"Generated $127,890 In 6months" Free Training
When I formed my first LLC in 2022, I thought it would cost $90. That's what Delaware's filing fee was, and that's what every formation service advertised.
The real cost? $910 in Year 1, then $1,149 in Year 2.
Nobody warns you about registered agent fees, annual franchise taxes, or compliance costs. The filing fee is just the beginning.
Most founders get blindsided by hidden costs after they've already formed their LLC. Here's what happened to me:
What I Expected:
Delaware filing fee: $90
Total first year: ~$100
What I Actually Paid:
Filing fee: $90
Registered agent (Year 2 renewal): $199
Annual franchise tax: $300
Annual report: $50
Business bank fees: $180 (before switching to Mercury)
Operating agreement: $40
Accountant: $600
Real Year 1 Total: $910 Real Year 2 Total: $1,149
That's 10x more than the advertised filing fee.
This is the one everyone talks about. It's what you pay to file your Articles of Organization with your state.
Cheapest states:
Kentucky: $40
New Mexico: $50
Arizona: $50
Wyoming: $100
Most expensive:
Massachusetts: $500
Nevada: $425
Texas: $300
Every LLC needs a registered agent; someone with a physical address in your LLC state who receives legal documents.
Cost breakdown:
Budget services: $39-$50/year (Northwest, Incfile)
Mid-range: $100-$150/year
Premium/lawyers: $200-$300/year
Included with Mercury banking: $0
I use Northwest Registered Agent at $39/year. Reliable, no upsells, does exactly what I need.
This is where states get you. The filing fee is one-time, but these hit every year.
States with NO annual fees:
New Mexico: $0
Arizona: $0
Ohio: $0
Missouri: $0
States with HIGH annual fees:
California: $800/year minimum franchise tax
Delaware: $300/year franchise tax + $50 report
Nevada: $350/year
Tennessee: $300/year
California's $800 annual tax is owed even if you make $0 revenue. That's $4,000 over five years just to exist.
Not required by most states, but you absolutely need one. It protects you legally and defines how your LLC operates.
Your options:
Free template online: $0 (risky, usually incomplete)
Quality paid template: $20-$50 (my recommendation)
LegalZoom/Rocket Lawyer: $100-$300 (overpriced)
Custom lawyer-drafted: $500-$1,500 (overkill for most)
I spent $40 on a solid template from Rocket Lawyer and customized it in 30 minutes.
This is your LLC's tax ID number. The IRS gives it to you for free.
For US residents: Apply online in 10 minutes at IRS.gov
For non-US residents: Call the IRS directly at +1-267-941-1099 or mail Form SS-4 (takes 4-6 weeks)
Never pay anyone to get your EIN. It's free directly from the IRS.
Digital banks (FREE):
Mercury: $0/month, best for online businesses
Relay: $0/month, gives you up to 20 accounts
Novo: $0/month
Traditional banks (EXPENSIVE):
Chase Business: $15/month ($180/year)
Bank of America: $16/month ($192/year)
Wells Fargo: $14/month ($168/year)
Why pay $180/year when Mercury is free with a better interface?
I switched from Chase to Mercury and saved $180/year immediately.
You need to track income and expenses for taxes.
DIY options:
Wave: $0 (free accounting software)
QuickBooks Self-Employed: $15/month ($180/year)
QuickBooks Online: $30/month ($360/year)
Professional services:
Bookkeeper: $150-$300/month
Full accounting: $300-$1,000+/month
Start with Wave (free) or QuickBooks ($15/month). Hire a bookkeeper when you're doing $10K+/month.
For foreign-owned LLCs (non-US residents):
Must file Form 5472 and Form 1120 annually
Accountant cost: $500-$800/year
DIY with software: $200-$300 (risky if you get it wrong)
For US resident LLCs:
Simpler, but still budget $300-$600 for tax prep
I tried DIY my first year. Ended up paying an accountant $400 to fix my mistakes plus their normal $600 fee. Now I just pay $600/year upfront.
Let me show you what you'll actually pay in popular states:
Year 1:
Filing fee: $100
Registered agent: $39
Operating agreement: $40
Total: $179
Ongoing (Annual):
Registered agent: $39
Annual report: $60
Accounting: $600
Total: $699/year
5-Year Total: $2,975
Year 1:
Filing fee: $50
Registered agent: $39
Operating agreement: $40
Total: $129
Ongoing (Annual):
Registered agent: $39
Annual report: $0 (not required)
Accounting: $600
Total: $639/year
5-Year Total: $2,685
Year 1:
Filing fee: $90
Registered agent: $0 (first year free with most services)
Operating agreement: $40
Total: $130
Ongoing (Annual):
Registered agent: $199
Franchise tax: $300
Annual report: $50
Accounting: $600
Total: $1,149/year
5-Year Total: $4,726
Extra cost vs Wyoming: $1,751 over 5 years
Year 1:
Filing fee: $70
Registered agent: $100
Operating agreement: $40
Franchise tax: $800 (due within 3.5 months)
Total: $1,010
Ongoing (Annual):
Registered agent: $100
Franchise tax: $800
Statement of Information: $20 (every 2 years)
Accounting: $600
Total: $1,510/year
5-Year Total: $7,050
Extra cost vs Wyoming: $4,075 over 5 years
I built a calculator that shows your real costs based on:
Your chosen state
Your business type
Whether you're a US or non-US resident
Your estimated revenue (affects some state taxes)
It calculates:
✓ Exact filing fees
✓ Annual reports and franchise taxes ]
✓ Registered agent costs
✓ 5-year projections
✓ State-by-state comparisons
No signup required. See real numbers in 30 seconds.
Most formation services include "free registered agent for first year." Sounds great, until year two hits and you get a $199-$299 renewal notice.
The trick: They know you won't want to change agents once established, so they charge 3-5x market rate after year one.
The fix: Use Northwest ($39/year) or bank with Mercury (includes agent for free).
Depending on your industry and location, you might need:
General business license: $50-$400
Professional license: $100-$1,000+
Sales tax permit: Usually free
Home occupation permit: $50-$200
I run an online business, so I only needed the LLC. My friend, who opened a coffee shop, needed $1,100 in licenses and permits before opening.
New York requires you to publish your LLC formation in two newspapers for six consecutive weeks. This costs $1,000-$2,000, depending on your county.
If you don't comply within 120 days, your LLC is suspended.
This is a newspaper industry handout from the 1800s that somehow still exists. Avoid New York unless you're physically operating there.
Many services advertise "$0 + state fees." Then they upsell:
"Express processing": +$100
"Compliance guarantee": +$299/year
"Attorney review": +$299
"Trademark search": +$99
"EIN service": +$50 (it's free from the IRS!)
By checkout, your "$0" service costs $650.
My take: Either DIY it completely or use a transparent service. Don't fall for bait-and-switch pricing.
Your state choice impacts costs for the entire life of your business, not just formation.
Choose Wyoming or New Mexico if:
You're running an online business
You don't have physical operations in a specific state
You want minimum costs and simple compliance
You're a non-US resident forming remotely
Choose Delaware if:
You're raising venture capital (investors often require it)
You plan to go public eventually
You have complex multi-state operations
Choose your physical state if:
You're operating a brick-and-mortar business
You're hiring local employees
Your industry requires state-specific licensing
Never choose California or New York unless required:
California's $800/year tax costs you $4,000 over 5 years
New York's publication requirement costs $1,000-$2,000 upfront
I formed my first LLC in Delaware because "that's what tech companies do." It cost me $600 extra over two years with zero benefit to my online business.
Don't make my mistake.
Traditional banks charge $15-$16/month for business accounts. Mercury, Relay, and Novo are free.
Annual savings: $180-$192
Premium agents charge $199-$299/year. Northwest charges $39/year for identical service.
Annual savings: $160-$260
Use a $40 quality template instead of paying LegalZoom $300.
One-time savings: $250
Wyoming vs California saves you $800/year in franchise taxes.
5-year savings: $4,000
Apply directly through IRS instead of paying a service.
One-time savings: $50
Budget Formation (DIY Everything):
New Mexico filing: $50
Budget agent: $39/year
Free template: $0
Mercury banking: $0
Year 1 Total: $89
Annual Total: $639 (including accounting)
Realistic Formation (Balanced Approach):
Wyoming filing: $100
Northwest agent: $39/year
Quality template: $40
Mercury banking: $0
Accountant: $600/year
Year 1 Total: $779
Annual Total: $699
Premium Formation (Full Service):
Formation service: $500
Premium agent: $200/year
Lawyer-drafted docs: $800
QuickBooks: $360/year
Accountant: $800/year
Year 1 Total: $2,660
Annual Total: $1,360
Most founders should aim for the "realistic" path. Costs $779 Year 1, then $699/year. Gets you proper setup without overpaying.
Want to see your exact numbers? I built a calculator that factors in:
✓ Your chosen state (or shows best options)
✓ Whether you're US or international founder
✓ Your estimated revenue (some states tax based on income)
✓ Industry-specific license requirements
✓ 1-year and 5-year projections
Takes 30 seconds. No signup required. See real costs, not marketing fluff.
Q: Is the filing fee really the only upfront cost?
No. The filing fee is just the state charge to file your Articles of Organization. You'll also need registered agent, operating agreement, and potentially expedited processing.
Expect $150-$300 in upfront costs beyond the filing fee.
Q: Can I use a free registered agent?
Technically you can be your own registered agent if you live in the state and have a physical address (no PO boxes). But this means:
You must be available during business hours to receive legal documents
Your personal address becomes public record
You can't move without updating state records
For $39/year, it's worth using a service.
Q: Do I really need an operating agreement if my state doesn't require it?
Yes. Without an operating agreement:
State default rules apply (rarely in your favor)
Harder to prove LLC is separate from personal assets
Issues arise when adding partners or selling business
Bank might require one anyway
Spend 30 minutes creating one. Could save you $10,000 in legal issues later.
Q: Why is California so expensive?
California charges an $800 minimum franchise tax annually, regardless of revenue. You could make $0 and still owe $800.
This is due by April 15th of your LLC's first year, even if you formed in December.
Only form in California if you're physically operating there and legally required to.
Q: What if I can't afford an accountant?
For US resident LLC owners, you might be able to DIY with TurboTax Business ($120-$200).
For foreign-owned LLCs (non-US residents), DIY is risky. Form 5472 penalties are $25,000 for errors. The $600 accountant fee is insurance against massive penalties.
Start with Wave (free accounting software) to track everything properly. This makes tax filing easier whether DIY or hiring help.
Q: Can I change states after formation?
Yes, but it's complicated and expensive. You'd need to:
Form a new LLC in the new state
Transfer all assets and contracts
Update banking, licenses, agreements
Dissolve the old LLC
Cost: $500-$2,000+ in fees and legal work.
Much better to choose the right state from the beginning.
After forming three LLCs and helping dozens of founders:
For online businesses, consultants, and remote companies: Form in Wyoming or New Mexico. Use Northwest for registered agent ($39/year). Bank with Mercury (free). Hire an accountant for taxes ($600/year).
Total Year 1: $650-$800 Total Annual: $650-$700
For physical businesses: Form in your operating state, even if expensive. You'll need to register there anyway, so might as well save the foreign registration fees.
For VC-backed startups: Form in Delaware if investors require it. The extra $450/year in costs is worth not fighting investors over entity structure.
The worst decision: Forming in California or New York without needing to be there. You'll pay $800-$2,000 extra per year with zero benefit.
Stop guessing at hidden fees. See your real, complete LLC costs in 30 seconds.
The calculator shows:
✓ Exact filing fees by state
✓ Annual reports and franchise taxes
✓ Registered agent costs
✓ 5-year total projections
✓ Best states for your situation
Plus get access to:
✓ Formation document generator
✓ Banking setup guides
✓ Stripe configuration help
✓ Operating agreement templates
✓ Step-by-step checklists
Start here: LLCtoolkitPro.com