What You'll Actually Spend to Establish an LLC: A State-by-State Breakdown

Starting an LLC involves more than just a single filing fee—it’s a layered process with mandatory expenses and optional costs that can significantly impact your total outlay. Understanding these expenses upfront helps entrepreneurs budget effectively and avoid surprises.

Breaking Down LLC Establishment Expenses

When you establish an LLC, you’re typically facing several categories of required payments. The secretary of state demands a filing fee to officially register your business entity—this ranges dramatically across jurisdictions, from $40 in Kentucky to $300 in Texas, with a national average hovering around $100. Beyond this core expense, most states impose annual reporting fees to maintain your LLC’s standing.

The registered agent requirement adds another layer. If you establish your LLC in your home state, you can serve as your own registered agent at no cost. However, businesses expanding into other states must hire a registered agent service, typically costing $100 to $200 annually.

Many entrepreneurs also need to navigate fictitious business name (FBN) or “doing business as” (DBA) fees when operating under a name different from their legal registration—usually around $25 per state. Some jurisdictions add publication requirements or notice filings with additional charges.

An operating agreement, while not legally mandated in most states, represents a strategic investment. You can use templates for minimal cost or hire attorneys for comprehensive drafting at substantially higher rates.

The Professional vs. DIY Cost Equation

This is where LLC costs diverge dramatically. A determined entrepreneur handling all paperwork independently might establish an LLC for under $100 in low-fee states. Conversely, hiring attorneys or business formation services to manage filings, ensure compliance, and draft operating agreements can escalate total costs into the thousands.

The trade-off? Time and peace of mind versus out-of-pocket savings. Professional services eliminate research burden and reduce filing errors that could complicate operations later.

Additional Mandatory Requirements (Usually Free or Low-Cost)

Securing an Employer Identification Number (EIN) from the IRS doesn’t cost anything—you simply file the appropriate form. Similarly, New York businesses must obtain a sales tax license without paying fees, though the requirement still exists.

Business permits and licenses present more variability. Some jurisdictions require universal licensing regardless of industry, while others impose requirements only on specific sectors. A cosmetology practice needs licensing; an advertising agency typically doesn’t. These fees span from negligible to substantial—beverage distributors, for instance, face significant licensing costs.

Real-World Example: New York LLC Expenses

New York illustrates how costs accumulate in more expensive jurisdictions due to its unique publication requirement. Here’s what a typical New York LLC filing involves:

• Secretary of state filing: $200
• Newspaper publication notices (two papers, six-week run): $50–$200 depending on location and outlet selection
• Certificate of publication and newspaper affidavit: $50
• Optional name reservation: $20
• Certificate of assumed name (equivalent to DBA registration): $25

New York’s annual reporting structure is income-based: LLCs reporting under $100,000 pay $25, while those exceeding $25 million in income face annual fees of $4,500. The state also mandates permits through its Division of Licensing Services, with costs varying by industry.

Ongoing Expenses Beyond Launch

The financial commitment doesn’t end after establishment. Annual reporting fees recur every year. Registered agent services charge annual renewal fees. Business license renewals require periodic payments.

Tax obligations also continue: while LLCs avoid corporate income tax (income passes through to owners’ personal returns), they must remit sales taxes in states where they conduct business.

Making Smart Decisions About Your LLC Structure

The true cost of establishing an LLC depends on your specific circumstances—your state location, industry sector, whether you operate in multiple states, and your comfort level managing filings independently versus delegating to professionals. Kentucky’s $40 filing fee looks vastly different from New York’s multi-hundred-dollar commitment when you account for publication costs and licensing.

Comparing an LLC against a corporation? LLCs consistently cost less to establish while providing comparable liability protection—making them an attractive option for many entrepreneurs seeking reasonable startup expenses paired with business protection features.