What is the Minimum Cost of an LLC: Easy Explanation

What Is the Minimum Cost of an LLC?

Forming an LLC is among the smartest things a freelancer, small business owner, and entrepreneur in the USA can do. It protects your personal assets, makes you more reliable in the eyes of clients, and eases the way towards having a professional firm. Yet, before registering your LLC, only one question is left in the minds of all entrepreneurs: What's the minimum LLC fee? Knowledge is power.

The answer is: It depends on the state where you form your LLC.

Every state in the US has a list of regulations and how much they charge as filing fees. They all differ in price, with some less and some more. Let's, however, walk you through the cost item by item so you know how much you should budget for.

1. State Filing Fee – The Main Cost

The state filing fee is the true cost you pay the government when you file your LLC paperwork (titled "Articles of Organization" or "Certificate of Formation").

• The cheapest states range from $40 to $50.
• The most expensive states are over $500.
• Most states run from $100 – $150.
• Examples

1. Kentucky charges one of the lowest rates in the nation: $40.
2. California is $70 to establish an LLC but also charges an $800 annual franchise tax, so it's more costly in the long run.
3. New York is also costly as it needs the publishing of an LLC that can cost more than $1,000 in some counties.
4. Wyoming, Delaware, and New Mexico are popular substitutes as they are low-cost with minimal expense and easy yearly fees.

So, the state you choose really does have a huge bearing on the cost of your LLC.

READ.... 9 Tax free states to form an LLC 

2. Annual or Recurring Fees

Once you establish your LLC, you will also need to pay annual or biennial (every two years) fees in order to keep your business alive. These are commonly known as:

• Annual report fee
• Franchise tax
• Business renewal fee
• These recurring fees will range from $0 to $800+ per year, state by state.

For example:

1. Wyoming is just $60 a year.
2. Delaware is $300 a year.
3. California has a minimum of $800 a year in franchise tax, so most small business owners avoid it unless they live there.

3. Registered Agent Fee

• A registered agent is a person who receives official mail and legal papers on your LLC's behalf. One is required in all states.
• You can serve as your own registered agent if you live in the state in which your LLC forms.
• Most small business owners, however, hire a professional registered agent service for privacy and convenience.
• The cost of a registered agent service runs between $50 to $150 a year.

4. Fees You Might Need

Aside from the regular state fee and agent fee, there are certain additional or situation-specific fees:

• Name reservation: A handful of states allow name reservation before you file. Normally $10–$50.
• Operating Agreement: Not always required, but strongly recommended. If you utilize a service, this can cost $50–$100.
• Business License or Permit: Local permits could be required based on the type of your business and the place you're at. The cost can be $20–$200+.
• EIN (Employer Identification Number): No fee if done directly with the IRS, but companies will charge around $50–$100 to do it for you.

5. Minimum LLC Cost Example by State

Here are some of the more popular states and their minimums:

• Kentucky LLC – $40 (filing) + registered agent optional
• Wyoming LLC – $100 (filing) + $60 a year
• Delaware LLC – $90 (filing) + $300 a year tax
• New Mexico LLC – $50 (filing fee) + $0 yearly fee
• California LLC – $70 (filing fee) + $800 yearly franchise tax

You can observe how minimum cost heavily relies on your desired state. If you want the cheapest expense LLC with simple upkeep each year, then Wyoming and New Mexico are very affordable.

READ... Wyoming LLC Formation steps: for beginner's guide

6. How to Keep Your LLC Costs Low

If you are on a shoestring budget, take a look at these cost-saving tips:

• Choose a low-filing fee state and a low-annual fee state (Wyoming, New Mexico, Kentucky).
• Act as your own registered agent if allowed.
• Obtain your EIN straight from the IRS website (free).
• Purchase add-on services only when absolutely necessary.

Conclusion

The minimum that you have to pay to create an LLC in the USA is $40–$50, but the average cost will be $100 and $150, depending on the state. Do not also forget to look at the renewal fees and extra charges like a registered agent or licenses.

If you don't have money and do not want to stress, choosing the right state is very important.

✅ Ready to Launch Your LLC the Smart Way?

Forming an LLC can be a hassle, but it doesn't have to be. We help you pick the best state for your business, prepare all the paperwork, and get your LLC set up — all for the lowest fees possible.

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