Starting an LLC sounds simple until you start seeing fees everywhere.
One website says you can start an LLC for $0 plus state fees. Another says you need a registered agent, an operating agreement, an EIN, a business bank account, a compliance package, a business license, and maybe even BOI reporting. Suddenly, a “cheap LLC” starts looking like a shopping cart with surprise add-ons.
I get why this confuses people. Most small business owners, freelancers, and non-US entrepreneurs are not trying to build a legal department. They just want to know one thing:
How much money do I actually need to start an LLC properly?
Here is the honest answer: the cost to start an LLC usually depends on your state, whether you file yourself, whether you hire a formation service, and whether your business needs extra licenses or professional help.
For a basic DIY LLC, you may spend only the state filing fee. In states like Wyoming, the LLC filing fee is $100, plus online payment processing if you file online. In Florida, a new LLC costs $125, which includes the filing fee and registered agent designation fee. In Delaware, a domestic LLC formation filing is $110. Texas is higher at $300.
But that is only the starting point.
You may also spend money on a registered agent, operating agreement, business license, EIN support, annual reports, tax filings, amendments, and compliance maintenance. Knowing these costs before you file is a real game-changer because it helps you choose the right state, avoid unnecessary add-ons, and keep your LLC in good standing from day one.
This guide breaks it down clearly.
Why LLC Costs Matter More Than the Filing Fee
The state filing fee creates your LLC. It does not automatically make your business fully ready to operate.
Think of LLC formation like buying a phone. The phone price is only one part. You may still need a case, charger, SIM, data plan, apps, and repairs later. An LLC works the same way. Filing the Articles of Organization creates the entity, but running it properly usually requires a few more steps.
Why You Cannot Ignore These Costs
If you skip key LLC setup steps, you may face problems like:
- Your LLC falls out of good standing
- You miss annual report deadlines
- Your bank refuses to open a business account
- You mix personal and business money
- You lose liability protection in a dispute
- You pay avoidable penalties
- You choose the wrong state and pay extra every year
For example, Florida LLCs must file annual reports, and the normal LLC annual report fee is $138.75. If filed after May 1, the fee becomes $538.75, which includes a $400 late fee. Florida also states that failure to file by the September deadline can lead to administrative dissolution or revocation.
That is why I always tell business owners to look at the first-year cost and the annual maintenance cost, not just the filing fee.
The Real LLC Cost Breakdown
Here is a practical cost snapshot before we go step by step.
| Cost Item | Typical Cost | Required? | Notes |
|---|---|---|---|
| State LLC filing fee | $50 to $500+ | Yes | Depends on state |
| Registered agent | $0 to $300/year | Yes | Free if you act as your own agent where allowed |
| Operating agreement | $0 to $1,500+ | Strongly recommended | Required in some states, useful everywhere |
| EIN | $0 | Usually needed | Free directly from the IRS |
| Business license | $0 to $500+ | Depends | Based on city, county, industry |
| DBA or trade name | $10 to $100+ | Optional | Needed if using a public name different from legal LLC name |
| Annual report/franchise tax | $0 to $800+ | Usually yes | Varies heavily by state |
| Formation service fee | $0 to $300+ | Optional | State fee still applies |
| Attorney or CPA help | $200 to $2,000+ | Optional | Useful for complex ownership, tax, foreign owners |
| Business bank account | Usually $0 opening cost | Strongly recommended | Some banks have minimum balance rules |
Step-by-Step LLC Cost Breakdown
Step 1: Choose Your State
How to do it:
Start with the state where you actually run your business. If you live in Florida and operate your business from Florida, forming in Florida is usually simpler than forming in Wyoming or Delaware and then registering as a foreign LLC in Florida.
Where to do it:
Use the Secretary of State or Division of Corporations website for your chosen state. Avoid random filing sites that look official but are not government websites.
Cost:
State filing fees vary. Here are a few examples:
| State | Formation Filing Cost | Annual/Recurring Cost |
|---|---|---|
| Wyoming | $100 filing fee | Annual report/license tax, plus online processing if filed online |
| Delaware | $110 domestic LLC filing fee | $300 yearly LLC tax due by June 1 |
| Florida | $125 new LLC total fee | $138.75 annual report, higher if late |
| Texas | $300 certificate of formation fee | Franchise tax/report rules may apply |
| California | Filing cost varies by SOS filing method | $800 annual LLC tax for LLCs doing business or organized in California |
Delaware LLCs do not file an annual franchise tax report with the Division of Corporations, but they must pay a $300 yearly tax by June 1. California LLCs organized or doing business in California must pay an $800 annual tax, even if they are not actively conducting business, until the LLC is canceled.
Pro-tip to save time:
Do not choose Wyoming or Delaware just because someone online said it is “best.” If you operate in another state, you may still need to register there as a foreign LLC and pay two sets of fees.
Step 2: File the Articles of Organization
How to do it:
The Articles of Organization, sometimes called a Certificate of Formation, is the document that legally creates your LLC. You usually need:
- LLC name
- Principal office address
- Registered agent name and address
- Organizer information
- Management type, such as member-managed or manager-managed
Where to do it:
File directly on your state’s business filing website. For example, Florida filings go through Sunbiz, Wyoming filings go through the Wyoming Secretary of State portal, and Delaware filings go through the Delaware Division of Corporations.
Cost:
This is your core filing fee. Examples:
- Wyoming: $100, plus 2.4% online payment processing with a $1 minimum if filed online.
- Florida: $125 total for a new Florida or foreign LLC.
- Delaware: $110 for domestic LLC formation.
- Texas: $300 for an LLC certificate of formation, with a 2.7% convenience fee if paid by credit card.
Pro-tip to save time:
Double-check the LLC name before filing. A small typo can lead to correction fees, amendment filings, bank delays, and branding issues.
Step 3: Appoint a Registered Agent
How to do it:
A registered agent receives official mail, lawsuits, state notices, and compliance documents for your LLC.
Where to do it:
You list the registered agent when filing your formation document. You can usually choose yourself, another eligible person, or a professional registered agent company.
Cost:
- Self-registered agent: $0
- Professional registered agent: usually $50 to $300 per year
- Premium privacy-focused agent: sometimes $125 to $300+ per year
Why this matters:
If you miss a lawsuit notice or state warning, your LLC can face default judgments, penalties, or loss of good standing.
Pro-tip to save time:
If you work from home and care about privacy, use a professional registered agent. It keeps your personal address off many public business records.
Step 4: Create an Operating Agreement
How to do it:
An operating agreement explains how the LLC is owned and managed. It covers:
- Ownership percentages
- Profit distribution
- Voting rights
- Member responsibilities
- What happens if someone leaves
- How disputes are handled
- How the LLC can be dissolved
Where to do it:
You can create one using a template, formation service, attorney, or business document platform.
Cost:
- DIY template: $0 to $50
- Formation service add-on: $50 to $200
- Attorney-drafted agreement: $500 to $1,500+
Why this matters:
Even if your state does not require you to file the operating agreement, banks, partners, investors, and courts may care about it. For multi-member LLCs, skipping this document is asking for future drama.
Pro-tip to save time:
Single-member LLC owners should still create one. It helps show that the LLC is separate from the owner, which supports liability protection.
Step 5: Get an EIN
How to do it:
An EIN is your business tax identification number. You usually need it to open a business bank account, hire employees, file certain tax returns, and work with payment processors.
Where to do it:
Apply directly through the IRS. The IRS says you can get an EIN online in minutes for free, and it warns that you never need to pay a fee for an EIN.
Cost:
Direct IRS application: $0
International entrepreneur note:
If your principal place of business is outside the U.S., the IRS says you cannot use the online EIN application and should use another method, such as phone, fax, or mail. The IRS also notes that only international applicants can receive an EIN by telephone, and fax applications can generally receive an EIN within 4 business days.
Pro-tip to save time:
Do not apply for the EIN before the LLC is approved by the state. The IRS says if you are forming a legal entity, you should form it through your state before applying for an EIN, or the EIN application may be delayed.
Step 6: Check BOI Reporting and Tax Registration
How to do it:
Check whether your LLC has any federal or state reporting requirements. For BOI, the rule changed significantly. As of the current FinCEN guidance, entities created in the United States, including entities previously known as domestic reporting companies, and their beneficial owners are exempt from BOI reporting to FinCEN. FinCEN states that existing foreign companies that must report had new deadlines after March 26, 2025.
Cost:
- BOI filing directly with FinCEN, when required: usually $0
- Third-party BOI service: $50 to $300+
- State tax registrations: often $0, but some licenses may cost extra
Why this matters:
For most U.S.-created LLCs, BOI may no longer be a cost item under current FinCEN guidance. But foreign entities registered to do business in the U.S. may still need to review the rules carefully.
Pro-tip to save time:
Do not confuse a foreign owner with a foreign company. A non-US person forming a U.S. LLC is not the same thing as a foreign entity registering to do business in the U.S.
Step 7: Open a Business Bank Account and Set Up Compliance
How to do it:
Once your LLC is approved and you have your EIN, open a business bank account. Keep business money separate from personal money.
Where to do it:
Use a bank, credit union, fintech bank, or international-friendly business banking platform.
Cost:
- Account opening: often $0
- Monthly fee: $0 to $30+
- Wire fees: $10 to $50+
- Minimum balance: varies
- Bookkeeping software: $0 to $70+ per month
Why this matters:
Mixing personal and business funds is one of the fastest ways to weaken your LLC’s liability protection. It also creates tax headaches.
Pro-tip to save time:
Create a compliance folder with your Articles of Organization, EIN confirmation letter, operating agreement, annual report receipts, licenses, and bank documents.
State-Specific Nuances: Wyoming, Delaware, Florida, Texas, and California
Wyoming LLC Cost Notes
Wyoming is popular because of privacy, simple maintenance, and a reasonable filing fee. The state filing fee for an LLC is $100, and online filing has a card processing fee.
Wyoming can be attractive for online business owners, but if you actually operate in another state, you may still need to register there too.
Delaware LLC Cost Notes
Delaware is popular for investors, startups, and holding companies. The formation filing is $110, and the yearly LLC tax is $300 due by June 1.
Delaware is not always the cheapest choice for a freelancer or simple local business.
Florida LLC Cost Notes
Florida charges $125 to form a new LLC. The annual report is $138.75 if filed on time, but late filing after May 1 can push the cost to $538.75.
Florida is straightforward, but the late fee is painful. Add the annual report deadline to your calendar immediately.
Texas LLC Cost Notes
Texas charges $300 to file an LLC certificate of formation. Credit card payments may include a convenience fee.
Texas can be a strong state for operating businesses, but the upfront formation fee is higher than many states.
California LLC Cost Notes
California deserves special attention because the yearly cost can be much higher. The California Franchise Tax Board states that every LLC doing business or organized in California must pay an $800 annual tax, even if it is not conducting business, until it cancels the LLC.
If you live in California, forming in Wyoming will not magically avoid California tax obligations if your business is actually based in California.
LLC vs Sole Proprietorship Cost Comparison
| Feature | LLC | Sole Proprietorship |
|---|---|---|
| Startup cost | State filing fee plus optional setup costs | Usually $0 unless licenses or DBA are needed |
| Liability protection | Usually protects personal assets when handled properly | No separate legal shield |
| EIN | Often recommended or required | Optional unless hiring employees or certain tax needs apply |
| Bank account | Strongly recommended | Can use separate account, but not always required |
| Annual state filings | Often required | Usually fewer entity-level filings |
| Credibility | Stronger for clients, banks, and partners | Simpler but less formal |
| Best for | Businesses with risk, partners, growth plans, or branding needs | Very small low-risk solo work |
Pros of Starting an LLC
- Protects personal assets when maintained properly
- Looks more professional to banks and clients
- Helps separate business finances
- Allows flexible tax treatment
- Works well for single-owner and multi-owner businesses
Cons of Starting an LLC
- Costs more than a sole proprietorship
- Requires state filings and maintenance
- May involve annual reports and franchise taxes
- Needs better recordkeeping
- Can become expensive in states like California
Common Mistakes to Avoid
1. Only Looking at the Filing Fee
A $100 LLC may still need a registered agent, license, annual report, tax registration, and bookkeeping setup.
2. Forming in the “Cheapest” State Without Thinking
Cheap formation does not always mean cheap compliance. If your home state requires foreign registration, you may pay twice.
3. Paying for an EIN
The IRS issues EINs for free. Paying a third party only makes sense if you knowingly want help, not because the EIN itself costs money.
4. Ignoring Annual Reports
Missing annual reports can lead to late fees, loss of good standing, or administrative dissolution. Florida’s $400 late fee is a clear example.
5. Skipping the Operating Agreement
This is risky, especially for multi-member LLCs. Verbal agreements are great until money, control, or exit rights become a problem.
6. Mixing Personal and Business Money
Use a separate bank account. Pay business expenses from the business account. Keep receipts.
7. Choosing the Wrong Registered Agent
Your registered agent must be reliable. Missed notices can cost far more than the annual registered agent fee.
2025-2026 LLC Compliance Checklist
Use this checklist after forming your LLC:
- Confirm LLC approval from the state
- Download and save formation documents
- Appoint and maintain a registered agent
- Create an operating agreement
- Apply for an EIN directly through the IRS
- Check whether any BOI rule applies to your situation
- Open a business bank account
- Register for state tax accounts if needed
- Apply for business licenses or permits
- Track annual report deadlines
- Track franchise tax deadlines
- Keep business and personal funds separate
- Update the state if your address, agent, or ownership details change
- Save every receipt and filing confirmation
FAQs About LLC Startup Costs
1. What is the cheapest way to start an LLC?
The cheapest way is to file directly with your state and avoid unnecessary add-ons. You still need to pay the state filing fee. You can create your own operating agreement, get your EIN free from the IRS, and act as your own registered agent if your state allows it and you have a valid in-state address.
2. Can I start an LLC for free?
Not completely. Some formation companies advertise “free LLC formation,” but that usually means they charge no service fee. You still pay the state filing fee. The only exception would be a state or special program that waives a fee, which is not the normal setup.
3. How much does an LLC cost per year?
Annual costs vary by state. Some LLCs pay only a small annual report fee. Delaware LLCs pay a $300 yearly tax, Florida LLCs pay a $138.75 annual report fee if on time, and California LLCs generally face an $800 annual tax if organized or doing business there.
4. Do I need a lawyer to start an LLC?
Not always. A simple single-member LLC can often be formed without a lawyer. You should consider legal help if you have multiple owners, investors, foreign ownership concerns, asset protection issues, licensing problems, or unusual tax planning needs.
5. Is a registered agent worth paying for?
Yes, if you want privacy, do not have a physical address in the state, travel often, or want someone else to monitor official notices. If you are comfortable listing your address and staying available during business hours, acting as your own agent may save money.
6. Does an EIN cost money for an LLC?
No. The IRS says you can get an EIN directly from the IRS for free and warns that you never have to pay a fee for an EIN.
7. Do non-US residents pay more to start an LLC?
The state filing fee is usually the same. However, non-US residents may pay more for registered agent services, EIN assistance, business address services, banking setup, tax filing, and professional guidance.
8. Is Wyoming or Delaware cheaper for an online business?
Wyoming is usually cheaper for basic maintenance, while Delaware is often chosen for investor-friendly legal reasons. But the best state depends on where you actually operate, where you have tax obligations, and whether you need investor credibility.
9. What happens if I do not file my annual report?
Your LLC may face late fees, penalties, loss of good standing, or administrative dissolution. Florida, for example, imposes a $400 late fee after May 1 and may administratively dissolve or revoke businesses that do not file by the September deadline.
10. How much should I budget for my first year?
For a simple DIY LLC, budget around $150 to $500 in many states, excluding business licenses and tax help. If you use a registered agent, formation service, operating agreement service, and bookkeeping software, a realistic first-year budget is often $300 to $1,000+. In states with higher annual taxes, such as California, budget more.
Final Action Plan
Here is the cleanest way to budget your LLC:
- Start with your state filing fee.
- Add registered agent cost if you need privacy or do not have an in-state address.
- Create an operating agreement before opening the bank account.
- Get your EIN directly from the IRS for free.
- Check licenses before you start selling.
- Add annual report and franchise tax deadlines to your calendar.
- Keep at least $300 to $1,000 aside for first-year setup and compliance.
The cheapest LLC is not always the best LLC. The best setup is the one that matches where you operate, keeps your paperwork clean, protects your business, and does not surprise you with avoidable fees six months later.