LLC Formation Cost by State 2026: Every Fee, Every Year

The true cost of forming and maintaining an LLC is more than the state filing fee — and the difference between the cheapest and most expensive states spans several thousand dollars per year. California charges a minimum $800 franchise tax annually. Massachusetts charges $500 just to form an LLC. Delaware's combination of low formation fees and renowned privacy attracts millions of companies — but non-residents still pay franchise taxes and registered agent fees that add up.

This guide gives you the complete cost picture: formation fees, annual report fees, franchise taxes, and registered agent costs for all 50 states — plus the realistic 5-year total cost comparison that reveals what you're actually signing up for.

The 10 Most Expensive States to Maintain an LLC (Annual Costs)

The 10 Cheapest States to Maintain an LLC (Annual Costs)

Complete State-by-State Formation Fees (All 50 States)

Fees current as of May 2026. State fees change periodically — verify at your state's Secretary of State website before filing.

The Delaware Myth: When It Matters and When It Doesn't

Delaware has become shorthand for "where smart businesses incorporate" — but for most small businesses, this is either wrong or irrelevant.

Delaware is the right choice when:

• You're raising venture capital or angel investment — investors expect Delaware C-Corps; the Court of Chancery and established corporate law matter
• You're forming a corporation intended to eventually go public
• You need the specific asset-protection or corporate-law features Delaware offers

Delaware is NOT the right choice when:

• You're a small business operating in one state — you'll pay Delaware filing fees + your home state foreign qualification fees + Delaware registered agent + Delaware franchise tax + home state registered agent. You're paying twice for everything.
• You don't plan to raise institutional capital — the investor preference for Delaware is irrelevant if you're bootstrapping
• You're choosing between Delaware and Wyoming for privacy — Wyoming offers comparable privacy at significantly lower cost for small businesses

Wyoming: The Best Alternative for Privacy-Conscious Businesses

Wyoming has aggressively positioned itself as an LLC-friendly state. Its LLC law includes:

• Strong charging order protection — a creditor who wins a judgment against you cannot seize your LLC membership interest directly
• No state income tax
• Anonymous LLCs — members' names are not required in public filings
• Low fees — $100 formation, $60 minimum annual fee
• No residency requirement for formation

For non-residents seeking privacy and asset protection with low ongoing costs, Wyoming is often the best non-home-state alternative. See our full comparison of the best states to form an LLC.

The 5-Year Total Cost: What You'll Actually Spend

The Foreign Qualification Cost: Why Out-of-State Formation Adds Expense

When you form an LLC in State A but operate in State B, you typically need to register in State B as a foreign LLC — paying State B's foreign qualification fee, maintaining a registered agent in State B, and filing annual reports in both states. This doubles your ongoing compliance costs.

Example: A Texas business owner who forms in Wyoming to save on fees will pay: Wyoming formation ($100) + Wyoming registered agent ($125–$200/year) + Wyoming annual report ($60/year) + Texas foreign qualification ($750) + Texas registered agent ($125–$200/year) + Texas franchise tax reporting. Total first-year cost easily exceeds forming directly in Texas.

The out-of-state formation math rarely works for small businesses: unless you have a specific reason (privacy, investor preference, asset protection law), forming in your home state is almost always cheaper. Home-state formation fees are almost always smaller than the ongoing foreign qualification costs.

Frequently Asked Questions

Can I change my LLC's state of formation later?

Yes — through a process called domestication, available in most states. You file with both your current state (to dissolve or convert) and your new state (to form or register). The process involves filing fees in both states and takes 2–8 weeks. Easier than forming a new LLC and transferring everything, but not trivial.

Do I need to pay California's $800 minimum franchise tax even if I make no money?

Yes — California's $800 minimum franchise tax applies to every LLC registered to do business in California, regardless of revenue or profit. If you're a California resident running a California business, you cannot avoid this fee by forming in another state — you'll owe the foreign qualification fee plus the $800 minimum either way.

What's the cheapest way to form an LLC?

File directly with your state's Secretary of State website — no formation service needed. You pay only the state filing fee (as low as $35 in Montana, $40 in Kentucky). Use your state's free registered agent option (if available) or self-represent as your own registered agent if you have a physical address in the state. Total cost: the filing fee only.

Bottom Line

For most small business owners: form in your home state. It's usually cheapest, avoids foreign qualification costs, and is straightforward to maintain. The exceptions — Delaware for VC-backed companies, Wyoming for privacy and asset protection — are real but apply to a minority of small businesses.

Before forming anywhere, calculate the 5-year total cost: formation fee + (annual report + franchise tax + registered agent) × 5. For out-of-state formation, add foreign qualification costs in your home state. The 5-year number usually makes the right choice obvious.

Once formed, don't forget to draft an operating agreement, stay on top of your annual compliance, and consider whether an S-Corp election could reduce your tax bill as your LLC grows.