What goes into the cost of an LLC
People underestimate LLC costs because they only look at the state filing fee. That’s usually 20–40% of the true year-1 cost and almost nothing of the ongoing cost. The actual money buckets are:
- State filing fee — paid once when you file Articles of Organization. Ranges $35 (Montana) to $500 (Massachusetts).
- Registered agent — required in nearly every state. Free if you serve as your own, $49–$300/year if you hire a commercial service.
- Annual report — most states require this every year (or every two years). Ranges from $0 (no fee in Idaho, Minnesota, Mississippi, Missouri, New Mexico, Ohio, South Carolina) to $500 (Massachusetts).
- Franchise / entity tax— a separate tax some states levy on LLC existence regardless of revenue. California $800, Delaware $300, Kentucky LLET $175 minimum, Tennessee F&E $100 minimum, Alabama BPT $50 minimum. Most states have $0.
- Formation service fee(optional) — $0–$249. Northwest’s $39 base is the most cost-effective if you want the convenience.
- EIN— always $0 from the IRS. Don’t pay for this separately.
5 things the calculator doesn’t include
- Local business licenses. Most cities require one. Fees usually $25–$500/year.
- Industry-specific permits. Real estate licensing, food handler permits, contractor bonds, professional services — varies wildly by industry.
- Sales tax registration. Free in most states but required if you sell taxable goods or services.
- FinCEN BOI reporting. Free to file yourself, but services charge $100–$200 if you outsource it.
- Operating Agreement template/legal review. Free templates everywhere online, but attorney review for a multi-member LLC starts around $500.
Have Northwest form your LLC for $39 + state fee
Free registered agent for the first year. Real human support. Privacy-by-default — your home address stays off public filings.
LLC cost FAQ
How much does it cost to start an LLC?
State filing fees range from $35 (Montana) to $500 (Massachusetts) for the initial Articles of Organization. Year-1 total realistically falls between $50 and $700 depending on the state, whether you use a formation service ($0–$249 add-on), and whether you hire a commercial registered agent ($49–$300/year). The calculator above shows your specific number.
What is the cheapest state to form an LLC in?
Montana ($35 filing fee) is the cheapest to file, followed by Kentucky ($40), Arkansas ($45 online), Missouri ($50 online), and Mississippi ($50). For ongoing cost, Missouri and Ohio are exceptional because they have no annual report — Missouri's long-term total can be just $50 lifetime in state fees if you serve as your own registered agent.
What is the most expensive state to form an LLC in?
Massachusetts is the most expensive overall — $500 filing fee AND $500 annual report every year forever. California is next: $70 filing is cheap but the $800 minimum annual franchise tax (after a year-1 waiver) puts ongoing cost above any other state. Tennessee and Maryland also have $300+ ongoing costs.
Are there hidden costs the calculator doesn't show?
A few. Local business licenses (most cities charge $25–$500/year), industry-specific permits (real estate, food service, contractors), sales tax registration (free in most states but required if you sell taxable goods), and FinCEN BOI filing (free if you do it yourself at fincen.gov, $100–$200 if you pay a service). The calculator focuses on state-level entity costs because those are universal.
Does the IRS charge for an EIN?
No. The IRS issues EINs (Employer Identification Numbers) for free at irs.gov. Avoid sites that charge $99 to "file" your EIN — they're using the same free portal you can use yourself in 10 minutes.
Do I need to hire a registered agent or can I serve as my own?
You can serve as your own registered agent if you have a physical street address in the state of formation and are available during business hours to receive legal mail. The two reasons to hire one: (1) keep your home address off public state filings, and (2) miss-nothing reliability for service of process. Costs $49–$300/year depending on the service.
Why is California so expensive for LLCs?
The $800 minimum annual franchise tax. California charges every LLC $800 per year regardless of whether the LLC made any money. New LLCs formed on or after January 1, 2021 get the first year waived, but every year after that the $800 is due. LLCs with California gross receipts above $250,000 owe an additional tiered fee from $900 to $11,790.
Can I form my LLC in Wyoming to save money even though I live in California?
Usually no. If you actually do business in California (have customers, employees, or operations there), California treats your "Wyoming" LLC as a foreign LLC and charges the same $800 franchise tax anyway — PLUS the Wyoming fees. You'd pay both states. The "form in a cheap state" strategy only works for true holding companies with no operations in your home state.
See specific state guides
Each state guide has the full breakdown — filing fee, processing time, annual report deadline, franchise tax math, registered agent rules, and the Secretary of State link.