LLC formation costs by state: the real numbers

Most comparisons of LLC costs stop at the filing fee, which is the least useful number available. Filing is a single payment. Annual reports, franchise taxes and registered agent renewals continue for as long as the company exists, and over five years they dwarf whatever you paid to set it up.

Filing fees: a wide spread with little meaning

Montana is the cheapest state in the country to form an LLC, at $35. Massachusetts is the most expensive, at $500. In between sit Wyoming at $100, Georgia and Delaware at $110, Florida and Pennsylvania at $125, Illinois at $150, New York and Washington at $200, and Texas at $300. California, often assumed to be expensive, charges only $70.

Reading that list as a ranking of affordability would be a mistake, and California is the clearest example why.

Annual obligations: where the real money is

California charges an $800 minimum annual franchise tax. It is due whether the LLC made a profit, made a loss, or did nothing at all. A California LLC therefore costs $70 to create and $800 every single year to keep, which over five years is more than $4,000 in state payments alone.

Texas takes the opposite shape. Formation costs $300, which is on the high side, but most small LLCs owe no annual franchise tax at all. Delaware charges $110 to form and an ongoing obligation that lands around $400 a year once the franchise tax and agent minimums are counted. Massachusetts is expensive twice over, at $500 to form and $500 a year after.

The cheap ongoing states are the quiet ones. Pennsylvania asks $7 a year. Wyoming, Georgia and Washington sit at $60. Illinois is $75. Florida is $138.75. New York charges a $9 biennial statement, which is trivial, and then has a much larger problem of its own.

The publication requirement

New York requires a newly formed LLC to publish notice in two newspapers for six consecutive weeks in the county of its office, then file a certificate of publication. Rates are set by the newspapers, so the cost tracks local advertising prices. In upstate counties the total can be a few hundred dollars. In New York City counties it regularly exceeds $1,500, and it can be the single largest line in a first year budget.

New York is not alone. Arizona and Nebraska also impose publication requirements, generally at far lower cost, but they are worth checking before you assume formation is a $100 exercise.

Registered agent: a small fee that never stops

Every LLC needs a registered agent with a physical address in the state, available during business hours. You can serve as your own agent in every state, which costs nothing, but your address becomes part of the public record and you must actually be there to accept service of process. Commercial agents charge $100 to $300 a year. Introductory offers below that band usually renew at full price.

Formation services and attorneys

Formation services advertise free packages, and for a single member LLC in a simple state that offer is often genuine, with state fees paid separately. The revenue comes from add ons: operating agreements, employer identification number filing, compliance monitoring and agent renewals. Budget zero to a few hundred dollars depending on how much of that you take.

Attorneys charge $800 to $2,500 for formation with a drafted operating agreement. That is worth paying when there are multiple members with different contributions, when profit splits are not proportional to ownership, or when the business is regulated. For a solo consultant in a simple state it usually is not.

The out of state trap

Forming in Wyoming or Delaware while living and working elsewhere rarely saves money. If you operate in your home state, you generally have to register there as a foreign LLC anyway, which means two filing fees, two annual reports and two registered agents. Delaware makes sense for companies raising institutional investment. It makes very little sense for a freelancer.

Compare states directly in the LLC formation cost calculator.