$160	$50/year	–
Kentucky	$40	$15/year	–
Louisiana	$100	$35/year	–
Maine	$175	$85/year	–
Maryland	$100	$300/year	–
Massachusetts	$500	$500/year	–
Michigan	$50	$25/year	–
Minnesota	$155	No annual fee	Minnesota LLCs must file an information report annually.
Mississippi	$50	No annual fee	Mississippi LLCs must file an information report annually.
Missouri	$50	No annual fee	No information report is required.
Montana	$35	$20/year	–
Nebraska	$100	$13	Paid biennially
Nevada	$425	$350/year	–
New Hampshire	$100	$100/year	–
New Jersey	$125	$75/year	–
New Mexico	$50	No annual fee	No information report is required.
New York	$200	$9	Paid biennially
North Carolina	$125	$200/year	–
North Dakota	$135	$50/year	–
Ohio	$99	No annual fee	No information report is required.
Oklahoma	$100	$25/year	–
Oregon	$100	$100/year	–
Pennsylvania	$125	$7/year	–
Rhode Island	$150	$50/year	–
South Carolina	$110	No annual fee and information report required from most LLCs	LLCs taxed as S corporations are exempt from the previously mentioned conditions.
South Dakota	$150	$50/year	–
Tennessee	$300	$300/year	–
Texas	$300	No annual fee required from most LLCs	Texas LLCs must file No Tax Due and Public Information Reports annually.
Utah	$54	$18/year	–
Vermont	$125	$35/year	–
Virginia	$100	$50/year	–
Washington State	$200	$60/year	–
Washington D.C.	$99	$300	Paid biennially
West Virginia	$100	$25/year	–
Wisconsin	$130	$25/year	–
Wyoming	$100	Minimum of $60/year	–

In conclusion

Starting a small business is an exciting experience, but so many people get defeated by the cost. Our goal here at Inc Authority is to make business ownership achievable for all aspiring entrepreneurs. That’s why our LLC setup service is 100% free and comes with legal advice (with no additional cost) and 9 free business management tools to make running your business a breeze!

Get started today and enjoy the perks and protections of LLC formation services no matter where the road takes you!

Incorporating is the most powerful thing you can do to legitimize your startup. And at IncAuthority.com, our setup LLC services are 100% free. Always. So, don’t wait. Form your new LLC today and enjoy the protection due to you and your business under the law.

Related Articles

• How Much Does It Cost to Start a Business?
• 5 Things to Know Before Starting a Business
• How to Start a Pawn Shop
• LLC Registered Agent Services
• How to Start an LLC