How Much Does It Cost to Set Up an LLC?
Quick Answer
Setting up an LLC costs between $50 and $808, depending on your state and formation service. Most people pay $200-$400 in year one. State filing fees range from $50 (New Mexico, Colorado) to $800+ (California with franchise tax). Formation services charge $0-$500 in service fees.
Breaking Down the Real Cost of an LLC
If you’re asking “how much does it cost to set up an LLC?” you’re probably encountering wildly different answers online. Some sites claim “$0 plus state fees,” while others quote $1,000 or more. The truth? Both are technically correct—and that’s exactly the problem.
The actual cost of forming an LLC in 2026 has three main components:
💰 State Filing Fees
Paid directly to your state government. This is unavoidable and varies dramatically by state. California charges $70 upfront but has an $800/year franchise tax, while New Mexico charges $50 with $0 annual fees.
🏢 Formation Service Fees
What you pay companies like LegalZoom, ZenBusiness, or Northwest Registered Agent to file your paperwork. Advertised prices start at $0, but hidden costs can push this to $400+ in year one.
📋 Ongoing Compliance Costs
Registered agent services (legally required), annual reports, and compliance monitoring. These recurring costs often exceed your initial setup fees over time.
State Filing Fees: What Every State Charges
Your biggest variable cost is your state filing fee. Here’s what all 50 states charge as of 2026 (we’ve highlighted the most cost-effective and most expensive options):
| State | Filing Fee | Processing Time | Annual Report Fee | Total Year 1 |
|---|---|---|---|---|
| New Mexico LOWEST COST | $50 | 1-15 days | $0 | $50 |
| Colorado | $50 | Same day – 1 day | $10 | $60 |
| California | $70 | 7-14 days | $800 franchise tax | $870 |
| Delaware | $90 | 1-3 days | $300 | $390 |
| Florida | $125 | 5-7 days | $138.75 | $263.75 |
| Wyoming | $100 | 1-5 days | $50 | $150 |
| Texas | $300 | 3-5 days | $0 | $300 |
| Nevada EXPENSIVE | $425 | 1-7 days | $350 | $775 |
| New York | $200 | 7-10 days | $9 | $209 |
| Pennsylvania | $125 | 5-7 days | $70 | $195 |
| Illinois | $150 | 5-10 days | $75 | $225 |
| Ohio | $99 | 5-7 days | $0 | $99 |
Yes, for 95% of businesses. Even though Nevada and Wyoming look appealing for their “tax benefits,” if you operate in California, you’ll still owe California’s $800 franchise tax PLUS you’ll need to pay for “foreign qualification” ($100-$200) to legally operate there. Only form out-of-state if you’re 100% remote with no physical presence anywhere.
Formation Service Costs: The “$0” Myth
Almost every LLC formation service advertises “$0 + state fees” in 2026. But here’s what they don’t tell you upfront: that $0 price only covers the bare minimum filing. To actually run your business, you’ll need several add-ons—and that’s where costs balloon.
Here’s what it REALLY costs to use popular formation services over 24 months:
| Service Provider | Advertised Price | Year 1 Real Cost | Year 2 Costs | 24-Month Total |
|---|---|---|---|---|
| BusinessRocket BEST VALUE | $0 + state | $125 | $125 | $250 |
| Northwest Registered Agent | $39 + state | $264 | $125 | $389 |
| Bizee (Incfile) | $0 + state | $199 | $149 | $348 |
| Inc Authority | $0 + state | $299 | $199 | $498 |
| ZenBusiness | $0 + state | $358 | $199 | $557 |
| Tailor Brands | $0 + state | $349 | $249 | $598 |
| Rocket Lawyer | $99.99 | $399 | $299 | $698 |
| LegalZoom MOST EXPENSIVE | $0 + state | $479 | $329 | $808 |
The $558 difference: Choosing LegalZoom over BusinessRocket costs you an extra $558 over 24 months for essentially the same legal outcome. Both give you a legally valid LLC—one just comes with more marketing fluff.
Hidden Costs: Where Your Money Really Goes
The 6 Hidden Costs in “Free” LLC Formation
1. Registered Agent Service
What it is: Legally required in every state. Someone who accepts legal documents on behalf of your LLC during business hours.
The trick: Most services include Year 1 free, then auto-renew at $99-$300/year. You’ll get billed again next year whether you remember or not.
2. Operating Agreement
What it is: Document defining ownership, profit distribution, and management structure for your LLC.
The trick: Some providers (Northwest, BusinessRocket) include this free. Others (LegalZoom) charge $99-$249 extra. Banks often require this to open a business account.
3. EIN Filing Service
What it is: Your business tax ID number from the IRS. Needed to hire employees or open a bank account.
The trick: The IRS gives you an EIN for FREE in 10 minutes online. Formation services charge $50-$139 to do the exact same thing. This is pure profit for them.
4. Expedited Processing
What it is: Filing your LLC paperwork faster than the standard 1-3 week timeline.
The trick: Most people don’t need their LLC approved in 24 hours, but it’s presented as “recommended” at checkout. Unless you’re signing a contract next week, save your money.
5. Compliance Monitoring
What it is: Automated reminders for annual reports, state filing deadlines, and renewal dates.
The trick: You can set calendar reminders for free and file annual reports yourself for $10-$50 directly with your state. Services charge $149-$299/year for reminder emails.
6. Business License Research
What it is: Finding out which local licenses and permits your business needs.
The trick: Most cities have free online databases where you can look this up yourself in 15 minutes. Don’t pay $99-$199 for someone to Google it for you.
📊 Calculate Your Exact LLC Cost
Use this interactive calculator to see what you’ll actually pay based on your state and service provider choice
Your Estimated Total Cost:
This includes all state fees, formation service costs, and registered agent renewals for the selected time period.
Can You Form an LLC Yourself to Save Money?
Yes, absolutely. Every state allows you to file LLC formation paperwork directly without using a service. Here’s the cost breakdown:
DIY LLC Formation
What you pay:
- ✓ State filing fee only
- ✓ $0 in service fees
- ✓ Registered agent: Be your own (free) or hire one ($99/yr)
Total Savings: $125-$500 vs. using a service
What You’ll Need to Do
- • Choose and verify your business name
- • File Articles of Organization with your state
- • Get an EIN from IRS (free, 10 minutes online)
- • Draft an operating agreement (templates available)
- • Set calendar reminders for annual reports
When to DIY vs. Use a Service
DIY is best if:
- ✓ You’re comfortable with paperwork
- ✓ Single-member LLC (simple structure)
- ✓ Budget is tight
Use a service if:
- ✓ You want someone else handling compliance
- ✓ Multi-member LLC needing custom agreements
- ✓ You value time over money ($125 for full service)
Additional Costs You Might Need
Beyond formation and compliance, here are other expenses to budget for when starting your LLC:
Business Bank Account
Legally required to keep personal and business finances separate. Many online banks (Mercury, Relay, Lili) offer free business checking with $0 monthly fees and no minimum balance.
Business Licenses & Permits
Varies by industry and location. Home-based consultants might pay $50 for a general business license, while restaurants need health permits, food handler licenses, and more ($300-$1,000+).
Professional Insurance
General liability insurance runs $400-$600/year for low-risk businesses. Professional liability (E&O) for consultants costs $500-$1,500/year. Not legally required but highly recommended.
Bookkeeping & Tax Prep
DIY using QuickBooks ($30/month) or hire a bookkeeper ($150-$400/month). Annual tax preparation for an LLC runs $500-$1,500 depending on complexity.
Domain Name & Website
Domain registration: $15/year. Basic website hosting: $5-$30/month. Professional website design: $500-$5,000+ one-time. Many LLC services bundle logo and website builders.
Business Phone Number
Google Voice is free but unprofessional. VoIP services like Grasshopper or RingCentral run $10-$30/month for a dedicated business line with features.
💡 Money-Saving Strategies: Cut Your LLC Costs by 50%+
- Skip the EIN service – Get your EIN free from the IRS in 10 minutes online (if you have an SSN)
- Don’t pay for expedited processing – Unless you need your LLC operational this week, standard 1-3 week processing is fine
- Be your own registered agent Year 1 – Switch to a service in Year 2 if needed (saves $99-$125 initially)
- Use free operating agreement templates – Northwest and BusinessRocket include these, but you can find state-specific templates free online
- Form in your home state – Avoid $100-$200 foreign qualification fees by not falling for the “Delaware advantage” marketing
- File annual reports yourself – Takes 15 minutes, costs $10-$50 directly with your state vs. $149-$299 through a compliance service
- Choose the cheapest provider – BusinessRocket ($250 over 24 months) vs. LegalZoom ($808) saves you $558 for the exact same legal entity
- Bundle banking and bookkeeping – Many modern banks (Relay, Mercury) offer free sub-accounts and integrations that replace paid bookkeeping tools
Ready to Form Your LLC at the Lowest Cost?
Compare transparent pricing from top-rated formation services
See Best LLC Services for 2026 →Frequently Asked Questions
What is the absolute cheapest way to start an LLC?
The cheapest option is filing yourself in New Mexico ($50 filing fee + $0 annual costs) and being your own registered agent. Total cost: $50 one-time. If you want a service to handle it, BusinessRocket in New Mexico costs $175 total for year one ($50 state + $125 service).
How much does it cost to maintain an LLC each year?
Ongoing costs include: registered agent ($99-$300/year), annual reports ($0-$800 depending on state), and optional compliance monitoring ($149-$299/year). Budget $100-$500/year minimum, with California being the outlier at $800+ due to franchise tax.
Is LegalZoom worth the extra cost?
For most small businesses, no. LegalZoom costs $808 over 24 months vs. BusinessRocket’s $250 for the same legal entity. You’re paying $558 extra primarily for brand recognition. The only advantage is their attorney network if you need ongoing legal consultations.
Do I need to hire a registered agent or can I do it myself?
You can be your own registered agent, but it’s not recommended. You must be available at a physical address during business hours (9-5) every weekday, and that address becomes public record. For $99-$125/year, a registered agent service protects your privacy and ensures you never miss legal documents.
What’s the difference between state filing fees and service fees?
State filing fees are paid directly to your state government and are unavoidable ($50-$800 depending on state). Service fees are what you pay companies like LegalZoom or Northwest to prepare and file your paperwork ($0-$500). You can skip service fees by filing yourself.
Should I form my LLC in Delaware or Wyoming for tax benefits?
Only if you’re 100% remote with no physical presence anywhere. If you operate in California but form in Wyoming, you’ll pay Wyoming’s fees ($150/year) PLUS California’s $800 franchise tax PLUS foreign qualification fees ($100-$200). For 95% of businesses, form in your home state.
Are there any states with $0 annual fees?
Yes! New Mexico, Ohio, and Texas have no annual report fees. New Mexico is the absolute cheapest long-term option with $50 filing and $0 annual costs. However, you still need a registered agent unless you use your own address.
Can I get an EIN for free instead of paying $50-$139?
Yes, absolutely. If you have a Social Security Number, the IRS gives you an EIN for free in about 10 minutes on IRS.gov. Formation services charge $50-$139 to do the exact same thing. Non-residents without an SSN need to fax Form SS-4, which is also free but takes 4 business days.
What happens if I don’t file my annual report?
Your LLC can be administratively dissolved, meaning you lose limited liability protection and could be personally liable for business debts. You’ll also face late fees ($50-$200) and penalties. Most states give 60-90 days past the deadline before dissolution.
Is forming an LLC worth the cost for a side hustle?
It depends on your risk. If you’re doing low-risk freelancing (writing, design), a sole proprietorship might be fine initially. If you’re doing anything with higher liability (selling products, consulting in regulated industries, real estate), the $200-$400 LLC cost is worth it for asset protection. You can always start as a sole proprietor and convert to an LLC later.
How much does it cost if I’m a non-US resident forming a US LLC?
Formation costs are the same ($50-$500 depending on state/service), but you’ll have additional expenses: international tax compliance ($500-$2,000/year for Form 5472 and 1120 filing), EIN by fax (free but slower), and specialized formation services like Doola ($300-$500 first year) that handle international requirements. Budget $800-$1,500 year one.
Final Cost Recommendations by Budget
🏆 Absolute Lowest Cost
Strategy:
- • Form in New Mexico (DIY: $50, or BusinessRocket: $175)
- • Be your own registered agent Year 1
- • Get EIN free from IRS
- • Use free operating agreement template
- • File annual reports yourself
💼 Best Value (Recommended)
Strategy:
- • Form in your home state
- • Use BusinessRocket or Northwest ($250-$389 over 24 months)
- • Includes registered agent, operating agreement, compliance reminders
- • Get EIN free from IRS
- • Perfect balance of cost and convenience
🚀 Full-Service Premium
Strategy:
- • Use ZenBusiness or Tailor Brands
- • Includes website builder, logo design, compliance automation
- • Registered agent for life
- • Best for entrepreneurs who value time over money
- • Expect $557-$698 over 24 months
The Real Answer: What Does an LLC Cost?
For most small businesses, expect to pay $200-$400 in Year 1 and $100-$300 annually thereafter. The exact amount depends on your state (New Mexico at $50 vs. California at $870), your choice of formation service ($0-$500), and whether you handle compliance yourself or pay for monitoring.
The smartest approach? Form in your home state, use a transparent provider like BusinessRocket or Northwest, skip unnecessary add-ons, and file your own annual reports. This gets you a fully compliant LLC for $250-$400 total over 24 months.
Updated February 2026 with current state fees and service pricing