How much does an LLC cost in 2026?
The direct answer: $50 to $1,500 in Year 1, then $0 to $850/year ongoing. That is a huge spread, and almost all of it comes down to which state the LLC is in rather than how it is formed. Five line items drive the total.
The five costs that make up an LLC
| Cost | Range | Frequency | Can you avoid it? |
|---|---|---|---|
| State filing fee | $35–$500 | One-time | No — required to form |
| Annual report | $0–$500 | Annual or biennial | Only in the few states with no report |
| Franchise / business tax | $0–$800+ | Annual | Only by choosing a no-tax state |
| Registered agent | $0–$300/yr | Annual | Yes — serve as your own |
| Publication | $40–$1,500 | One-time | Only by avoiding NY / AZ / NE |
1. State filing fee (one-time)
The fee to file the Articles of Organization and bring the LLC into existence. It runs from $35 in Montana to $500 in Massachusetts, with most states between $50 and $200. This is the one cost nobody can avoid, and it is paid only once.
2. Annual report (recurring)
Most states require a yearly or every-other-year report to keep the LLC in good standing, with a fee attached. A handful charge nothing (New Mexico, Missouri, Ohio, Arizona, South Carolina); others charge a modest $20–$50; Massachusetts tops the list near $500. Miss it and the state eventually administratively dissolves the LLC, so this is not optional once you owe it.
3. Franchise or business-privilege tax (recurring — often the biggest line)
This is where the real money is, and it surprises most first-time owners. Many states charge $0. But Delaware charges a flat $300 annual franchise tax, and California imposes an $800 minimum franchise tax every year regardless of revenue or profit — even a dormant California LLC owes it. Texas charges a margin tax only above a revenue threshold. For high-tax states, this single recurring line often dwarfs the one-time filing fee, which is why "cheapest to form" and "cheapest to operate" are different questions.
4. Registered agent (recurring — optional)
Every LLC needs a registered agent, but you can serve as your own for free if you have an in-state street address and don't mind your address being public. A commercial agent costs $35–$300/year and buys privacy plus reliable handling of legal mail. Formation services frequently include the first year free, then renew at $100–$250 — a common "hidden" cost in Year 2.
5. Publication (one-time — three states only)
New York, Arizona, and Nebraska require new LLCs to publish a formation notice in local newspapers. Arizona (~$60) and Nebraska (~$40) are cheap. New York is the outlier: in expensive downstate counties (Manhattan especially) the combined newspaper cost can hit $1,200–$1,500, single-handedly making New York one of the most expensive states to launch in. Full detail: the LLC publication requirement.
Cheapest vs most expensive states
Because the recurring taxes dominate, the right comparison is total cost over the first two years, not the filing fee alone.
| State | Filing fee | Recurring (annual) | Why it ranks here |
|---|---|---|---|
| New Mexico | $50 | $0 | No annual report, no franchise tax — cheapest to maintain |
| Wyoming | $100 | ~$60 min | Low report fee, strong privacy |
| Ohio / Missouri | $50–$99 | $0 | No annual report fee |
| Delaware | $110 | $300 | Flat franchise tax every year |
| New York | $200 | ~$9 (+ publication) | Publication can add $1,200–$1,500 up front |
| California | $70 | $800 min | Cheap to file, most expensive to keep — $800/yr no matter what |
| Massachusetts | $500 | ~$500 | Highest filing fee + high annual report |
The pattern: a low filing fee tells you almost nothing about the true cost. California has one of the cheapest filing fees in the country and the most expensive ongoing cost. Run the homepage calculator for an exact Year-1 + ongoing figure for any state.
One-time vs ongoing — how to budget
Separating the two prevents sticker shock in Year 2, when the "free first year" perks expire:
- One-time (Year 1 only): state filing fee, publication (if applicable), and any formation-service setup fee.
- Ongoing (every year): annual report, franchise/business tax, and registered agent renewal. This is the number that actually matters for a business you plan to keep, and it is set almost entirely by the state you choose.
DIY vs using a formation service
Filing directly with the Secretary of State costs only the state fee — zero markup. A formation service adds $0–$300 in service fees (many advertise "$0 + state fee") plus paid add-ons for registered agent, operating agreement, and EIN. The trade is money for time: DIY means reading the state form and managing the registered agent yourself; a service bundles the steps and hands you a templated operating agreement. One thing worth knowing — the EIN is free directly from the IRS, so paying a service $79 for it is pure markup.
Does forming in a "cheap" state actually save money?
This is the most expensive misconception in the whole topic. Ads and forums push the idea of forming in Wyoming, Delaware, or New Mexico to save on taxes — but for most small businesses it costs more, not less. Here is why: an LLC has to be registered in every state where it actually does business. If you live and operate in California but form your LLC in Wyoming, you have not escaped California — you now have to foreign-qualify that Wyoming LLC back into California, which means paying California's $800 franchise tax plus Wyoming's fees, plus two registered agents, plus two annual reports. You have doubled your compliance cost to avoid nothing.
The out-of-state play only makes sense in specific cases: real-estate holding companies, businesses with no physical nexus anywhere (some online businesses), or owners who genuinely operate in the chosen state. For the typical operator — a consultant, freelancer, contractor, or local shop — forming in your home state is almost always the cheapest total cost. The deeper analysis is in best states to form an LLC.
Three realistic budgets
Putting the line items together for three common situations:
- Lean / DIY in a low-cost state (e.g. New Mexico): $50 filing fee, serve as your own registered agent, free EIN from the IRS, no annual report. Year 1: ~$50. Ongoing: ~$0.
- Typical small business in a mid-cost state: ~$100–$200 filing fee, $100–$150/yr registered agent, ~$50/yr annual report, free EIN. Year 1: ~$250–$400. Ongoing: ~$150–$200/yr.
- California, using a formation service: $70 filing fee + $0–$200 service + $125/yr RA + $800 franchise tax + $20 statement of information. Year 1: ~$1,000–$1,200. Ongoing: ~$950+/yr — the $800 minimum tax dominates.
The lesson across all three: the formation service is the smallest variable. The state — specifically its recurring franchise tax — determines whether an LLC costs $50 a year or $1,000 a year.
Frequently asked questions
What is the cheapest state to form an LLC?
Kentucky at $40 and Arkansas at $45 are the cheapest filing fees nationally. New Mexico at $50 is the cheapest state to maintain because there is no annual report fee. Montana at $35 is the cheapest one-time filing fee but adds a $20 annual report. The cheapest state to form is not necessarily the cheapest state to operate — most operators are better off forming in their home state regardless of nominal filing-fee differences, because operating in a non-home state triggers foreign qualification in the home state with duplicate fees.
How much does an LLC cost per year, not just to form?
The annual cost varies dramatically by state. The state-fee portion ranges from $0 in Arizona, Missouri, New Mexico, Ohio, and South Carolina to $800 in California and $300 in Delaware. Texas charges $0 in franchise tax below its no-tax-due threshold ($2.65 million in annualized revenue for 2026) and a percentage of margin above it (0.375% for retail and wholesale, 0.75% for everyone else) — not a fixed dollar amount. Add a registered agent ($50 to $200 per year if hired), the federal Form 5472 + 1120 if foreign-owned, BOI reporting if applicable, and state-specific taxes. Typical all-in annual cost in a low-cost state: $50 to $200. Typical in California: $1,000 to $1,200. The state matters more than the formation service.
Is forming an LLC online cheaper than using a formation service?
Yes, in absolute dollar terms. Filing directly with the Secretary of State costs only the state filing fee — no service markup. Formation services add $0 to $300 in service fees plus paid add-ons for registered agent, operating agreement, EIN, and compliance reminders. The trade-off is time and convenience. Direct filing requires reading the state's filing form, knowing what to enter for each field, and managing the registered agent separately. Formation services bundle the steps and provide a templated operating agreement that would otherwise need to be drafted independently.
What hidden costs do most people miss when budgeting for an LLC?
Five categories typically come as surprises. First, the registered agent renewal price after Year 1 — formation services often include the first year free then renew at $125 to $249 per year. Second, the state's annual franchise tax or annual report fee, which is separate from the formation fee. Third, the publication requirement in New York, Arizona, and Nebraska, which adds $40 to $1,500 to the first-year cost. Fourth, BOI reporting under the Corporate Transparency Act when applicable. Fifth, the EIN, which formation services often charge $79 for despite being free at IRS.gov.
Can I form an LLC for free?
No state allows free LLC formation. The state filing fee is non-negotiable and ranges from $35 (Montana) to $500 (Massachusetts). Formation services sometimes advertise 'free' formation, which means $0 in service fees from the service itself, but the state fee still applies. The closest to free is filing directly with a state that charges a low filing fee, being your own registered agent, and skipping all paid add-ons — total cost can be as low as $35 to $50 in some states.
How much does it cost to dissolve an LLC?
Dissolution fees are typically $20 to $100 to file the Articles of Dissolution or Certificate of Cancellation with the Secretary of State. The hidden cost is the back-taxes and penalties that must be paid before the state will accept the dissolution filing — all outstanding franchise taxes, annual report fees, and registered agent obligations must be current. An LLC that has been delinquent for several years can owe several thousand dollars in cumulative back-fees before the state will allow dissolution. Filing dissolution promptly when the business stops operating prevents the back-fee compound problem.