What is the Cheapest Way to Form an LLC

Starting a Limited Liability Company (LLC) can provide your business with legal protection and tax benefits, but LLC formation doesn’t have to be expensive.

In this article, we’ll explore the cheapest way to form an LLC, from handling the paperwork yourself to leveraging affordable online services. Whether you’re a startup or a small business owner, these tips will help you navigate the process while keeping costs to a minimum.

Cheapest Way to Start an LLC

In the sections below, we’ll guide you through the most affordable ways of forming your LLC, regardless of whether you choose to 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. Filing the Articles of Organization (or Certificate of Formation/Organization as it’s also called in some states) will typically cost between $50 and $100.

Many states post the necessary LLC formation forms online, with most also allowing you to submit them electronically through their online platforms as well. Depending on the state in which you’re filing, you’ll likely need the following pieces of information:

• The LLC’s legal name
• Your business address
• The names of the LLC’s members/managers
• The date of formation
• The name and address of your registered agent

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.

Note: While you may be tempted to file your LLC in a state with lower fees, this will generally result in much more hassle and complications. Additionally, the extra costs of maintaining a foreign LLC at the same time often far outweighs the difference in initial fees.

Use an LLC Service

If you’d prefer not to file the papers for your LLC yourself, hiring a professional service is another great alternative for inexpensive LLC formation.

Many companies specialize in helping people incorporate or form an LLC at prices that are much more manageable than those of an attorney.

While these companies can provide you with assistance in forming an LLC, it’s important to remember that they can’t offer you true legal advice.

Alternatively, you can check out our NorthWest Registered Agent review to discover why we recommend this service so highly.

How Much Does it Cost to Form an LLC

As mentioned above, each LLC must be registered with the state in which it’s formed by submitting its Articles of Organization (or the equivalent formation document) with the Secretary of State and paying a state filing fee.

While this will typically form the main bulk of the total cost of forming an LLC, there are a number of additional mandatory and optional costs you may also be expected to pay.

We’ve broken these fees down for you in more detail in the sections below.

Registered Agent Service Fees

As part of your Articles of Organization, your LLC will be expected to appoint a registered agent in order to receive legal documents and official government communications on behalf of a company.

This includes service of process, which is the delivery of legal documents such as lawsuits, subpoenas, and other official notifications.

You can appoint any of the following to this position:

• A professional registered agent service
• Any LLC owners
• A business attorney
• Yourself

Naturally, the individual or entity that you appoint to this position will influence the cost you’ll need to pay. While you can act as your own registered agent or appoint any of your LLC’s members for little to no fee, appointing professional registered agent services will save you a lot of headaches in the long run.

Publication Fees

In a minority of states (i.e., Arizona, Nebraska, and New York), your LLC will be required to publish a statement of formation in a local newspaper.

You’ll need to refer to the specific requirements in your state to ensure you comply with them successfully. For example in Arizona, the notification must be published at least three times in a newspaper that’s been approved by the state in the 60 days following your LLC’s formation.

Publishing costs will vary depending on the state and newspaper you must submit this notice in, though they typically range anywhere from $40 to $2,000.

Name Reservation Fees

Another important cost to bear in mind is that of reserving your business’s legal name for later use.

This will be necessary if you plan on forming your LLC at some point in the future but are worried about someone using your desired name before then.

While in most cases this is entirely optional, if you do choose to submit a name reservation in your state, you’ll typically be required to pay between $10 and $75 for the privilege (depending on where you’re based).

Note: If you’re forming an LLC in Alabama you’ll be legally required to reserve your LLC’s name.

DBA Name Fee

Another naming cost that you may be faced with is that of registering a “doing business as” (or DBA) name with your Secretary of State.

In simple terms, this is an alternative name that you can register for your business to operate under, especially if you’re dissatisfied with your LLC’s official name.

The cost of this fee is highly dependent on the state in which your LLC is based, though it will generally fall somewhere between $10 and $100.

To read more about this topic, you can check out our How Much Does It Cost to Form an LLC guide.

Initial Report Fees

Depending on where your LLC was organized, you may also be required to submit an initial report shortly after its formation.

This document, which details crucial information regarding your LLC, is a legal requirement in the following states:

• Alaska: $200 fee
• California: $20 fee
• Louisiana: $25 fee
• Nevada: $150 fee
• Washington: $10 fee

However, these fees naturally won’t apply to your situation if you plan on forming your LLC in any other state.

Where Should I Form My LLC

In almost all cases, you should always form your LLC in the state where you plan to conduct business. Otherwise, you’ll likely 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.