Forming a limited liability company (LLC) is one of the first steps you’ll take in forming your business, and, like many new business owners, costs may be an issue. Whether you’re considering finding investors or bootstrapping your business, LLC formation doesn’t need to be such a pricey investment.
You want to find the best price when it comes to forming your LLC. But what does an affordable LLC setup look like, and how much should it cost to form an LLC? Here’s what you need to know.
Cheapest Way to Start an LLC
We will guide you through forming your LLC the most affordable way possible, whether you do it yourself or use a professional service.
Do It Yourself
Depending on the LLC filing fees charged by your state, filing your own incorporation statements may be the cheapest way to form an LLC. For LLCs, incorporation statements are generally the Articles of Organization — although the name of the document can vary by state.
Many states post the necessary LLC formation forms online, and many also allow you to form an LLC online.
These forms are generally fairly straightforward to fill out, and the filing procedure — whether you file online, by mail, or in person — shouldn’t be too complicated.
Use an LLC Service
If you’d prefer not to file the papers for your LLC yourself, an LLC service may be another option for inexpensive LLC formation.
Many companies specialize in helping people incorporate or form an LLC. While these companies can provide you with assistance in forming an LLC, it’s always wise to remember they can’t offer you true legal advice.
Check out StateRequirement’s ZenBusiness review to help you kick-start your LLC.
How Much Does it Cost to Form an LLC?
Every LLC must be registered with the state in which it’s formed and pay a state filing fee.
The main cost of forming an LLC is the fee to file your LLC’s Articles of Organization with the Secretary of State. This fee typically ranges between $40 and $500, depending on the state.
Additional LLC costs might include business license and permit fees, publication fees in certain states, and optional name-related fees.
Business Licensing and Permit Fees
Depending on your industry and geographical location, your business might need federal, state, and local permits and/or licenses to legally operate. This is true whether you form an LLC or any other type of business structure.
Publication Fees in Arizona, Nebraska, and New York
Some states (i.e., Arizona, Nebraska, and New York) require your new LLC to publish a statement of formation in a local newspaper.
Publishing costs can range from $40 to $2,000, depending on your state’s requirements.
Optional LLC Name Reservation Fees (Required in Alabama)
If you’re forming an LLC in Alabama, you’ll also need to reserve your LLC’s name for a fee of between $10 and $75. Reserving a name is optional for all other states.
Optional Fictitious Name Fee (Also Known as a DBA Name)
A fictitious name isn’t required for LLCs. But, after you form your LLC, you might want to create a fictitious name to create separate brands under your main LLC. A fictitious name is usually referred to as a DBA or “doing business as” name.
Learn more with StateRequirement’s How Much Does It Cost to Form an LLC guide.
Where Should I Form My LLC?
You should always form your LLC in the state where you plan to conduct business. Otherwise, you may end up with additional unwanted costs and paperwork.
Because LLC filing fees and other related fees and service charges vary by state, another option is to form your LLC in another state that offers cheap LLC filing fees. However, the lower filing fees may not make up for the additional costs of forming your LLC in another state.
If your new business will be a local one with most of your clients or customers coming from within your state and you decide to form your LLC in another state, for example, you’ll have to obtain foreign qualification in your home state. This means additional fees and paperwork, which may outweigh the benefits of a cheaper initial filing fee.
What is the Cheapest Way to Form an LLC FAQ
What is the cheapest way to get an LLC?
There are ways to cut costs when forming an LLC, such as:
Filing the LLC formation process yourself in your state
Creating your own LLC operating agreement
Being your own registered agent
To form your LLC for the least amount of money as possible, see above for more details.
Do you have to pay for an LLC every year?
There are annual/biennial report fees and/or franchise taxes. Our How Much Does It Cost to Form an LLC guide lists the fees that might be required in your state.
Does having an LLC help with taxes?
It depends. LLC owners elect their company’s tax designation; your LLC can be taxed via pass-through taxation, as an S corp, or as a C corp. Learn more about what taxes you need to pay to your state with our in-depth LLC Taxes guide.
Can I form an LLC by myself?
Yes. The least expensive way to form your LLC is to file the forms yourself. LLC formation documents are typically the Articles of Organization (Certificate of Formation or Certificate of Organization in other states). The filing fees will vary from state to state. If you’re uncertain about forming your own LLC, or just want to ensure you’re not making any mistakes, LLC formation services can help you start your business, and they’re surprisingly affordable and convenient.