LLC Cost Calculator

How Much Does It Cost to Start an LLC?

The cost to form an LLC ranges from $40 (Kentucky) to $500 (Massachusetts) just for the state filing fee. But the real cost goes beyond that — you'll also pay for a registered agent, potential franchise taxes, and annual report fees. In the cheapest states like Wyoming, Colorado, and Arizona, you can form and maintain an LLC for under $200 per year. In expensive states like California ($800/year franchise tax) or Massachusetts ($500/year annual report), the ongoing costs add up quickly.

For most small businesses, the total first-year cost including formation, registered agent, and annual fees is between $200 and $1,000. The choice of state matters significantly — not just for formation cost, but for ongoing annual obligations.

LLC Formation Cost by State — 2026

*Includes registered agent ($125). **TX franchise tax only applies to revenue over $2.47M. ***NY excludes publication requirement ($1,000–$2,000+).

LLC vs S-Corp — When Does S-Corp Election Save Money?

A single-member LLC pays self-employment tax (15.3%) on all net profit. An S-Corp election lets you split income into salary (subject to payroll tax) and distributions (not subject to SE tax). The bigger the gap between your profit and your reasonable salary, the more you save.

S-Corp election adds costs: payroll processing ($300–$1,500/yr), additional tax returns (Form 1120-S), and potentially higher CPA fees ($500–$2,000 extra). Most accountants recommend S-Corp election when net profit consistently exceeds $50,000–$60,000 per year.

Hidden Costs of Running an LLC

Frequently Asked Questions

What is the cheapest state to form an LLC?

For formation alone, Kentucky ($40) and Arkansas ($45) have the lowest filing fees. But for total ongoing cost, Wyoming ($100 formation + $60/yr), Colorado ($50 + $10/yr), and Arizona ($50 + $0/yr) are the cheapest because they have no franchise tax and low or no annual report fees. However, if you physically operate your business in a different state, you'll likely need to register as a "foreign LLC" there too — which doubles your filing fees. For most small businesses, forming in your home state is the simplest and cheapest option.

Do I need a registered agent?

Every state requires LLCs to have a registered agent — a person or service designated to receive legal documents and official mail on behalf of your business. You can serve as your own registered agent in most states (free), but a professional RA service ($100–$300/year) provides privacy (your home address isn't on public records), reliability (someone is always available during business hours), and convenience if you move or travel frequently.

When should I elect S-Corp status for my LLC?

Consider S-Corp election when your LLC consistently nets over $50,000–$60,000 per year in profit. Below that threshold, the additional payroll, accounting, and filing costs ($1,500–$3,000/yr) often eat into the self-employment tax savings. You must file Form 2553 with the IRS within 75 days of formation (or by March 15 for existing LLCs to be effective the same tax year). You'll also need to pay yourself a "reasonable salary" — typically 40–60% of profit for most owner-operators. Setting it too low is a common audit trigger.

See also: Self-Employment Tax Calculator and Employee Cost Calculator.