How Much Does It Cost To Start an LLC?
Updated May 10, 2024 at 9:22 am
A limited liability company (LLC) is one of the most popular business structures in the United States. It’s a type of “hybrid” structure that combines features of a sole proprietorship with additional legal protections for business owners.
Like a sole proprietorship or partnership, the owner or investors aren’t double taxed. Instead, profits “pass through,” eventually getting taxed as part of the owner’s personal income. Many rapidly-growing businesses find this to be an attractive benefit of LLC formation, as this can reduce tax liability that would otherwise be excessive in other formation types.
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Vault’s Viewpoint
- Limited Liability Company (LLC) is one of the most popular business structures in the United States due to its flexibility and tax savings opportunities..
- An LLC protects the owners’ personal assets from the business’s debts and liabilities, and in the case of business failures.
- “How much is an LLC?” Costs associated with starting an LLC include filing fees, registered agent fees, entity registration, annual report fees and business license fees.
There are a few steps required to form an LLC. These include:
- Naming your LLC
- Choosing a registered agent
- Filing formation paperwork
- Applying for a tax identification number
Our experts have summarized these steps below, offering insight into how each contributes to the question: “how much does it cost to start an LLC?”
Naming Your LLC
When you start an LLC, you’ll need to come up with a unique name that is different and distinguishable from other active businesses in your state. Otherwise, the state may refuse to file the documents to form your LLC or corporation.
Your state secretary of state office should provide a search tool to help you ensure that your proposed LLC name isn’t similar to an existing LLC. If you use an LLC formation service, there are often tools available in the ensuite to help you search for and choose a name. Be sure to calculate this cost in your LLC cost estimate.
We do want to note: If you already have an LLC and want to expand business into another state, you must go through the process of registering according to state-specific requirements. You’ll also need to search in that state as well, ensuring that there are no other LLCs in place with the same name.
Choosing a Registered Agent
An LLC must have a registered agent. A registered agent is an individual or a company that will be the LLC’s or corporation’s official point of contact in the state to receive service of process—known as the legal documents and other government notices associated with the business—on behalf of the business.
Legally, the person or entity who serves as the registered agent must have a physical location within the state where you are registered to operate. Some people can act as their own registered agent, but many choose to hire registered agent services due to the flexibility and autonomy this option provides.
Opting to hire out for registered agent support allows more privacy as well, as the address of a registered agent is required to be a part of the public record.
Depending on your location, a registered agent typically costs $100-$300 a year. Registered agent services operate in all 50 states. If your company expands and is registered to do business in multiple states, only one company needs to handle your registered agent needs.
Filing Formation Paperwork
To officially start an LLC, you need to submit your entity’s articles of incorporation, which provide basic details about the new business. You can submit these documents online, by mail or in person. The required basic filing fee to do this varies from state to state.
Our experts have summarized an average cost-by-state summary below, helping you to determine how much an LLC costs.
| State | Filing Fees | Recurring Fees |
| Alabama | $200 + $25 name reservation fee | $10 annual report + $100 minimum for the Business Privilege Tax (annual) |
| Alaska | $250 | $100 (every two years) |
| Arizona | $50 | |
| Arkansas | $45 (online) | $150 (annual) |
| California | $70 | $800 annual tax + $20 Statement of Information fee (every two years) |
| Colorado | $50 | $10 (annual) |
| Connecticut | $120 | $80 (annual) |
| Delaware | $110 | $300 (annual) |
| Florida | $100 + $25 registered agent fee | $138.75 (annual) |
| Georgia | $100 (online) | $50 (online) |
| Hawaii | $50 | $15 (annual) |
| Idaho | $100 (online) | |
| Illinois | $150 | $75 (annual) |
| Indiana | $95 (online) | $50 by mail / $32 online (every two years) |
| Iowa | $50 | $45 by mail / $30 online (every two years) |
| Kansas | $160 (online) | $55 by mail / $50 online (annual) |
| Kentucky | $40 | $15 (annual) |
| Louisiana | $100 | $30 (annual) |
| Maine | $175 | $85 (annual) |
| Maryland | $100 | $300 (annual) |
| Massachusetts | $500 | $500 (annual) |
| Michigan | $50 | $25 (annual) |
| Minnesota | $135 by mail / $155 online | |
| Mississippi | $50 | |
| Missouri | $50 (online) | |
| Montana | $35 | $20 (annual) |
| Nebraska | $100 (online) | $30 by mail / $25 online (every two years) |
| Nevada | $75 | $150 annual report + $200 annual business license fee |
| New Hampshire | $100 | $100 (annual) |
| New Jersey | $125 | $75 (annual) |
| New Mexico | $50 | |
| New York | $200 | $9 (every two years) + $25 annual franchise fees (minimum) |
| North Carolina | $125 | $200 (annual) |
| North Dakota | $135 | $50 (annual) |
| Ohio | $99 | |
| Oklahoma | $100 | $25 (annual) + $40 annual registered agent fee |
| Oregon | $100 | $100 (annual) |
| Pennsylvania | $125 | $70 (annual) |
| Rhode Island | $150 | $50 (annual) + $400 annual RI corporate tax |
| South Carolina | $110 | |
| South Dakota | $165 by mail / $150 online | $65 paper / $50 online (annual) |
| Tennessee | $300 | $300 (minimum annual) |
| Texas | $300 | |
| Utah | $54 | $18 (annual) |
| Vermont | $125 | $35 (annual) |
| Virginia | $100 | $50 (annual) |
| Washington | $180 by mail / $200 online | $70(annual) |
| West Virginia | $100 | $25 (annual) |
| Wisconsin | $170 /$130 online | $25 (annual) |
| Wyoming | $100 | $60 (annual) |
Depending on the type of business you conduct in your state, you may need to obtain a special business license, a permit and/or a local license to conduct business.
Working with an LLC formation expert or service can help you determine how much an LLC is with these fees included.
Applying for a Tax Identification Number
For-profit U.S.-based LLCs are required to file for an employer identification number (EIN), which is to businesses like a social security number is to individuals. The Federal Government assigns this number, and it’s specific to the LLC. It identifies the tax accounts at a federal and state level, and is also required for certain business tasks—such as opening a business bank account.
Frequently Asked Questions
What’s the Difference Between an LLC and a Corporation?
Even though LLCs and corporations protect business owners from personal liability, these two entities vary.
A primary difference is seen in the taxation standards of each. single-member LLCs are taxed similarly to sole proprietorships. Conversely, corporations file separate returns in their names, and the entities themselves carry the tax burden vs. the LLC owners.
Another difference can be seen if or when ownership changes. If someone joins or exits the LLC, the LLC may need to be re-formed as a completely new entity. If a shareholder in a corporation leaves or sells shares, the company can continue operating with no disruption to the entity.
Before we can fully answer the questions: “How much does an LLC cost?” and “is an LLC worth it?” We have to consider the differences in price between an LLC and a corporation of any type. LLCs, in most cases, are much less expensive—averaging a few hundred dollars depending on the location of your formation. On the other hand, incorporation and fees for a corporation can range from several hundred to several thousand dollars, depending on where you incorporate.
Can an LLC Have Multiple Owners?
Yes. When you form an LLC, it is possible to have two or more owners. These owners are commonly referred to as “members.”
The percentage of LLC ownership can vary amongst members. The specific details of the ownership arrangement are typically outlined in the LLC’s operating agreement, which is a key legal document governing the internal operations of the LLC. The LLC operating agreement controls how and when LLC distributions are made.
How Are Distributions Handled?
In a single-member LLC,100% of all distributions go to one member. Multi-member LLCs each take respective amounts of profits and losses based on whatever stake of ownership they maintain in the LLC.
For example, let’s say there are three members in an LLC: Helen has 60% ownership, Bob has 25% and Marv has 15%. If the LLC wanted to distribute $10,000 to the owners, Helen would get $6,000, Bob $2,500 and Marv $1,500.
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