How Much Does It Cost to Start an LLC?

ByJulija A.
March 04, 2022

Forming a Limited Liability Company is one of the most popular ways to start a business. An LLC can be more beneficial than other corporations, and make running a business more convenient, especially if it’s your first time owning a startup. An LLC protects your personal assets, grants flexibility for paying taxes and some other financial considerations, and it’s generally a little easier to handle than other kinds of companies.

But how much does an LLC cost, does it make sense for every startup, and do things vary by state? Here’s the 411.

Forming an LLC

To form an LLC, you’ll need to file your Articles of Organization. These can sometimes also be referred to as Articles of Formation, Certificate of Organization, or Certificate of Formation. Basically, this document proves your LLC exists.

Most states will have a form to fill out to receive your formation document. The form is usually filed with a state agency, and this initial LLC cost ranges from $40 to $500. There are a number of conditions to meet before you can file for the Articles, too, such as checking if the name you chose is available and you have all of the correct documentation.

Still, as long as you abide by the procedures outlined by the Secretary of State, all you’ll have to do is pay the fee and start the process.

Service Fees

If you wish to enlist the help of an LLC formation agency, the service fees will depend on what they end up doing for you, but they can go under $50 or over $500.

Name Reservation Fees

Some states offer you the ability to reserve a name for your LLC, for a small price. For example, this costs $28 in Alabama, besides the $200 formation fee. The LLC name reservation fee is generally optional, but it can give you peace of mind if you know there will be some time between the filing of your LLC and the intended start date of the company.

Annual Fees

Many states have an annual fee required for filing an Annual Report, also referred to as the Periodic Report, or Statement of Information. Not all states make you pay for this (e.g., Arizona and Idaho), but Alabama will make you pay a $100 Annual report fee. States may also have an LLC renewal fee that ranges from $0 to $500 and is also paid annually.

Franchise Tax

A franchise tax is another annual fee that some states require. This is a yearly tax on the privilege of opening a business in a particular state. Not all states enforce a franchise tax, but those that do are: Alabama, Arkansas, California, Delaware, Minnesota, Nevada, New Hampshire, Tennessee, Texas, Vermont, and Washington D.C.

It may not be referred to as franchise tax, but instead something like Modified Business Tax, Franchise and Excise Tax, or a Business Entity Income tax.

Fictitious Name Fee

A fictitious name is sometimes known as a “doing business as” name. This isn’t required to form an LLC, but you may want to create a fictitious name to create separate brands under your main LLC. This can be done after forming your LLC, and the cost varies from state to state.

Publication Fees

Some states require new LLCs to publish a legal ad that notifies the citizenry that their LLC is forming. This is usually published in a newspaper, and the fees will depend on both the state and the chosen newspaper.

Foreign LLC Fees

While it may occur to some people that it’s cheaper to start an LLC in another state, you will be required to register as a foreign LLC, which usually costs more.

There are often advantages to forming an LLC in another state because of the tax benefits and fees, but if you have to also consider foreign LLC fees, you may be paying more than you’d expect. In most cases, it’s usually best to form an LLC in your own state due to the convenience.

Depending on your industry, your business might require several other permits or licenses to operate. While this isn’t strictly related to the cost of forming an LLC, these still count as LLC startup costs.

These fees will vary greatly depending on the type of business you plan to run, so it’s best to consult the service you’re working with or look at individual permits and licenses and tally them up.

Note that these permit fees apply to all businesses and not just LLCs. In short, it’s not just the cost to create an LLC that should concern you, since there are many other expenses to consider too.

LLC Formation Costs by State

So how much does an LLC business license cost in each state? Below, we’ve included all of the necessary information you’ll need to figure out how much it costs and also if you could be paying less by starting up an LLC in a different state. Note that some states will require you to pay additional fees such as a publishing fee, or annual franchise tax.

State

Filing Fee

Annual Fees

Foreign LLC Fee

Alabama

$200

$10 Annual Report Fee

$100 Annual Privilege Tax (minimum)

$150

Alaska

$250

$100 every two years

$350

Arizona

$50

$0

$150

Arkansas

$50

$150 (Franchise tax + annual report)

$270 (online) $300 (paper)

California

$70

$800 annual franchise tax

$20 biannual Statement of Information

$70

Colorado

$50

$10

$100

Connecticut

$120

$80

$120

Delaware

$90

$300 franchise tax

$200

Florida

$125

$138.75

$125

Georgia

$100

$50

$235

Hawaii

$50

$15

$50

Idaho

$100

$0

$100

Illinois

$150

$75

$150

Indiana

$90

$30, every two years

$125

Iowa

$50

$60 every two years

$100

Kansas

$165

$55

$165

Kentucky

$40

$15

$90

Louisiana

$100

$30

$150

Maine

$175

$85

$250

Maryland

$100

$300

$100

Massachusetts

$500

$500

$500

Michigan

$50

$25

$50

Minnesota

$135 - $155

$0

$185 - $205

Mississippi

$50

$0

$250

Missouri

$50 - $105

$0

$105

Montana

$70

$20

$70

Nebraska

$100 - $110

$10 every two years

$100 - $110

Nevada

$75 + $150

$150

$75 + $150

New Hampshire

$100

$100

$100

New Jersey

$125

$75

$125

New Mexico

$50

$50 franchise tax

$100

New York

$250

$25 - $4,500

$250

North Carolina

$125

$200

$125

North Dakota

$135

$50

$135

Ohio

$99

$0

$99

Oklahoma

$100

$25

$300

Oregon

$100

$100

$275

Pennsylvania

$125

$70 every 10 years

$250

Rhode Island

$150

$50

$150

South Carolina

$110

$0

$110

South Dakota

$150

$50

$750

Tennessee

$300 - $3,000

$300 - $3,000

$300 - $3,000

Texas

$300

$0 + franchise tax

$750

Utah

$70

$20

$70

Vermont

$125

$35

$125

Virginia

$100

$50

$100

Washington

$200

$60

$200

West Virginia

$100

$25

$150

Wisconsin

$130 - $170

$25 - $80

$100

Wyoming

$100

$60 minimum

$100

As you can see from this table, the cost of setting up your own LLC varies wildly between states, but most small businesses can probably afford it. However, some states, such as Texas and California, may have unexpected costs and additional fees, and some states also make things cheaper if you pay the state filing fee online.

Most states have recurring fees or taxes that also need to be taken into consideration.

Note that this table also doesn’t include any potential fees you’ll have to pay to a formation company or a business lawyer. If you decide to work with extra services, their service fees will make a more significant hole in your pocket.

Again, keep in mind that, while it’s tempting to start an LLC in another state, you may be hit with foreign LLC registration fees. For example, South Dakota and Texas charge $750 for foreign LLCs to form in their state.

This can make things much more expensive; still, it may be worth it, depending on the tax-related benefits and other conveniences you could expect. If you are working with a formation company or a business lawyer, then it can be beneficial to ask them about the possibility of forming an LLC in another state.

Conclusion

Starting up an LLC may seem difficult, but it’s generally relatively inexpensive, and the process is well-documented and straightforward. Hopefully, the LLC license cost table shown above has illustrated that starting your own LLC isn’t an insurmountable expense in most cases.

FAQ

What is the total cost of an LLC?

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The total cost of an LLC depends on the state where it’s formed. Please refer to the table above to check individual prices. Keep in mind that these fees are solely for the formation of the LLC and do not include fees paid to a business lawyer or formation company.

Are LLCs expensive?

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Forming an LLC is generally not too expensive, but the cost is very variable between states. The highest LLC costs are in Massachusetts, where the formation fee is $500, plus an additional $500 annual charge. Also, forming an LLC in California is pretty cheap - just $70 - but you’ll have to pay an annual $800 franchise tax.

How long does it take to get an LLC?

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It generally takes between seven and 10 business days to file an LLC, with the shortest timeframe being three days. However, this process may be longer if you decide to contact a formation company or a business lawyer for help. You may also have your request rejected if you haven’t submitted enough information or there are problems with the information that you have submitted.

Do you have to pay for LLC every year?

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Only in some states. For example, LLCs formed in Alaska are expected to pay $100 every two years, and LLCs in California must pay an annual $800 franchise tax. Please refer to our table above for more information about recurring fees per state.

About author

Albert Einstein is said to have identified compound interest as mankind’s greatest invention. That story’s probably apocryphal, but it conveys a deep truth about the power of fiscal policy to change the world along with our daily lives. Civilization became possible only when Sumerians of the Bronze Age invented money. Today, economic issues influence every aspect of daily life. My job at Fortunly is an opportunity to analyze government policies and banking practices, sharing the results of my research in articles that can help you make better, smarter decisions for yourself and your family.

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