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.

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.

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.