Forming an LLC costs $35 to $500 in state filing fees depending on where you file — the national average is about $132 — plus an ongoing annual fee that ranges from $0 to $500 per year. That's the real number. The $700–$1,000 figures you see elsewhere include add-ons (registered agent service, operating agreement templates, "compliance packages") that most first-time owners can do themselves for free.

Here's every cost line, what's mandatory vs. optional, the cheapest legitimate way to file, and the traps that turn a $132 filing into a $1,000 bill.

The costs at a glance

Cost Typical range Mandatory?
State filing fee (one-time) $35–$500 (avg ~$132) Yes
Annual report / franchise fee $0–$500/yr (avg ~$91) Yes, in most states
Registered agent $0 (be your own) or $100–$300/yr Agent yes; paid service no
Operating agreement $0 (DIY) to $200 (template/service) Required in ~5 states; smart everywhere
EIN from the IRS Always $0 Yes, for banking/hiring
Business licenses/permits $0–$100+ (varies by city/industry) Depends on your business
Formation service $0–$300 + state fee No
Lawyer $500–$1,500 No, for a standard single-member LLC
DBA (if operating under another name) $10–$100 Only if you use one

The one-time filing fee: $35–$500

Every state charges a fee to file your Articles of Organization. The extremes:

  • Cheapest: Montana ($35), Kentucky ($40), Arkansas, Arizona, Mississippi, Missouri, New Mexico ($45–$50)
  • Most common range: $50–$200 (most states cluster around $100–$150)
  • Most expensive: Massachusetts ($500), Tennessee ($300+ depending on members), Texas ($300), California ($70 to file — but see the $800 trap below)

Should you file in a cheap state? Almost never. If you live and operate in, say, California but form a Montana LLC, you'll have to register as a foreign LLC in California anyway — paying both states' fees plus California's franchise tax. The "Wyoming/Delaware LLC" advice applies to funded startups and specific privacy/asset situations, not to a freelancer or local business. File in the state where you actually work.

The recurring cost most people forget: annual fees

The filing fee is one-time; the annual report or franchise fee repeats forever:

  • $0/year: Arizona, Missouri, New Mexico, Ohio (and a few others with no report at all)
  • Typical: $20–$100/year
  • The big one: California charges a flat $800/year franchise tax on every LLC, profitable or not. Massachusetts is $500/year. Delaware $300/year.
  • Some states (e.g., New York) also require a one-time publication requirement that can run $300–$1,200 in newspaper fees depending on the county.

Before you form, look up both numbers for your state — the state that's cheap to enter can be expensive to stay in. Miss an annual report and you'll pay late penalties or eventually get administratively dissolved. If you're done with the business entirely, filing to formally close it is usually cheaper than letting the annual fees pile up — see how to close or dissolve an LLC.

Registered agent: $0 if you're your own

Every LLC must name a registered agent — a person or company at a physical in-state address who can receive legal mail during business hours. You can be your own agent for free in almost every state. Pay the $100–$300/year for a service only if you (a) work from home and don't want your address on public record, (b) move often, or (c) don't keep regular hours at a fixed address.

The things that should always be free

  • EIN: The IRS issues Employer Identification Numbers free in about 10 minutes online. Sites charging $50–$300 for "EIN filing" are reselling a free government form — here's how to get an EIN for free.
  • Operating agreement: Only a handful of states (New York, California, Missouri, Maine, Delaware) formally require one, and free templates cover a standard single-member LLC fine. It's still worth having everywhere — banks ask for it, and it's your proof of separation between you and the business.
  • "Compliance alerts," "minutes templates," "banking resolutions": upsell padding from formation services. Skip.

DIY vs. formation service vs. lawyer

DIY (state fee only). Filing is a web form on your Secretary of State's site: name, address, agent, 20–30 minutes. If you can fill out a job application, you can file an LLC. Our step-by-step registration guide walks the whole sequence including the EIN and bank account.

Formation service ($0–$300 + state fee). The "free LLC" offers are real but monetized by upsells and a free-first-year registered agent that auto-renews at $200–$300/year. Worth it if you value the hand-holding; set a calendar reminder to cancel what you don't need. We compare the major providers — and which upsells to decline — in our guide to the best LLC formation services.

Lawyer ($500–$1,500). Justified for multi-member LLCs with unequal ownership, outside investors, or complex asset-protection needs — the operating agreement is what you're really paying for. Overkill for a standard solo business.

Realistic first-year totals

Scenario First-year cost
DIY in a cheap state (e.g., Missouri: $50 file, $0 annual, own agent) ~$50
DIY in a typical state ($130 file + $50 annual, own agent) ~$180
Formation service + paid agent in a typical state ~$400–$600
California, any route (file + $800 franchise tax) ~$900+

Do you even need the LLC yet?

An LLC's job is liability protection and cleaner business banking — it does not save you taxes by default (a single-member LLC is taxed exactly like a sole proprietorship). If you're pre-revenue and testing an idea, it's often fine to start as a sole proprietor and form the LLC once real money or real risk shows up. The full decision framework: do I need an LLC to start a business? and LLC vs. sole proprietorship vs. S-corp. Freelancers, this version is for you: when should a freelancer form an LLC.

Once you file, the remaining setup is quick and mostly free: EIN, then a business bank account to keep the liability protection intact — commingling personal and business money is the classic way owners accidentally void it.

FAQ

What is the cheapest state to form an LLC? Montana has the lowest filing fee ($35), but the cheapest state for you is almost always your home state — forming out-of-state means registering twice and paying twice. If you're comparing total cost, look at filing fee + annual fee: states like Missouri, New Mexico, and Arizona are cheap on both.

Can I really form an LLC for free? The service fee can be $0 (several formation companies waive it), but the state filing fee is unavoidable — $35 minimum. "Free LLC" always means "free + state fees," usually with upsells attached.

How much does an LLC cost per year after formation? Between $0 and $800+ depending on state. The average annual report fee is about $91. Arizona, Missouri, New Mexico, and Ohio charge nothing annually; California charges $800 regardless of income.

Is an LLC worth the cost for a side hustle? Usually only once the side hustle has real revenue or real liability exposure (clients who could sue, physical services, products that could injure). Below that, a sole proprietorship costs nothing and works fine — here's the side-hustle-specific comparison.

Does an LLC reduce my taxes? Not by itself. A single-member LLC is a "disregarded entity" — same taxes as a sole proprietor, including self-employment tax. Tax savings only appear later via an S-corp election, which makes sense at roughly $60k+ of profit.