Explore the startup and maintenance costs for creating an LLC using our expert-authored guide.
How Much Does it Cost to Start an LLC?
Updated:
Jan 18, 2024
Authored By:
Miranda Riva, Esq.
Miranda Riva, Esq.
Reviewed By:
Laura Jackson, Esq.
Laura Jackson, Esq.
If you’ve been thinking about starting a business, or you already have a sole proprietorship but are looking for more liability protection, the questions are probably starting to pile up. You’re likely wondering what kind of business entity you want to form, whether you want to form your business as a limited liability company, how to start an LLC and how much it will cost you.
Small business owners will find many benefits to choosing an LLC structure for their business, including significant tax benefits and flexible management structure. The exact cost and the process of starting an LLC will vary slightly depending on the state you choose for LLC formation. This guide will provide the average costs associated with starting and maintaining an LLC in the US.
LLC Startup Costs
To officially start an LLC, you’ll need to file paperwork with the secretary of state, and eventually you’ll need to apply for an employer identification number (EIN) from the IRS. While the EIN is free if you DIY your application, there are filing fees associated with the paperwork you’ll need to file with the state. See the breakdown below.
Startup Cost Varies Depending on the Formation Method
When setting up an LLC, you can choose to DIY, use an online formation service or hire an attorney. If you DIY, you’ll only need to worry about paying filing fees when you file documents with the state.
In addition to filing fees, if you use an online formation service for basic filing, you’ll pay an additional $39-$79. This cost varies if you want to upgrade your formation package or have the service act as your LLC’s registered agent. If you hire an attorney, expect to pay a flat fee between $1,000 and $1,500, depending on the complexity of your business and the state in which you form.
LLC Name Reservation
Standard Cost: One-time fee between $10 and $140
Whether you’ve had a business name in mind for a while or you’re just starting to think about one, you can reserve a name any time before filing to ensure it isn’t taken before you get around to filing articles of organization for your LLC. The cost and time to hold your name varies by state. For example, Alabama requires LLCs to reserve a business name for $10, while Florida doesn’t offer name reservation services.
Filing Fee
Standard Cost: One-time fee between $50 and $150
The filing fee is how much it will cost for the state to officially process and file your LLC application, which is the LLC organization document (usually called the articles of organization) and in some states include your LLC’s operating agreement as well. The filing fee is state specific with the lowest cost being $40 (in Kentucky) and the most expensive cost being $500 (in Massachusetts). Most states’ filing fees hover between $50 and $100.
Operating Agreement
Standard Cost: Between $0 and $200
An operating agreement is the contract that details small- and large-scale LLC operations and relationships between members and the LLC. While only a handful of states require an LLC to file an operating agreement at formation, it is a good business practice to have one in place even if your state doesn’t require one to be filed. You can create this agreement yourself for free using a template found online or from scratch. Alternatively, you can use an online formation service to create this document or you can hire an attorney to draft one for your LLC.
Registered Agent
Standard Cost: Between $0 and $300
A registered agent is an individual designated by the LLC to accept important financial and legal documents on behalf of the LLC. This agent should have an address within the state in which you form your LLC and should be accessible by the state for service of process. All states require an LLC to have an active agent on file with the state.
You can serve as your LLC’s registered agent for free, or you can hire a registered agent service or attorney to serve as your LLC’s agent. If you choose an online service to form your LLC, there are some companies that offer a free registered agent service for the first year and anywhere between $50 and $300 annually after that.
EIN Application
Standard Cost: Between $0 and $99
An employer identification number is a number assigned to a company by the IRS that will be used when paying federal taxes. LLCs with more than one member or employees are required to have an EIN, but even LLCs that aren’t required to have one should still consider getting one.
You’ll need to get an EIN If your LLC plans to hire employees, make contracts with vendors or open business bank accounts. You can apply for an EIN for free on the IRS’s webpage, but some formation services offer to complete the application process on behalf of your LLC for an additional cost.
LLC Maintenance Costs
After paying the initial startup LLC costs, you’ll need to stay on top of ongoing costs like taxes, annual filings, licensing and any compliance services provided by an online formation company if you hired one.
Annual Reports
Standard Cost: Between $0 and $800
Most states will require LLCs to submit an annual or biennial report to the secretary of state to keep all important contact and monetary information up to date. If your state requires that your LLC submit a report, it’s either free to submit or will cost a processing fee (cost is usually around $50). Some states won’t require a report but might require a business tax, often called an “annual franchise tax,” in addition to other state taxes. Some states may require LLCs to file a report and pay a tax.
In nearly all states that require a report or tax annually or biennially, there are major consequences if your LLC fails to comply. You’ll either need to pay a hefty late fine when you eventually submit the required fees and documents, or your LLC will face dissolution. Some states will dissolve your company after failing to comply after a year. This timeline and the late fees vary by state.
Business Licensure
Standard Cost: Depends on the state and your business specialty
In most states, there is no statewide business license needed to conduct business as an LLC. However, most counties will require companies to pay for licensure to operate within the boundaries of that locality. This means companies that operate in multiple counties may need to get licensed in every county in which they conduct business.
There may also be categorical licenses you’ll need to obtain to conduct business, for example a liquor license or food and beverage license if you are opening a bar or restaurant. These costs will be the same regardless of the type of business you form. Most will cost around $50 and will need to be renewed annually or biennially.
Taxes
Standard Cost: Depends on the state and your business specialty
LLCs are pass-through tax entities, which means the LLC itself doesn’t pay taxes. Rather, the income and debts of the LLC are passed through to the members who pay the appropriate taxes annually through personal tax returns. Thus, the taxes your LLC will pay depends on factors like, what your business specializes in, whether your state has an income tax and how much your LLC made (or lost) that year.
Compliance Services
Standard Cost: Between $0 and $300
If your LLC chose an online service as its registered agent or to assist with compliance, then this will be another recurring cost for your LLC. For example, some companies, like LegalZoom, offer a compliance calendar subscription ($69/year) to send alerts when reports and taxes are due and to help your LLC stay organized and compliant.
Overall LLC Cost
The actual cost to form an LLC will vary depending on the state in which you form and the assistance you hire to start your LLC. If you DIY, your total cost will be the filing fees and annual fees required by your state. If you use an online formation service, you should expect to pay the fees plus the cost charged by the formation company.
Forming an LLC in Your State
Oftentimes, there are unique costs and requirements associated with starting an LLC in specific states. Check out our expert-authored guides to learn about forming an LLC in your home state.
FAQ: Cost to Start an LLC
No states will allow you to form an LLC for free. Every state charges a filing fee to start an LLC, and the least expensive state to form an LLC in is Kentucky for $40. If you come across a formation service offering to form your LLC at no cost, this is not including the state filing fees.
To form an LLC with an online formation service it will cost anywhere from $0 to $79 (+ state fees) for a basic formation package.
In Texas, to form your LLC you’ll need to pay $300 in LLC filing fees to get your certificate of formation submitted to the secretary of state. Each year you’ll need to pay a franchise tax to keep your LLC in good standing. The tax will be determined by your LLC’s net surplus.
DBA stands for “doing business as” and is a name that your company can conduct business as if it prefers to go by a name other than the name you filed your company under. This is common for businesses that have numerous small branches that each operate under different titles. If you have a business that is registered with the state, you won’t need a DBA unless you choose to do business under a different name than the one you filed on your certification of formation.
After reviewing the top LLC formation companies on the market, our team designated these top five companies as the best in the business:
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| Cost | $0+ | $0+ | $0+ | $0+ | $39+ |
| Customer Service | |||||
| Operating Agreement | |||||
| Registered Agent Service | |||||
| EIN | |||||
| License Reports | |||||
| Compliance | |||||
| Expert Help | |||||
| Tax Advisory | |||||
| Tax Preparation | |||||
| Guarantee of Acceptance | |||||
| Start Now | Start Now | Start Now | Start Now | Start Now |
- Service not offered.
- Service included in basic package.
- Service free for one year.
- Service available for additional fee.
Note that formation companies may offer promotional deals or additional free services.
Legal Disclaimer: This article contains general legal information but does not constitute professional legal advice for your particular situation and should not be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed in your jurisdiction.
