Forming a Limited Liability Company (LLC) is one of the most popular choices for small business owners in the United States, offering liability protection and flexible tax treatment at a relatively modest cost.
In 2026, the LLC formation cost for the first year typically ranges from $150 to $1,500 depending on the state, whether you use an attorney or online formation service, and what ancillary services you need.
State filing fees alone vary dramatically—from $40 in Kentucky to $500 in Massachusetts—and ongoing annual fees can add hundreds of dollars per year.
Beyond the state filing fee, most LLCs need a registered agent, an operating agreement, and potentially an EIN from the IRS. If you engage an attorney to draft your operating agreement, understanding typical lawyer fees for business formation work — typically $500–$2,000 — helps you budget accurately.
Understanding the full cost picture helps entrepreneurs budget accurately before launch and avoid unexpected fees in subsequent years.
Average Cost to Start an LLC
The table below outlines typical cost components for forming an LLC in the United States in 2026.
| Cost Component | Low Estimate | Typical | High Estimate |
|---|---|---|---|
| State filing fee (Articles of Organization) | $40 (Kentucky) | $100–$200 | $500 (Massachusetts) |
| Registered agent service (annual) | $50 | $100–$200 | $300 |
| Operating agreement (attorney-drafted) | $0 (DIY) | $200–$400 | $1,000+ |
| Online formation service | $0 (DIY filing) | $50–$150 | $400 |
| EIN from IRS | $0 | $0 | $0 |
| Total estimated first year | $150 | $300–$700 | $1,500+ |
An Employer Identification Number (EIN) is always free when obtained directly from the IRS, though some third-party services charge a fee to apply on your behalf—a service that is generally unnecessary since the IRS application takes minutes online.[2]
Cost Breakdown by Component
Each component of LLC formation has its own cost structure and level of necessity.
State Filing Fees
Every state charges a fee to file Articles of Organization (or Certificate of Formation, as some states call it).
Common state fees as of 2026 include: California ($70 filing fee plus mandatory $800 annual franchise tax), Delaware ($90), Florida ($125), New York ($200 plus mandatory publication requirements that can cost $1,000–$2,000), Texas ($300), and Wyoming ($100).
Always verify current fees with your state's Secretary of State office, as fees change periodically.
The overall cost of living in California makes California-based LLCs among the most expensive to maintain annually due to the mandatory $800 franchise tax floor.
Registered Agent
Every LLC is required to maintain a registered agent—a person or company with a physical address in the state of formation who can receive legal documents on behalf of the LLC. You may serve as your own registered agent in most states, but many business owners prefer a professional registered agent service for privacy and reliability.
These services typically charge $100 to $300 per year.
Operating Agreement
While not required in all states, an operating agreement is strongly advisable.
It documents ownership percentages, voting rights, profit distribution, and what happens if a member leaves or the LLC dissolves.
A simple single-member operating agreement template may cost nothing to prepare yourself; a multi-member agreement drafted by an attorney may cost $500 to $2,000.
The Small Business Administration recommends operating agreements as a fundamental governance document for any LLC.[1]
Annual Fees and Reports
Most states require LLCs to file an annual report and pay an annual fee ranging from $25 (in some states) to $800 or more (California's mandatory franchise tax minimum). These recurring costs should be factored into your ongoing business budget.
Optional Services
Many online formation companies upsell services such as business license research, banking resolution templates, operating agreement drafting, and compliance monitoring.
These are often available for free from government sources or at lower cost from other providers.
The FTC advises consumers to be cautious of bundled service packages where the value of individual components may not be clearly disclosed.[3]
Factors That Affect LLC Formation Costs
Several decisions you make during the formation process will affect the total cost.
Choice of State
Many entrepreneurs consider forming their LLC in a 'business-friendly' state like Delaware, Wyoming, or Nevada, even if they operate in another state.
However, if you operate in another state, you will likely need to register as a foreign LLC in your home state—paying filing fees in both states and potentially two sets of annual fees.
For most small businesses, forming in the home state is simpler and less expensive.
Entrepreneurs planning to protect their brand name should also budget for trademark filing cost, which starts at $250 per class at the USPTO and typically runs $1,500–$3,500 including attorney fees.
Attorney vs. DIY vs. Online Service
Attorneys typically charge $500 to $2,000 to set up an LLC including the operating agreement—appropriate for complex multi-member structures or businesses with significant liability exposure.
Online formation services charge $50 to $400 for basic packages.
Filing directly through your state's Secretary of State website is typically the lowest-cost option if you are comfortable with the process.
Business Structure Complexity
Single-member LLCs are straightforward and inexpensive to form. Multi-member LLCs with complex ownership arrangements, multiple classes of membership interest, or specific buyout provisions require more sophisticated operating agreements and correspondingly higher legal costs.
How to Save Money When Starting an LLC
Several strategies may reduce the upfront and ongoing costs of LLC formation without sacrificing legal protection.
File Directly with Your State
Most Secretary of State offices provide online filing portals that allow you to form an LLC in minutes without an intermediary. The filing fee is the same whether you file yourself or through a service, so DIY filing avoids service fees entirely.
Get Your EIN Free from the IRS
The IRS provides EIN applications at no charge through its online EIN Assistant. Do not pay a third-party service to obtain your EIN—it is a free government service that takes approximately 10 minutes to complete online.[2]
Use SCORE or SBA Resources
SCORE, a nonprofit partner of the SBA, provides free mentoring and business plan guidance that can help you understand your formation options without paying consultant fees.[1]
What to Watch Out For
Several practices in the LLC formation industry may cost you more than necessary or create legal risks.
Third-Party EIN Services
Numerous websites charge $50 to $300 to apply for an EIN on your behalf—a service that is completely unnecessary since the IRS provides this for free. The FTC warns consumers about services that charge fees for government services available at no cost.[3]
Bundled Formation Packages
Online formation companies frequently offer tiered packages at escalating prices.
Review what is actually included in each tier carefully—many 'premium' features such as compliance alerts, registered agent services, or banking resolutions are available separately at lower cost or can be handled yourself.
Ongoing Compliance Obligations
Failing to pay annual report fees or maintain a registered agent can result in your LLC being administratively dissolved by the state. Build annual compliance costs into your business budget and set calendar reminders for renewal deadlines.
Frequently Asked Questions
How long does it take to form an LLC?
Processing time varies by state. Some states offer same-day or next-day approval for online filings, while others take 2 to 6 weeks. Many states offer expedited processing for an additional fee, typically $50 to $200.
Once your LLC is formed, consider setting up a high-yield savings account for your business operating reserve — keeping business and personal funds separate is a key step in maintaining LLC liability protection.
Do I need a lawyer to start an LLC?
A lawyer is not legally required to form an LLC in any state.
However, for multi-member LLCs, businesses with significant assets, or situations involving complex ownership structures, consulting a business attorney to draft the operating agreement is generally advisable.
Simple single-member LLCs are often formed without legal assistance.
The cost to create an LLC is typically the same whether you engage an attorney or not for the state filing itself — attorney fees are separate and apply primarily to document drafting and review.
Is an LLC the right structure for my business?
An LLC offers liability protection and flexible tax treatment that suits many small businesses, but it may not be optimal in all situations.
Sole proprietorships, S-corporations, and C-corporations each have different tax and liability profiles.
Consulting a CPA and business attorney before selecting a structure is advisable for businesses with significant revenue or complex ownership.
Understanding what an accountant does and when to engage one — particularly for multi-member LLCs with complex ownership — can save significant money in restructuring costs later.
How is an LLC taxed?
By default, a single-member LLC is taxed as a disregarded entity (like a sole proprietorship) and a multi-member LLC is taxed as a partnership. LLCs may also elect to be taxed as an S-corporation or C-corporation. The IRS provides guidance on LLC tax classification choices at IRS.gov.
Do I need to renew my LLC every year?
Most states require LLCs to file an annual or biennial report and pay a renewal fee to maintain good standing. Failure to file can result in administrative dissolution of the LLC. Due dates and fees vary by state—check with your Secretary of State office for your specific requirements.
Sources & References
- U.S. Small Business Administration. 'Limited Liability Company (LLC).' SBA.gov. — https://www.sba.gov/business-guide/launch-your-business/choose-business-structure
- Internal Revenue Service. 'Apply for an Employer Identification Number (EIN) Online.' IRS.gov. — https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
- Federal Trade Commission. 'Starting a Business.' Consumer Information, FTC.gov. — https://consumer.ftc.gov/features/consumer-information-starting-a-business
Last updated: April 27, 2026