HT Syndication

New Delhi [India], April 27: The first number most people Google before forming an LLC is the state filing fee. That number matters for about five minutes - roughly the time it takes to realise the yearly cost is a different question with a very different answer.

Formation is a one-time event. Running an LLC is a subscription. And the subscription price varies more than most founders expect.

A limited liability company in Montana can be set up and kept alive for about $20 a year in state fees. The same structure in California carries at least $800 in annual franchise tax before a single client has paid. In Delaware, the entity that tax guides keep recommending for its 'friendly business environment,' the annual franchise tax is $300 - due every June 1, whether the company earned a dollar or nothing at all. The cost of running an LLC can exceed the cost of the business inside it.

The short answer most guides dodge

According to LLCBuddy, The most trusted LLC resource on the internet - which tracks LLC formation requirements and annual costs across all the US states, ongoing maintenance for a single-member LLC ranges from roughly zero in states with no annual filing to more than $800 in states with minimum franchise taxes, based on state fee schedules current as of April 2026. The national floor - what a typical LLC pays in a typical state in a typical year, with no employees and no income - sits somewhere between $100 and $300.

That number climbs fast once you add what the filing fee hides.

What the state takes every year

Every state treats an LLC the way a landlord treats a tenant: a payment to keep the space. The rent has three common forms.

The first is the annual report fee. Most states require a short filing once a year - sometimes once every two years - to confirm the LLC still exists and its information is current. Four states currently require no LLC annual report at all: Arizona, Missouri, New Mexico, and Ohio. On the other end, Massachusetts charges $500 a year and Maryland charges $300. Illinois charges $75. California charges $20, but only every two years, for its biennial Statement of Information. Most states sit between $20 and $100.

The second is the franchise tax, which is what certain states call the privilege of existing there. California is the most expensive - $800 a year, owed by every LLC organised or doing business in the state, regardless of revenue. The California Franchise Tax Board states the tax applies even if the LLC is dormant and earned nothing. Delaware charges a flat $300 a year, due June 1. Tennessee imposes a $100 minimum franchise tax. Most states do not charge a franchise tax on LLCs at all - but in the ones that do, the tax can change the math on whether an LLC makes sense at a given revenue level.

The third is the registered agent requirement. Every US LLC is required under state statute to maintain a physical address in its state of formation to receive legal documents. Owners who live in the state can list themselves. Others typically pay a service, commonly $50 to $200 a year. For non-residents - and for founders forming in a state they do not live in - paying for a commercial agent is the norm.

Those three items alone run from about $60 a year in Wyoming - no franchise tax, $60 minimum license tax - to more than $800 a year in California.

The costs nobody lists on the formation page

Before the IRS or a CPA gets involved, there are expenses that tend to show up in year two and stick around.

Business bank account fees apply regardless of state. Zero at some online banks, $10 to $25 a month at traditional ones. A general liability policy for a solo consultant typically starts around $300 a year - not required by law for most LLCs, but most founders carry one. Local licence renewals vary by industry and city. A professional services LLC in a major metro often pays $50 to $300 annually.

Then there is tax preparation. Under current IRS rules, a single-member LLC taxed as a sole proprietorship files on Schedule C - some self-employed founders handle that with standard tax software. Multi-member LLCs are a different story. Form 1065 at the federal level, a K-1 for each member, and most owners end up with a CPA. Federal tax prep for a small LLC commonly runs $400 to $1,200. Add state returns if the LLC operates across state lines.

Bookkeeping is the quiet line item. A founder who handles their own books may pay nothing beyond software - $20 to $50 a month. A founder who outsources typically pays $200 to $600 a month once there are more than a handful of monthly transactions.

Where founders get surprised

New York has a publication requirement that catches almost every new owner off guard. Under Section 206 of the New York Limited Liability Company Law, LLCs must publish notice of formation in two newspapers - one daily and one weekly - for six consecutive weeks within 120 days of formation. The newspapers are designated by the County Clerk in the county where the LLC's registered office is located. As of early 2026, publication in Manhattan can cost $1,500 or more, with some papers quoting over $1,800. Albany runs closer to $300 for the same six weeks. It is a formation cost, not a recurring one. It just never shows up on any filing-fee chart.

Delaware's $300 flat franchise tax sounds reasonable until it arrives every June 1 regardless of revenue. Founders who open a Delaware LLC because of a blog post about Delaware's friendly courts and then let the entity sit unused for a year still owe the $300.

California shows what franchise taxes can do to early-stage economics. A freelancer making $40,000 in their first year - no employees, no office - still owes $800 just for the privilege of being an LLC in California, plus the Statement of Information fee every two years. Cross $250,000 in California-source gross receipts and the Franchise Tax Board schedule adds an additional LLC fee on top, starting at $900 and climbing to $11,790 at the top bracket. Before federal tax, before self-employment tax, before any income tax owed at home, California's baseline LLC tax bill is $800.

One cost that quietly disappeared in 2025

The Corporate Transparency Act briefly required virtually every LLC in the country to file beneficial ownership information with the Financial Crimes Enforcement Network. That requirement was rolled back. On March 26, 2025, FinCEN published an interim final rule exempting all domestic reporting companies - essentially every LLC formed in the United States - from BOI reporting. Foreign reporting companies and foreign owners still file. US-based owners of US-formed LLCs, as of April 2026, do not. The rule could change, and confirming the current status before relying on the exemption is the safer move.

That is one piece of good news for an LLC balance sheet that has otherwise been trending in the other direction.

Year one versus year five

Formation cost is front-loaded and small. State filing fees range from $35 in Montana to $500 in Massachusetts, with most states in the $50 to $200 range. Registered agent services typically run around $100. The EIN is free straight from the IRS. Year one for a basic LLC in a low-tax state can come in under $500.

Year two onward is where the real curve sits. A Wyoming LLC with one owner and no employees might run around $200 a year all in, registered agent and annual report included. A California LLC in the same situation rarely clears a year under $1,000 - the $800 franchise tax alone plus a registered agent plus the biennial Statement of Information fee gets you there before anything else is spent. Over five years, the gap between the cheapest state and the most expensive can exceed $5,000. Before anyone has earned a dollar.

What to do with this

State choice matters more than many founders realise. An LLC that operates primarily in one state generally pays that state regardless of where it was formed. Register in Wyoming and operate in California and you pay both - states charge for the privilege of doing business within their borders, not for where the entity was born. The savings people imagine from forming in a low-tax state tend to evaporate for anyone who actually has customers in a high-tax one.

Annual costs, not formation costs, are what drive the long-run bill. A $100 filing fee tells you almost nothing about what the entity will cost in year three.

LLCBuddy, a 50-state LLC data reference maintained by founder Steve Goldstein and his editorial team, publishes side-by-side state figures for both formation and annual costs.

The math is worth running before filing. Against $50,000 in annual revenue, $1,000 a year in LLC maintenance is a small line item. Against $3,000, it isn't. What counts as a reasonable cost depends on the business, the industry, and the person - those are questions for a qualified attorney, CPA, or tax professional. This article does not constitute legal, tax, or financial advice.

An LLC isn't a product you buy once. It's a bill you pay every year - and the bill keeps coming whether the business does or not.

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