What It Costs to Start an LLC
Starting an LLC typically costs between $40 and $500 for state filing fees alone, but the total depends on your state, whether you use a registered agent service, and whether you need extra licenses or drafts. Most new businesses spend $100 to $800 in the first year to get legally formed and operational. Understanding those costs up front helps you budget without overpaying for services you may not need.
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The LLC structure protects your personal assets while keeping tax treatment simple, which is why it remains a popular choice for freelancers, small retailers, and online sellers. The actual formation is fast, but the cost picture has several layers: state-mandated fees, optional professional services, and ongoing compliance items. This guide breaks those down so you know exactly what you are signing up for.
State Filing Fees: The Biggest Fixed Cost
Every state charges a fee to file your Articles of Organization (or a similar formation document). These range widely:
| State | Filing Fee Range | Notes |
|---|---|---|
| Wyoming | $100 | Popular low-cost choice |
| Delaware | $90 | Well-known for business-friendly laws |
| California | $70 | Plus an $800 annual minimum franchise tax |
| Texas | $300 | No state income tax |
| New York | $200 | Requires publication in newspapers |
Some states, like New York, add a publication requirement that can push costs another $100 to $2,000 depending on your county. Others, like Wyoming and Delaware, keep the process lean and inexpensive. Always check your secretary of state website for the current fee, since states update these annually.
Optional Costs That Add Up
Beyond the state filing, several optional expenses can shape your total startup cost:
- Registered agent service: $50 to $300 per year if you use a third party instead of naming yourself.
- Operating agreement: Free if you draft it yourself, or $200 to $1,000 if a lawyer drafts a custom version.
- EIN (Employer Identification Number): Free from the IRS, but some third-party sites charge for expedited filing.
- Business licenses and permits: Varies by city and industry, often $50 to $300 per license.
- DBA (Doing Business As): $10 to $100 in most states if you plan to operate under a name different from your LLC.
Not every LLC needs all of these. A single-member online business with no employees can often start for under $150 total if it handles formation itself and skips a registered agent service.
How to Reduce LLC Startup Costs
You do not need a lawyer to form an LLC in most states. The paperwork is straightforward, and free resources from your secretary of state, SCORE, and the Small Business Administration walk you through it step by step. Drafting your own operating agreement using a reputable template is another way to save several hundred dollars.
Using a registered agent service is optional if you have a physical street address in the state where you are forming and can accept documents during business hours. That alone can eliminate a recurring annual cost. Similarly, applying for an EIN directly through the IRS website takes minutes and costs nothing.
Recurring Costs After Formation
LLCs are not a one-and-done formation. Most states require an annual report or biennial statement, with fees typically ranging from $0 to $300. Some states, such as California, impose a franchise tax or annual fee regardless of income. Factor these ongoing costs into your business plan so there are no surprises later.
Is the Cost Worth It
For most small businesses, the answer is yes. The personal liability protection and credibility an LLC provides usually outweigh the modest formation and annual costs. The key is to avoid overpaying for services you can handle yourself and to choose your state of formation deliberately based on where you actually do business, not on reputation alone.