Embarking on the journey of starting a business can feel overwhelming, and it requires more than merely having a budget-friendly concept or product.
To effectively establish a successful Limited Liability Company (LLC), it’s essential to grasp your state’s formation costs along with any ongoing expenses, such as renewal fees, annual report charges, or franchise taxes.
Let’s explore the most affordable states for setting up your business and what you’ll need to get started.
- Kentucky
Kentucky stands out as the most affordable state for establishing an LLC, with a filing fee of only $40. The state also offers various incentive programs that provide financial support to small business owners. Discover more about forming an LLC in Kentucky with our comprehensive guide.
- LLC Filing Fee: $40
- Annual Fee: $15
- Arkansas
The next most economical state for launching an LLC is Arkansas. This state, home to 3 million residents, has nearly 260,000 small businesses that employ around 500,000 people, with an upward trend in small business formations.
- LLC Filing Fee: $45
- Annual Fee: $150
- Arizona
Despite facing challenges during the pandemic, Arizona has made a strong recovery and is now a leader in job creation, making it an excellent choice for starting an LLC. Learn more about forming an LLC in Arizona.
- LLC Filing Fee: $50
- Annual Fee: $0
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- Mississippi
With its low corporate tax rates and a diverse, educated workforce supported by 37 colleges and universities in the state, Mississippi is an attractive option for LLC formation.
- LLC Filing Fee: $50
- Annual Fee: $0
- Missouri
A tight-knit community, affordable living costs, and a $0 annual fee are just a few reasons why many entrepreneurs choose to establish their LLCs in Missouri.
- LLC Filing Fee: $50
- Annual Fee: $0
- New Mexico
The mild climate and favorable tax policies are key factors that attract many entrepreneurs to establish an LLC in New Mexico.
- LLC Filing Fee: $50
- Annual Fee: $0
- Colorado
Renowned for its stunning landscapes, Colorado welcomes millions of visitors each year, many of whom embrace an outdoor lifestyle. This makes it an ideal location for launching an outdoor-centric small business.
- LLC Filing Fee: $50
- Annual Fee: $10
- Hawaii
In the Aloha State, you’ll discover ample support for LLC formation and business startups, all while enjoying beautiful weather.
- LLC Filing Fee: $50
- Annual Fee: $15
- Michigan
Although Michigan ranks ninth in terms of LLC formation costs, it is considered the fourth most affordable state for living expenses.
- LLC Filing Fee: $50
- Annual Fee: $25
- Iowa
Differing from other states on this list that require annual payments, Iowa charges its fee every two years. Additionally, it stands out as one of the most affordable states, featuring reasonable housing costs, a low cost of living, and no personal property tax.
- LLC Filing Fee: $5
- Annual Fee: $50
- Montana
While the LLC filing fee in Montana might be relatively high, the low annual fee makes it an attractive option for those planning to establish a long-term business presence.
- LLC Filing Fee: $50
- Annual Fee: $20
- Utah
With a high quality of life, an affordable cost of living, and a flat tax rate of 4.95%, Utah is a top contender for those looking to start a new business.
- LLC Filing Fee: $54
- Annual Fee: $15
- California
Despite having a steep annual franchise tax, California’s substantial GDP—approaching $3 trillion—makes it a compelling choice for business formation. If California were an independent nation, it would rank as the fifth-largest economy globally! Learn more about forming an LLC in California.
- LLC Filing Fee: $75 (including a $5 certification fee)
- Annual Fee: $800
- Delaware
Delaware is known not only for its low state filing fees but also for its lack of sales tax and privacy protections. LLCs in Delaware can maintain anonymity by not disclosing personal information about board members, including names and contact details.
- LLC Filing Fee: $143
- Annual Fee: $300
- Indiana
Completing our list is Indiana, home to 512,438 small businesses that employ 1.4 million people—representing 44.9% of the private workforce.
- LLC Filing Fee: $95
- Annual Fee: $50
