Fact checked for accuracy by Billie Anne Grigg, a bookkeeper and Mastery Level Certified Profit First Professional.
You just came up with the perfect idea for your new business. But you realize that forming an LLC would be smart, and you don’t know how much it will cost to form an LLC.
The costs of forming an LLC are easy to find. Read on to learn about costs in different states and the different types of fees you may have to pay.
Cost to Form an LLC in Every State
When considering the cost of forming an LLC, think about where your LLC will be. Different states have varying setup and ongoing costs. Here’s a quick overview of each state.
|State||Setup Cost (filing, unless noted)||Ongoing Cost|
|Arizona||$50 + $299 (publication)||$0|
|California||$75 + $20 (report)||$20|
|District of Columbia||$220||$300|
|Nebraska||$120 + $150 (publication)||$26|
|Nevada||$75 + $325 (report)||$325|
|New York||$210 + $425-$1,200 (publication)||$9|
|Texas||$310||Based on gross revenue (annually)|
|Washington||$200 + $10 (report)||$73|
Knowing how much it costs to form an LLC in different states can help you decide where to set up your business. Then, you can prepare for the costs or consider moving to a state with lower costs.
State Filing Fee
Before you can even start your LLC, you’ll need to come up with the funds to file for it. Many states have affordable fees, starting at $50.
States with $50 filing fees include:
- New Mexico
Many other states have filing fees at $150 or less. Some states with more expensive filing fees include Alaska ($250), Tennessee ($325), and Texas ($310).
Massachusetts is the state where it’s most expensive to form an LLC, with a filing fee of $500. So if you live in that state, you’ll need to save up a bit more money. You can also look into forming your LLC in a neighboring state to lower your costs.
Business Licensing and Permit Fees
Depending on the type of business you want to form, you may need a license or permit. Some industries where this applies at the federal level include:
- Fish and wildlife
- Mining and drilling
- Radio and television broadcasting
- Transportation and logistics
You may also need a state permit for specific other industries. Businesses that need permits include retail, restaurants, dry cleaning, and plumbing. Make sure you budget for the cost of your permit along with other expenses to form your LLC.
Other professionals, such as cosmetologists, doctors, and real estate agents, will also need licenses and permits. Construction businesses will need to pay for permits to complete individual projects.
Fortunately, most states don’t require you to pay to publish your LLC. However, you will need to pay fees in a few states.
In Arizona, publication fees range from $30 to $300. You will need to pay to publish a notice of forming your LLC within 60 days, and the publication must run for at least three weeks. However, if you start your business in Pima or Maricopa county, you don’t have to publish a notice.
Nebraska also requires you to publish a notice regarding the formation of your LLC. Like in Arizona, the notice has to run for three weeks. Depending on the county, you may need to pay anywhere from $40 to $250.
In both Arizona and Nebraska, you must publish the notice in a newspaper. The newspaper must be in the county where you form the LLC. For example, a business in Omaha must publish in a Douglas County newspaper.
New York is the third state where you need to publish a notice. Fortunately, a Certificate of Publication only costs $50 in the state.
LLC Name Reservation Fees
In Alabama, you have to pay to reserve the name of your LLC. If you file for the reservation online, the cost will be $28. On the other hand, you can save money and pay $25 if you file by mail. The fees are the same for domestic and foreign LLCs.
Other states make name reservation fees optional. If you know you can afford the cost to start an LLC and have the perfect name, it can be worth reserving it now. Then, you can make sure no one else takes it before you can officially form the LLC.
If that’s the case, you can reserve the name of your choice for around $20 to $30. That will give you time to save up enough to file for the LLC.
Fictitious Name Fee
A fictitious name fee or a DBA (doing business as) fee is another optional cost. You can use DBAs to separate the brands within your primary LLC.
This can be nice if you decide to operate one brand that’s business to business (B2B) and another that is business to consumer (B2C). Using a DBA can also be nice if your LLC name is hard to say or spell.
Either way, paying for a fictitious name is not a requirement. So if you don’t want to spend a ton on starting your LLC, you can go without a DBA for now.
Ongoing Maintenance Costs
Once you set up your LLC, you may have to account for ongoing costs. Some states have higher prices than others, and some states have no ongoing costs at all.
Be sure to consider the following types of costs before you form an LLC.
A franchise tax is what allows your LLC to continue to exist in your state. You may need to pay a flat fee, or your state may calculate the franchise tax based on the LLC’s company stock, net worth, or assets.
California charges LLCs an annual flat rate of $800, and Delaware’s flat rate is $300. On the other hand, the following states don’t have any annual fees, aside from taxes:
- New Mexico
- South Carolina
If your LLC is in a state that requires franchise tax, be sure to prepare for it. The tax is not a replacement for income tax, though. So unless your state doesn’t charge income tax, you will need to pay both taxes each year.
Some states require LLCs to file an annual or biennial report. The cost can range from $15 in Montana and Utah to $520 in Massachusetts of the states where the fee applies. If your LLC is in Texas, the state will use your annual gross revenue to determine the cost.
The annual report should include your business address and the names and contact information of all LLC members. You also need to include numbers for your business, such as your employer identification number (EIN).
Annual reports should also cover the purpose of your business and the information of your registered agent. Once you write the first report, you can keep it on file. Then, you’ll only need to make small changes before filing the report in future years.
Cost of Hiring an LLC Service Provider
Hiring an LLC service provider can make forming your LLC much easier. However, you should consider how a company may affect the cost to form an LLC.
Some LLC service providers won’t charge you their own fees. If you use a service like that, such as IncFile, you will only be responsible for paying state fees.
On the other hand, you can find an LLC service provider that charges you money. The fee for some of the best LLC service providers can range from $30 to $350.
Unnecessary Fees to Watch Out For
Before you start going through the process of forming an LLC, you should know about other potential fees. These are costs that you don’t have to cover, so beware of anyone trying to force you to pay for these things.
In some cases, the extra fees may be worth it. However, you can get around these fees to keep your business startup costs low.
Here are a few things to look out for when starting your LLC.
LLC Name Lookup Fee
You can’t choose the same name as an existing LLC in your state. Because of that, it can be worth looking at the current LLC database. Then, you can figure out if your name of choice is available or if you need to choose a different name.
You should be able to go to your state’s business filing agency website. Most of these websites will have a tool where you can check if a name is available.
Be sure to check the databases for all states in which you want to form your LLC. Then, you can make sure the name you select is available everywhere.
LLC Kit and Seal
You can receive an LLC kit and seal that includes your formation documents and a corporate seal to use on your contracts and other documents. However, you don’t need to pay for these items.
While it can be nice to have a kit and seal, consider if you need it. If your business is small, you may want to hold off on buying a kit. You can create your kit by making a copy of your formation documents.
That way, you don’t have to spend extra money when forming your business.
LLC Membership Certificates
Having an LLC membership certificate can help prove you own the business. But you shouldn’t have to pay to get a certificate. You can find free templates online that you can use to create your own.
Then, you can still prove you own part of the company. However, you won’t have to spend money on something that isn’t always necessary. If you don’t see yourself needing to prove your ownership often, you can go without a certificate.
If you want to form your business quickly, you may choose to pay to rush the process. Then, you can start the business within two or three business days. However, unless you want to launch your company soon, rush filing isn’t necessary.
Some states can process your request in a short period without a rush fee. And even if they can’t, most states only take four to six weeks. That gives you plenty of time to work on your business to get it ready to launch.
LLC service providers may encourage you to pay a rush fee. But it’s not necessary for most businesses.
Free Domain Names, Websites, Phone Numbers, and Other Operating Expenses
You should also watch out for the fees regarding your domain name and website. You can set up a site for a few dollars a month to get started, so don’t spend hundreds right out of the gate.
Phone numbers can also be expensive, but you can start with a free service like Google Voice. And if you have other operating expenses, make sure they’re necessary to run your business.
The Last Word
Knowing how much it will cost to form an LLC is crucial. You may have a lot of startup expenses, but developing your business is one of the most important ones. Make sure you know how much the formation will cost in your state so that you have the money to pay for it.
Then, you’ll be able to start your business on the right foot. Soon enough, you’ll start making a profit. Make sure to read our guides on how to start a business and how to form an LLC for more information on getting your business off the ground.
Filed under: Advice Columns