The Short Answer
The only truly mandatory cost to form an LLC is your state's filing fee for the Articles of Organization — and that's anywhere from about $40 to $500 depending on the state. Everything else you'll see advertised is either an optional convenience or a recurring fee that comes after formation. Let's separate what you must pay from what you might pay from what you shouldn't pay at all.
The One Required Cost: State Filing Fee
To legally create your LLC, you file the Articles of Organization with your state and pay its filing fee. This is one-time, and it varies a lot by state:
- Lower-cost states sit around $40–$100 (for example, Kentucky and Arizona are on the cheaper end).
- Mid-range states are roughly $100–$200, where most fall.
- Higher-cost states reach $300–$500 (Massachusetts is the notable high end at around $500).
This fee creates the LLC. Pay it once, and the company exists. It's unavoidable and it goes straight to the state — no service can waive it.
The Cost That Surprises People: Annual Fees
Here's what trips up first-time founders: forming the LLC isn't the end of the spending. Most states charge an ongoing fee to keep the LLC active — usually an annual (sometimes biennial) report fee, a franchise tax, or both. Miss it and your LLC can be administratively dissolved.
- Some states charge $0 for the annual report.
- Many charge a modest $20–$100 per year.
- Some charge several hundred dollars.
The California outlier: California charges every LLC an $800 minimum annual franchise tax — regardless of whether the business made any money. This catches a lot of people off guard, and it's a real reason to think carefully before forming (or registering as a foreign LLC) in California if you don't have to. Always check your state's recurring fees, not just the upfront filing cost — the annual number is what you'll live with year after year.
Optional Costs (Useful, Not Required)
- Registered agent service — $100–$300/year. You can be your own registered agent for free, but a service buys privacy (keeps your address off public record) and reliability. Worth it if you work from home or operate in multiple states.
- Formation service — $0–$300 + state fees. Companies like the popular budget filing services will prepare and file your paperwork. Some advertise "$0" formation (you still pay the state fee), making money on add-ons and the registered agent renewal. Convenient, but you can do the same filing yourself directly with the state.
- Operating agreement — $0–$200. You can use a free template, pay a service for a fancier one, or have an attorney draft a custom one for a complex multi-member arrangement.
- Business licenses/permits — varies. Depending on your industry and city, you may need local licenses. Separate from the LLC itself.
What You Should NOT Pay For
- An EIN. The IRS issues these for free in minutes on its website. Any service charging for "EIN registration" is reselling something the government gives away. Skip it; go straight to the IRS.
- Overpriced "compliance" upsells. Formation services love to bundle expensive add-ons (certificates, kits, "compliance packages") you usually don't need. Decline what you don't understand the value of.
A Realistic All-In Estimate
For a simple single-member LLC formed yourself, directly with the state:
- Bare minimum (DIY): just the state filing fee — roughly $40–$500 one-time, plus your state's annual fee going forward. EIN free, operating agreement from a free template, you as your own registered agent.
- Comfortable middle: state fee + a registered agent service (~$125/year) + maybe a formation service's modest package. Call it $150–$400 in year one, plus annual fees.
- Don't forget recurring: whatever your state's annual report/franchise fee is — from $0 to $800 (California) — every year you keep the LLC.
Budget for the other half too: The LLC protects your personal assets, but it does nothing to protect your brand name — that's a federal trademark, a separate filing with its own cost (USPTO fee of $350+ per class). Founders who budget only for LLC formation often discover later that their name was never protected nationally. If your name matters, plan for both line items. See how much a trademark costs for that side of the math.
Frequently Asked Questions
What is the minimum cost to form an LLC?
The minimum is your state's filing fee for the Articles of Organization — roughly $40 to $500 depending on the state — if you file yourself directly with the state, act as your own registered agent, use a free operating agreement template, and get your EIN free from the IRS. Beyond that one-time fee, budget for your state's annual report or franchise fee to keep the LLC active.
Why is California's LLC so expensive?
California charges every LLC an $800 minimum annual franchise tax, regardless of income — on top of the formation filing fee. This recurring charge makes California one of the most expensive states to maintain an LLC, and it's a key reason to check ongoing fees, not just upfront costs, before choosing where to form.
Do I have to pay for an EIN?
No. The IRS issues EINs for free in a few minutes on its website. Any third party charging you for an EIN is reselling something the government provides at no cost. Always get your EIN directly from the IRS.
Are there ongoing costs after forming an LLC?
Yes. Most states require an annual or biennial report fee, a franchise tax, or both to keep the LLC in good standing — ranging from $0 to several hundred dollars a year (California's is $800). If you use a registered agent service, that's another $100–$300 annually. These recurring costs often matter more than the one-time formation fee.