LLC Startup Costs: Breaking Down State Fees and Requirements

Most articles about LLC formation costs quote you a single state fee and call it a day. That’s not the number you need. The real cost of starting an LLC has four or five components, and depending on your state and how you handle it, the gap between the cheapest and most expensive approaches can run from under $50 to well over $1,500 before you’ve made your first dollar.

Let me give you the actual breakdown.

The state filing fee is the only mandatory cost, and it varies wildly. Wyoming charges $100. California charges $70 to file but then hits you with an $800 annual franchise tax minimum starting the second year. Massachusetts is $500 just to file. Knowing your state’s full fee schedule before you commit to an entity type isn’t optional research, it’s the research.

What You Actually Pay: The Full Cost Picture

Here’s where people get confused. They see “$99 to form your LLC!” in an ad and think that’s the number. It isn’t. That’s the service fee on top of whatever the state charges. And neither of those includes the ongoing costs you’ll pay every year just to keep the LLC active.

The costs break into three buckets: one-time formation costs, first-year operating costs, and recurring annual costs. Most guides talk about bucket one and quietly ignore the other two.

One thing I’ll tell clients right away: get your EIN directly from IRS.gov. It’s free, takes about ten minutes, and you get the number instantly. I still see people paying $50 to $75 to formation services that just do this on your behalf. Don’t.

State Filing Fees, Side by Side

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The variance here is genuinely large. Wyoming, New Mexico, and Montana are the go-to states if you want to minimize cost and are willing to manage some complexity around registering as a foreign LLC if you actually operate elsewhere.

New York deserves a special callout. The $200 filing fee isn’t the real pain. New York requires LLCs to publish a notice of formation in two newspapers for six consecutive weeks, a requirement that dates back to 1804 and nobody has ever successfully explained to me. In New York City, that publication requirement can cost $1,200 to $1,800 depending on which newspapers you use. Some upstate counties are cheaper, under $100. Know this before you file.

DIY vs. Formation Service vs. Attorney

Here’s my honest take: most single-member LLCs in straightforward businesses can be filed DIY without losing any sleep over it. The Secretary of State website in your state has the forms. The process is a few pages of information and a credit card.

That said, I’ve seen people botch the registered agent requirement, miss publication deadlines in New York, and form in the wrong state for their situation, all things a decent formation service or attorney would have caught. The question is proportionality.

• DIY: State fee only. Works well for simple, single-state businesses. Budget an afternoon.
• Formation service (ZenBusiness, Northwest Registered Agent, Incfile): $0 to $399 service fee plus state fees. Northwest is the one I point clients toward most often because their registered agent privacy practices are genuinely better and their customer service picks up the phone. ZenBusiness is fine for basic filing.
• Business attorney: $500 to $1,500+ depending on complexity. Worth it if you have multiple members, outside investors, complex operating agreement needs, or are in a regulated industry like healthcare or financial services.

Worked example: A freelance graphic designer in Texas, single member, no employees. She filed DIY through the Texas Secretary of State website, paid the $300 state fee, got her EIN free from the IRS, and used a free operating agreement template from SCORE (which has solid small business formation resources at score.org). Total cost: $300. Done in two hours.

Worked example: Three co-founders starting a software company in Delaware (common for investor-ready startups). They used an attorney to draft their operating agreement and handle the filing. Attorney fees: $1,200. Delaware state fee: $90. Registered agent: $50/year through a Delaware-based service. Total first-year cost: approximately $1,340, excluding their annual franchise tax. That operating agreement they paid for? It specified what happens when one founder wants to leave 18 months in. It’s already saved them one painful conversation that could have blown up the company.

Worked example: A restaurant owner in New York City who didn’t know about the publication requirement filed her LLC for $200, then got a notice about publishing. She ended up spending $1,600 for the newspaper publication, missed the deadline once, had to restart the clock, and ultimately paid around $1,900 total. She told me, “I wish someone had just told me that upfront.”

The Hidden Recurring Costs

This is where the long-term cost of an LLC actually lives.

Almost every state charges an annual report fee or renewal fee to keep your LLC in good standing. Miss it, and your LLC can be administratively dissolved, meaning contracts you signed might not be enforceable and your liability protection gets murky. Registered agent services run $50 to $300 per year depending on provider (the Consumer Financial Protection Bureau’s small business resources have some useful guidance on keeping your entity in good standing, though it’s not their main focus).

California’s $800 annual franchise tax minimum applies to almost every LLC doing business there, regardless of whether you made money. That one surprises people. A lot.

Budget for the annual costs before you form, not after.

When Forming in a Different State Actually Makes Sense

You’ll see advice everywhere saying to form in Wyoming or Delaware to “save money” or “protect assets.” Sometimes that’s right. Often it isn’t.

If you operate your business in California but you form in Wyoming, California will still require you to register as a foreign LLC in California and pay the $800 annual tax anyway. You’ll pay Wyoming’s annual fee on top of that. You haven’t saved money; you’ve added complexity and cost. I’ve walked clients through this math more times than I can count, and the “just form in Wyoming” advice is usually being sold by someone who benefits from the filing fee.

The cases where out-of-state formation genuinely makes sense: you have no physical presence or employees in your home state, you’re a digital business with truly mobile operations, or you’re building a venture-backed company where Delaware’s well-established corporate law is what investors and their attorneys expect.

Sources

• Wyoming Secretary of State: Current LLC filing fee schedule and formation requirements
• California Franchise Tax Board: Annual LLC franchise tax rules and minimum tax requirements
• IRS Small Business and Self-Employed Tax Center: EIN application (free) and LLC tax classification guidance
• SCORE: Free operating agreement templates and small business mentorship resources
• New York Department of State, Division of Corporations: LLC publication requirement details and county-by-county newspaper lists

Photo: RDNE Stock project via Pexels

This article is for general informational purposes only and does not constitute financial, tax, or legal advice. Business finance and tax rules vary by entity type, state, and individual circumstances. Consult a qualified CPA, enrolled agent, or business attorney for advice specific to your situation.

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