What Is an LLC and Why Does It Matter?
A Limited Liability Company is a legal business structure that protects your personal assets from business debts. That means if your business gets sued or owes money, your home or savings are usually safe. People choose LLC formation for its flexibility, tax benefits, and ease of setup compared to corporations.
One major reason entrepreneurs pick an LLC is the blend of LLC business structure benefits like personal liability protection and pass-through taxation. It allows profits and losses to flow directly to owners, avoiding double taxation. Whether you’re starting a small shop or an online brand, forming an LLC gives your business legal recognition and structure across all business-friendly states for LLC setup.
π° How Much Does It Cost to Start an LLC in 2025?
The LLC setup cost in 2025 varies widely across the United States. Some states charge just $40, while others go over $500. The most common LLC filing fee is between $100 and $200. These are one-time LLC formation costs. But keep in mind: the initial fee is just part of the picture.
Besides the filing fee, there are charges for the registered agent, LLC operating agreement, and sometimes business licenses by state. States like California also have a franchise tax due annually. If you’re planning to register your company this year, it’s important to study LLC filing fees by state so you donβt face unexpected costs.
π LLC Formation Costs by State (2025 Updated Table)
Here’s a 2025 breakdown of LLC filing fees by state:
| State | Filing Fee | Annual Fee | Franchise Tax |
| Delaware | $90 | $300 | Yes |
| Wyoming | $100 | $60 | Yes |
| California | $70 | $800 | Yes |
| Florida | $125 | $138.75 | No |
| Texas | $300 | $0 | Yes (if income > $1.2M) |
| Nevada | $425 | $350 | Yes |
| New York | $200 | $9 (biennial) | Yes |
As you can see, the cheapest state to start LLC might be Delaware or Wyoming, depending on your goals. However, state comparison for LLCs shows that ongoing costs like annual fees matter just as much as startup costs.
π Annual and Biennial Report Fees for Each State
Each state requires LLCs to file a yearly or biennial report to remain active. This is separate from income taxes. These LLC annual maintenance cost fees help keep your business in good standing with the state.
For example, Florida charges $138.75 annually, while Texas doesnβt require a fee unless you cross a revenue threshold. Meanwhile, California’s annual franchise tax of $800 remains one of the highest in the U.S. Always check your LLC legal requirements to avoid fines or dissolution.
𧱠Full Breakdown of LLC Costs (Filing, Taxes, Hidden Fees)
When calculating the LLC setup cost, donβt stop at filing fees. Add in costs for a registered agent, business tax compliance, name reservation, EIN (Employer Identification Number), and certified copies if needed. Some states require newspaper publication, like New York, which adds $300-$1,200 to your bill.
There are also ongoing costs. These include the self-employment tax, franchise tax, state income tax (if not in tax-free states for LLC), and charges for business licenses. If you’re not careful, the true price of starting an LLC could double what you first expected.
π Cheapest States to Form an LLC in 2025
In 2025, Wyoming, Delaware, and New Mexico lead the list of cheapest states. Wyoming offers the lowest ongoing fees and strong asset protection in LLCs. Itβs also popular for being one of the most anonymous LLC states.
Delaware vs Wyoming LLC is a hot debate. Delaware is favored by startups due to its Chancery Court (Delaware) system and investor familiarity. Wyoming is often better for solopreneurs or small business owners seeking privacy and fewer obligations.
πΈ States with the Highest LLC Costs β And Why
California, Massachusetts, and Nevada are among the most expensive. California’s franchise tax and high LLC annual maintenance cost quickly add up. Nevada demands upfront and ongoing payments nearing $800 yearly.
Some states justify higher costs by offering better business structure in USA, access to funding, or strategic location. Still, for many, these perks don’t outweigh the savings of starting in a cheapest state to start LLC like Wyoming or New Mexico.
π‘οΈ Best States for Privacy and Asset Protection
If protecting your identity or property is a concern, go for anonymous LLC states like Wyoming, New Mexico, or Delaware. These states donβt require member names to be made public. They also offer strong corporate veil protections.
This makes them perfect for real estate investors, consultants, or eCommerce sellers. The real estate LLC tax benefits in these states also attract property buyers looking to reduce liability while optimizing taxes.
π LLC Costs for Non-US Residents (Tax + Compliance)
If you’re a foreign founder, registering an LLC as a non-resident is entirely possible. You’ll need a foreign-owned LLC, registered agent, and an EIN for foreign-owned LLC from the IRS. Expect some extra paperwork, including Form SS-4.
Costs for US LLC for international founders include formation fees, compliance filings, and possibly hiring a local contact. Also, non-residents face different reporting rules, like FATCA compliance, and might be taxed under different treaties or rates.
π How to Choose the Right State for Your LLC
Deciding how to pick a state for LLC creation depends on business type, location, and future plans. Are you local or remote? Do you want investors? Will you hold property or provide services?
For example, the best state for online business LLC is often Wyoming or New Mexico. For startups seeking venture capital, Delaware is ideal. A solid state comparison for LLCs will always consider privacy, taxes, and reporting ease.
π Factors That Affect LLC Formation Costs by State
Your total LLC cost depends on your business type, industry, and whether you’re local or remote. States with complex rules may require legal help, increasing your expenses. States like New York add costs through newspaper publication laws.
Also, check whether your state allows series LLC states if you plan to hold multiple properties. And remember, business licenses by state vary widely in cost and complexity.
ποΈ How Long Does It Take to Form an LLC in Each State?
Most states process your LLC formation within 1 to 10 business days. Expedited services are available in many states for an extra fee. For example, Delaware offers same-day service.
Still, timelines can stretch due to paperwork, mail delays, or errors. Using a formation service speeds things up. Just make sure it meets all LLC legal requirements in your chosen state.
π§ββοΈ Tax Classification Options for LLCs: What You Need to Know
When you create an LLC, you must choose how itβs taxed. The default is pass-through entity taxation, where profits flow directly to owners. This avoids corporate taxes.
However, you can opt for an S Corporation Election or C Corporation Election with the IRS. That changes how profits and self-employment tax are handled. Youβll also deal with Form 1065 LLC, Schedule K-1, and possibly more complex filings depending on your choice.
π οΈ Step-by-Step Guide to Starting an LLC in 2025
First, pick your state. Next, file your LLC formation documents and pay the LLC filing fee. Then, appoint a registered agent, create your LLC operating agreement, and apply for an EIN (Employer Identification Number).
Finally, check local rules for any business licenses by state or local permits. Once approved, you can open a business bank account and start operations. Congratulationsβyou’ve joined the world of Startup LLC advantages with legal protection and a flexible business structure in USA.
