Once you’re all in on a business idea, one of the first steps to bring it to life is to form a limited liability corporation (LLC). An LLC protects you personally from lawsuits against your business while providing the freedom and opportunity of being an entrepreneur.
In the U.S., due to different filing fees, related laws and licensing costs, LLC costs vary by state. You can expect to pay anywhere from $140 to $5,000—with an average of $1,000.
Common costs for starting an LLC include an LLC filing fee, required add-ons to comply with state-specific laws and additional perks to streamline your business journey. To determine what you can expect to pay, let’s check out the costs in detail:
8 costs to start an LLC
Forming an LLC as part of starting a business comes with both required and optional costs:
01. Filing fees
To legally register your business as an LLC, you need to submit articles of organizations to your state government—specifically with the Secretary of State's office. Additionally, you must also pay a state filing fee. State filing fees range from $35 to $500, with an average of $132.
Here are the LLC filing fees for the five most populated states:
Tip: While you can submit the articles of organizations yourself, using a third-party service makes the process smoother in exchange for a small fee, ranging from $50 to $100.
02. Applying for an EIN
With a single-member LLC structure (without any partners), you can use your Social Security number (SSN) to do your business and file taxes. That said, banks might ask for additional documentation if you want to open a business bank account, so getting an employer identification number (EIN) is preferable.
You also must apply for an EIN if you want to hire employees or work with a couple of entrepreneurs as partners.
Regardless, it’s better to get an EIN to benefit from increased privacy, as using an SSN for business purposes makes you more vulnerable to identity theft. An EIN also lets you build a credit score for your business, get business financing from banks and distinguish yourself as a professional business.
Typically, there are no costs associated with applying for an EIN as it’s a free service offered by the Internal Revenue Service (IRS). If you’re not a U.S. resident and want to rely on a third-party service for convenience, you might need to pay up to $100.
03. Registered agent
A registered agent is an individual designated to receive legal documents, official documents and other mail on behalf of the LLC. It’s a legal requirement for LLCs to have a registered agent to keep an open communication channel at all times.
Since any adult can be a registered agent, you can be a registered agent for your own LLC for free—or you can ask a friend, a relative, or even your Certified Public Accountant (CPA). That said, the registered agent must have a physical presence in the state and be available during standard business hours.
If you don’t reside in the state, consider hiring a trusted professional to manage sensitive documents for you. Typical costs for getting a registered agent range from $100–$300, with an average expense of $160.
Tip: With Wix, you can form a new business entity and build an online presence in one stroke via its partnership with LegalZoom, which comes with registered agent services.
04. Operating agreement
While you don’t legally need an operating agreement to form an LLC, it helps clarify management structure, protect limited liability status and outline operational policies.
In particular, if there are several owners, an LLC operating agreement gets everyone on the same page in terms of expectations—it’s the first hurdle to clear for a partnership. Once an operating agreement is in place, it helps the partners avoid disputes surrounding profit distribution, critical decisions and other business matters.
You can create your operating agreement for free from scratch or using a DIY template. Alternatively, since dividing profits and losses among business owners can get complicated later on, consider opting for a legal service.
Typically, you can expect to pay between $100–$200 on operating agreement preparation if you opt for online service providers. A local lawyer will also work, with costs depending on the location/practice.
05. Business name registration
Excluding Alabama, all U.S. states let you choose a business name without incurring any fee. In Alabama, you need to pay $25 (via mail) or $28 (via the online service) to reserve your business name before filing your LLC documents.
While it’s not a requirement in other U.S. states, you can pay roughly $30 for a name reservation to ensure it isn't taken by the time you get ready to submit the filing documents.
Tip: If you need help brainstorming a great business name for your LLC, use Wix’s free business name generator to get a list of industry-relevant name ideas.
Business names typically include an LLC designation—such as LLC, Limited, or Limited Liability Company—to convey their registration as an LLC. If you don’t want to use that name beyond legal documents, register a Doing Business As (DBA) name (also called a trade name).
Depending on the state, the cost of getting a DBA name ranges from $5 (Iowa) to $100 (Wyoming). On average, you can expect to spend $40 on getting a trade name.
Tip: While finalizing your LLC name, get a domain name and social media handles to go with it, as well. Doing so at this stage ensures a consistent brand image and makes it easier for potential customers to find you online. Use Wix’s domain name generator to find available domain names relevant to your business.
Sign up with Wix to get a free domain name.
06. Business registration and licensing
If you want to include specific words, like “insurance,” “bank” or “engineering,” in your business name, you’ll need to register with the relevant state agency before filing your LLC documents. This is because those terms might mislead customers into believing that your LLC holds a specific business license.
For example, say you want to start a Texas company with “engineering” in the name. You’ll need to register your small business with the Texas Board of Professional Engineers and Land Surveyors (TBPELS), which costs $150.
Beyond that, some states have a general business license, including:
Alaska
Delaware
Nevada
Tennessee (for businesses with gross receipts of $100,000+ only)
West Virginia
If you’re looking to operate in one of these states as an LLC, you’ll have to spend $15–$200 for a business license.
Other states don’t have a general business license. Still, you may need specific business licenses, depending on your industry, that come with additional costs. For example, California’s contractor license, which covers a range of labor-intensive services, has an application fee of $450 and an initial license fee of $200–$350.
07. Compliance fees
You may also need to pay compliance fees, depending on the state. For example, most U.S. states require biennial or annual reports, with associated fees of $9–$100.
In addition to these filing fees, you may also have state-specific compliance requirements. For example, New York, Nebraska and Arizona (except for Maricopa County or Pima County) require you to notify the public about the LLC formation in a local newspaper, which can cost from $80 in Nebraska to over $1,000 in New York.
Similarly, California, Nevada and Washington require you to submit an initial report and charge a filing fee for that report—ranging from $10–$150.
Here are the compliance fees for the five most populous states:
California: $20 (annual report) + $20 (initial report)
Texas: $0
Florida: $138.75 (annual report)
New York: $9 (biennial report) + $50 (certification of publication) + $600–$1,200 (publication costs)
Pennsylvania: $7 (annual report)
08. Business tax for an LLC
LLCs don’t get a flat tax rate—like the 21% federal tax rate for corporations. Instead, LLCs have pass-through taxation. As a result, instead of an LLC paying the taxes, the owners pay self-employment and income taxes on the profits they earned from the LLC.
However, a few states have minimum annual fees or taxes you must pay to maintain good standing with the state, regardless of whether you make any profits. For instance, every LLC operating in California must pay an annual tax of $800.
Here are the business fees on LLCs in the five most populous states:
California: $800
Texas: $0
Florida: $0
New York LLC: $0
Pennsylvania LLC: $0
In addition, some states, like Texas, have franchise taxes.
What is the most affordable state to start an LLC in?
You can reduce your costs by opting for a state with low filing fees. For example, LLC filing fees in Montana are only $35 for local applications. You can get this low fee by having a registered agent there.
Need more reasons to consider Montana? You don’t need to pay any compliance fees or business taxes, and you can also use a DBA by incurring a fee of only $20. Plus, the annual report fee ($20) is the only ongoing cost.
Alternatively, you can opt for:
Kentucky: LLC filing fee of $40 and annual report fee of $15
Arizona: LLC filing fee of $50
Mississippi: LLC filing fee of $50
New Mexico: LLC filing fee of $50
Colorado: LLC filing fee of $50 and annual report fee of $10
That said, it’s often simpler to start and run an LLC in your home state to simplify LLC formation, future taxation and business management.