Many founders pick a state on formation price and then get hit with annual reports, franchise taxes, registered-agent fees, and a second registration in the state where they actually work. This article compares five low-cost candidates using official fee schedules checked in October 2026. It also explains why your operating location often matters more than the lowest advertised fee.
Key Takeaways
- Montana has the lowest filing fee ($35), but the cheapest state changes with the metric you use.
- Arizona, Missouri, and New Mexico charge no mandatory LLC annual report fee.
- Forming outside the state where you operate usually means paying twice.
- Include taxes, licenses, permits, and registered-agent costs in any real comparison.
Overview of LLC Formation Costs in the US Market
An LLC formation fee is the state charge for filing your founding document. Most states call it Articles of Organization. Delaware calls it a Certificate of Formation.
That fee is one-time. Several recurring costs follow it:
- Annual or biennial report fees
- Franchise or entity taxes
- State business taxes, such as sales or gross receipts tax
- Registered-agent service
- Local business licenses and permits
The next section compares five low-cost states on both formation cost and practical operating considerations, not just the cheapest filing.
Cheapest States to Form an LLC in the US
We compared current official filing fees, first-year obligations, recurring costs, registered-agent rules, and whether the state makes sense for where you actually operate. Amounts below are state filing fees only. Registered-agent service prices and taxes are extra.
| State | Initial fee | Foreign LLC fee | Recurring state filing |
|---|---|---|---|
| Montana | $35 | $70 | Annual report: fee waived if filed by April 15; $35 after |
| Kentucky | $40 | $90 | $15 annual report, due June 30 |
| Arizona | $50 | $150 | Annual report optional; no mandatory fee |
| New Mexico | $50 | Confirm with SOS | No periodic report on current SOS guidance; confirm before filing |
| Missouri | $105 | $105 | No LLC annual report required |
Montana: Lowest Initial Cost
Montana's fee schedule lists Articles of Organization at $35. The annual report is due April 15, and the fee is waived if you file on time. File late and it costs $35. Montana also has no general sales tax, according to its Department of Revenue.
That makes it attractive to a budget-minded founder. The catch: if you run the business mostly in another state, you'd register there as a foreign LLC and pay that state's fees too. Montana suits owners who actually operate there, or remote businesses with no physical presence elsewhere.
Kentucky: Low Entry Cost, Annual Upkeep
Kentucky charges $40 to form and $15 for the annual report, due June 30. Miss that date and a domestic LLC is administratively dissolved. A $100 reinstatement penalty is listed.
You also need a registered agent with a Kentucky street address. Kentucky's Limited Liability Entity Tax may apply as well, and it's calculated under tax rules rather than set as a flat fee. Forming here is sensible if your business really operates in Kentucky.
Arizona: Low Fee, No Mandatory Annual Report
Arizona's filing fee is $50. Current Corporation Commission materials present an annual report as optional for LLCs. That helps long-term affordability.
Watch the publication rule, though. After approval, you must publish a notice of formation. The commission handles that online if your statutory agent is in Maricopa or Pima County. Elsewhere, you pay for a newspaper notice. Arizona's Transaction Privilege Tax license also applies to certain activities, with a $12 state fee per location.
Missouri: Low Maintenance, Higher Entry
Missouri costs $105 to form, the highest of the five. But its Secretary of State FAQ confirms LLCs don't file annual reports. You need a Missouri registered agent and street address.
Don't choose Missouri solely because it has no annual fee. If you operate in Illinois or Kansas, you'd still register there as a foreign LLC. Sales and use tax registration with the Department of Revenue depends on your activity.
New Mexico: Low Recurring Costs, More Questions
New Mexico lists a $50 domestic filing fee on a 2026 filing record. No periodic LLC report appears on current Secretary of State guidance, and a 2023 bill that would have added a triennial report did not become law.
Confirm the foreign registration fee, registered-agent rules, and ownership-disclosure details with the New Mexico Secretary of State before you file. Gross receipts tax applies to covered business receipts, and privacy, banking, and tax questions need separate review.
Why Other States Still Come Up
Some states cost more but get chosen for other reasons:
- Wyoming: $100 to form, then a $60 minimum annual license tax
- Delaware: $110 to form, $400 annual tax due June 1, no annual report; known for legal infrastructure and investor familiarity
- Nevada: $425 in initial state charges, then $350 yearly
- California: $800 annual tax for LLCs organized or doing business there
Your home state may also win once duplicate filings are counted.
How We Chose the Cheapest States
We separated four measurements:
- Initial formation fee
- First-year total
- Recurring annual or biennial cost
- Estimated cost if you must register in another state
Fees came from each state's Secretary of State or equivalent agency, checked October 22, 2026. We reviewed annual reports, franchise taxes, registered-agent rules, and publication requirements separately. No reliable nationwide average annual fee is published, so these rankings use state-by-state figures only.
Where Formation-Fee Comparisons Go Wrong
Comparing only the filing fee misses real costs. Registered-agent service, foreign registration, local licenses, sales-tax registration, and tax filings can reverse the ranking. The SBA notes that foreign qualification can add filings, taxes, and annual-report fees in both states.
Lower recurring costs keep budgets predictable, and forming in the right state avoids duplicate filings. Clear compliance guidance also helps you avoid missed deadlines and penalties.
A Practical Decision Rule
If your business has a physical location, employees, or regular operations in one state, look at forming there first. Form out of state only for a specific legal, privacy, investment, or operational reason.
Formation is only the first step. At JFT Group, new-business support covers state and local permits and licenses, EIN applications, payroll setup, and a cash-flow budget for the first few years. We've also seen what happens when structure is wrong: one case involved a $210,000 IRS levy tied to an audit, an incorrect business structure, and unfiled taxes.
Fee schedules and tax rules change. If you have multi-state operations, multiple owners, significant assets, or a complex tax situation, talk to a qualified attorney or tax professional.
Conclusion
There's no universal cheapest state. One state has the lowest filing fee, another has lower recurring costs, and your home state may come out cheapest once foreign registration is counted.
Before you form, take these steps:
- Compare first-year and multi-year costs
- Confirm where the business operates
- Note annual filing deadlines
JFT Group helps first-time founders and established businesses with formation, entity selection, accounting, tax, bookkeeping, payroll, and compliance across all 50 states. Request tailored guidance rather than choosing a state on price alone.
Frequently Asked Questions
What is the cheapest state to form an LLC?
Montana has the lowest filing fee at $35 among commonly compared low-cost states. The answer changes with initial fee, first-year total, or ongoing costs, and your operating state may cost less overall.
What is the average annual fee for registering an LLC in the US?
Fees vary too widely for a single nationwide average to be useful. Kentucky charges $15, Delaware's tax is $400, and California's is $800. Report fees and franchise taxes aren't interchangeable.
What is the renewal fee for an LLC in New Jersey?
New Jersey's LLC annual report costs $75, due the last day of the formation-anniversary month. Missing it can lead to revocation, and reinstatement carries a $75 filing fee.
What's the best state for an LLC?
It depends on your location, tax structure, privacy needs, investment plans, and compliance costs. For a small business operating in one state, the home state is often simplest.
Is it cheaper to form an LLC outside my home state?
Usually not. You may pay foreign registration, a second registered agent, duplicate annual reports, and multi-state taxes. Compare total costs, not just the formation fee.
Can I form an LLC in a state where I do not live?
Generally yes. But operating in another state may trigger foreign registration, and forming elsewhere doesn't eliminate taxes or local compliance obligations.
