LLC Cost by State: Filing Fee and the Real First-Year Bill

How much does it cost to form an LLC?

Forming an LLC costs a one-time filing fee, paid to the state where you form it: Kentucky's $40 is among the lowest and Massachusetts's $500 among the highest, and the IRS charges nothing. The table below lists the fee by state. The real first-year bill adds whatever that state charges in the first year (a report, a tax, newspaper publication), a registered agent if you cannot serve yourself, and any fees in the state where you actually live and work.

Your case is not simple if:

• You will form in one state but live or work in another. Both states can charge you every year.
• You live outside the US. If you are not a US citizen or resident, a one-owner LLC files Form 5472 for each year it deals with you, starting with the year you fund it; missing it carries a $25,000 penalty. State choice and the EIN application change too.
• The LLC will have two or more owners. It usually files its own federal return every year, and Tennessee prices the filing by member count.
• You form in California, New York or Nevada. A tax, report or publication is due at filing or within months.

What to gather before you file: the state where you live and where the business will operate, the number of owners, a street address in the formation state for the registered agent (or the agent you will hire), and the LLC's name with a backup.

LLC filing fee by state: all 50 states and DC

Kentucky's $40 is among the lowest one-time filing fees and Massachusetts's $500 among the highest, and Tennessee charges by the number of members. Where filing online costs less, both fees are shown. Fees change, so confirm on the state's page before you pay.

What else does an LLC cost in the first year?

In most states the filing fee is the only state charge at formation, and the yearly report or fee starts later. The states below charge much more in the first year. Every state's recurring fee and due date is in LLC annual fees and reports by state.

California's annual tax is generally owed by every LLC organized or doing business there, whether or not it earns anything; the California minimum tax guide covers the exceptions, such as cancelling within the first year, and the extra fee on larger LLCs. Arizona and Nebraska may also require a new LLC to publish a notice; the publication guide covers when, how often and what it costs. A Texas LLC owes no franchise tax at or below $2,650,000 of annualized revenue but still files a yearly report (Comptroller); see the Texas franchise tax guide. Delaware's tax has its own Delaware LLC tax guide.

Do I have to pay a registered agent?

Almost every state requires an LLC to name someone in the state to receive legal papers, but you do not have to pay anyone if you can serve yourself. The articles list the agent and a street address in that state; Arizona's statute, for example, requires the statutory agent's street address in Arizona. An owner who lives in the state can usually be the agent: Montana's help page says you can be your own registered agent. Three states work differently. New York's articles name the Secretary of State as agent and give a mailing address that may be outside the state, and a registered agent is optional (N.Y. LLC Law 203). Pennsylvania requires a registered office address in the state, or a listed commercial registered office provider, but no agent (Department of State). West Virginia lets an LLC keep an agent but does not require one (W. Va. Code 31B-1-108).

Elsewhere, if you form in a state where you have no address, you need someone with a street address there to act as agent for as long as the LLC exists, usually a paid agent. Florida's filing total includes a registered agent designation fee paid to the state, even when you are your own agent. Choosing and changing an agent is covered in the registered agent guide.

Which LLC costs are optional?

Beyond the filing fee, an agent and any first-year charge in the table above, the rest is optional. Some sellers charge for items the state or the IRS provides for little or nothing; the IRS warns that you never have to pay a fee for an EIN.

One exception: Alabama's formation form requires a name reservation certificate to be attached, so the reservation is not optional there.

Are there federal fees to form an LLC?

No. The IRS charges nothing to form an LLC or to issue its EIN (IRS). A company formed in the US also no longer files a beneficial ownership report: FinCEN's final rule made US companies exempt; who still files a BOI report covers the exceptions and letters asking for a fee.

The first federal return has no IRS fee either; its cost is your time or a preparer's fee. A single-owner LLC is normally reported on the owner's own return, while an LLC with two or more members files a partnership return unless it elects to be taxed as a corporation (IRS). An LLC owned only by a married couple as community property may instead be treated as a single-owner LLC (Rev. Proc. 2002-69).

Does forming in a cheaper state save money if I live elsewhere?

Usually not. If the LLC does business in the state where you live, it generally must register there as an out-of-state LLC and pay that state's fees and taxes, on top of the formation state's yearly fee and an agent there.

California shows the effect. An LLC formed elsewhere that does business in California registers for $70, the same as a California filing, and owes the same $800 annual tax (Franchise Tax Board). In Texas, registering an out-of-state LLC costs $750 (Form 304), more than the $300 to form a Texas LLC. What counts as doing business is covered in registering in another state, and the trade-offs in which state to form in.

Can the LLC deduct what it paid to form?

Yes, within limits. The business can elect to deduct up to $5,000 of start-up costs in the year it begins, and an LLC taxed as a partnership or corporation can also deduct up to $5,000 of organizational costs, which include state filing fees (Treas. Reg. 1.709-2). A one-owner LLC has no organizational limit: its formation costs, the filing fee included, are deductible like its other costs only if together they total $5,000 or less; above that they must be capitalized (Treas. Reg. 1.263(a)-5). Each limit shrinks once those costs pass $50,000, and the rest is spread over 180 months (Form 4562 instructions; Publication 583). A filing fee from the table above is far below either limit. Which costs qualify and when the business begins are covered in the startup costs guide.

What should I budget for books and the first tax return?

These costs recur every year and are set by whoever does the work, not by the state. An LLC with two or more owners usually files its own partnership return for every year it has income or deductible expenses, and a late one can be penalized $260 per owner for each month, up to 12 months (Form 1065 instructions). For typical prices, see bookkeeping cost per month and what an accountant costs a small business.

Example

These examples are illustrative and use US dollars. State charges only; a paid agent, bookkeeping and tax preparation are extra.

California, one owner

An owner files articles in March for $70. The Statement of Information ($20) is due within 90 days, and the first $800 annual tax is due by the 15th day of the 4th month, counting March as the first: June 15. State charges in year one: $890, even if the LLC earns nothing.

Florida, one owner

An owner files in March for $125: the $100 filing fee plus the $25 registered agent designation fee, with the owner as agent. Nothing more is due to the state that year. The first annual report, $138.75, is due between January 1 and May 1 of the next year. State charges in year one: $125.

A Californian who forms in Wyoming

A California resident forms a Wyoming LLC for $100 to save money, then runs the business from home in California. The LLC registers in California ($70), files the same $20 Statement of Information and owes California's $800 annual tax. It also needs a Wyoming agent, usually paid, because the owner has no Wyoming address. State charges in the first year come to at least $990 plus the agent, more than the $890 a California LLC would have paid. By the first day of its anniversary month the next year, the Wyoming annual report adds at least a $60 license tax, on top of California's $800 for the second year.

Different for you?

• You live outside the US: see the best state for a non-resident LLC and get business formation help.
• You will form in one state but live or work in another: check registering in another state before you file, and get business formation help if two states are involved.
• You are forming in California: read the California minimum tax guide and how to start an LLC in California.
• You are forming in New York: budget for publication with the publication guide.
• You are about to pay a service to file or to get an EIN: see who should form your LLC and the EIN for a single-member LLC, or get business formation help to set up the state filing and the tax side together.
• The LLC will have two or more owners: see whether a multi-member LLC needs a CPA, and get business formation help to set it up.
• You formed an LLC and missed a fee or report: see reinstating your company.