Starting a business involves many decisions, and choosing where to form your Limited Liability Company (LLC) is crucial. Costs vary by state, so understanding these differences can help you save money and make informed choices. Let’s explore the 15 most affordable states to form an LLC, considering filing fees, annual fees, startup survival rates, entrepreneurship rates, and popular business ideas.
Kentucky
- LLC Filing Fee: $40
- Annual Fee: $15
- Popular Business Ideas: Agriculture, bourbon distilleries, and horse breeding.
Kentucky offers the lowest LLC formation fee in the U.S. and provides various incentives for small businesses.
Arkansas
- LLC Filing Fee: $45
- Annual Fee: $150
- Popular Business Ideas: Retail, agriculture, and transportation services.
With a modest filing fee, Arkansas is home to approximately 260,000 small businesses, indicating a supportive environment for entrepreneurs
Arizona
- LLC Filing Fee: $50
- Annual Fee: $0
- Popular Business Ideas: Tourism, real estate, and tech startups.
Arizona requires no annual renewal fee, making it cost-effective for long-term business operations. The state leads in job growth, enhancing its appeal.
Mississippi
- LLC Filing Fee: $50
- Annual Fee: $0
- Popular Business Ideas: Manufacturing, agriculture, and healthcare services.
Mississippi’s low filing fee and absence of annual fees, combined with a diverse and educated workforce, make it an attractive option for new businesses.
Missouri
- LLC Filing Fee: $50
- Annual Fee: $0
- Popular Business Ideas: Biotechnology, transportation, and food processing.
Missouri’s low cost of living and zero annual fees contribute to its appeal to small business owners.
New Mexico
- LLC Filing Fee: $50
- Annual Fee: $0
- Popular Business Ideas: Film production, tourism, and renewable energy.
New Mexico’s business-friendly tax policies and no annual fees make it a favorable state for LLC formation.
Colorado
- LLC Filing Fee: $50
- Annual Fee: $10
- Popular Business Ideas: Outdoor recreation, tech startups, and craft breweries.
Colorado’s thriving tourism industry and high quality of life attract entrepreneurs, despite a minimal annual fee.
Hawaii
- LLC Filing Fee: $50
- Annual Fee: $15
- Popular Business Ideas: Tourism, hospitality, and retail.
Hawaii offers a supportive environment for startups, with reasonable fees and a strong tourism-driven economy.
Michigan
- LLC Filing Fee: $50
- Annual Fee: $25
- Popular Business Ideas: Automotive industry, technology, and agriculture.
Michigan’s affordable living costs and reasonable LLC fees make it an appealing choice for entrepreneurs.
Iowa
- LLC Filing Fee: $50
- Annual Fee: $30 (Biennial)
- Popular Business Ideas: Agriculture, renewable energy, and manufacturing.
Iowa’s low cost of living and biennial reporting fees offer financial relief for new business owners.
Montana
- LLC Filing Fee: $50
- Annual Fee: $20
- Popular Business Ideas: Tourism, agriculture, and outdoor recreation services.
Montana’s low annual fees and supportive business environment make it a viable option for long-term ventures.
Utah
- LLC Filing Fee: $54
- Annual Fee: $18
- Popular Business Ideas: Technology, outdoor products, and health services.
Utah’s flat tax rate and high quality of life contribute to its attractiveness for forming an LLC.
California
- LLC Filing Fee: $75 (Including $5 Certification Fee)
- Annual Fee: $800
- Popular Business Ideas: Technology, entertainment, and agriculture.
Despite high annual fees, California’s substantial economy and market size make it a compelling choice for many entrepreneurs.
Delaware
- LLC Filing Fee: $110
- Annual Fee: $300
- Popular Business Ideas: Finance, legal services, and technology.
Delaware’s business-friendly laws and privacy protections have long made.
Wyoming
- LLC Filing Fee: $100
- Annual Fee: $60 (Minimum Tax)
- Popular Business Ideas: Outdoor recreation, tourism, and renewable energy.
Wyoming is consistently ranked as one of the best states to form an LLC due to its low fees, lack of corporate income tax, and pro-business regulations. Its combination of affordability and legal advantages makes it especially appealing for entrepreneurs focused on long-term growth.
LLC Formation Checklist
Before diving into forming your LLC, here’s a checklist to guide you through the process:
1. Choose Your LLC Name
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- Make sure your LLC name is unique and compliant with state naming rules.
- Check domain name availability for a matching website.
2. Designate a Registered Agent
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- This is the person or service responsible for receiving legal documents on behalf of your LLC.
3. File Articles of Organization
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- Submit the necessary paperwork to the Secretary of State.
- Pay the filing fee (varies by state).
4. Create an Operating Agreement
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- Although not required in every state, this document outlines ownership and operating procedures.
5. Obtain an EIN (Employer Identification Number)
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- Apply through the IRS to use this number for taxes and opening a business bank account.
6. Open a Business Bank Account
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- Keep personal and business finances separate for easier accounting.
7. File Annual Reports and Pay Fees
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- Stay compliant by submitting required annual or biennial reports and paying any associated fees.
Why State-Specific Guides Matter
Every state has its own unique requirements for forming an LLC, from filing fees to reporting regulations. While the steps are generally similar, the specific details and costs can vary significantly. If you’re unsure about the rules in your state, having access to a reliable resource is essential.
We’ve compiled comprehensive state-specific LLC guides that cover everything you need to know—from choosing a name to maintaining compliance. These guides simplify the process and help you make informed decisions about forming your LLC.
Explore our detailed resources to find the perfect state for your LLC
Final Thoughts
Choosing the right state to form an LLC can have a significant impact on your business’s success. Factors like filing fees, annual costs, startup survival rates, and the state’s business environment should all play a role in your decision. States like Kentucky, Wyoming, and New Mexico stand out for their affordability, while others like Delaware and California offer specific advantages for certain industries.
If you’re ready to take the next step, use the LLC checklist above and consult our state-specific guides for detailed instructions tailored to your location. Starting an LLC might seem daunting, but with the right tools and resources, you’ll be on your way to building a successful business.
