Cheapest States to Form an LLC in 2026

The 10 Cheapest States by First-Year Cost

Fees verified August 2026. Use our LLC Cost Calculator for exact figures including expedite options.

States with No Annual Report Requirement

These states require zero recurring filings after formation — the lowest ongoing compliance burden:

• Missouri — no annual report, no franchise tax
• New Mexico — no annual report, no franchise tax
• Arizona — no annual report (but must file if info changes)
• Ohio — no annual report for LLCs

If you hate paperwork and deadlines, these four states are your best bet for minimal ongoing compliance.

The Most Expensive States (and Why)

California's $800 minimum franchise tax is the biggest surprise for new business owners — you owe it even if your LLC earns $0. Factor this in before forming there.

5-Year Total Cost Comparison

First-year fees don't tell the full story. Here's what 5 years actually costs in popular states:

Missouri and New Mexico are dramatically cheaper over time. Delaware's $300/year franchise tax adds up fast if you don't actually need Delaware's legal advantages.

All 51 States Ranked by 5-Year Total Cost

The table below shows every state's filing fee, annual report cost, and projected 5-year total. This is the most complete comparison available — most articles only show the top 10.

Fees verified August 2026. "Annual" reflects the recurring report or franchise fee. States marked "None" have no mandatory recurring filing.

How We Calculated These Numbers

Transparency matters, so here's exactly how we built the table above:

• Filing fee — the base cost to file Articles of Organization (or equivalent) with the Secretary of State. We use the standard online filing rate, not expedited or paper rates.
• Annual report fee — the recurring fee to keep your LLC in good standing. Some states call this a "Statement of Information," "Annual List," or "Franchise Tax Report." We normalize all of these into one number.
• Franchise tax — a separate tax some states charge just for the privilege of existing as an LLC. California's $800 minimum is the most famous, but Delaware ($300), Texas (above $1.23M revenue), and a few others also charge one. We include the minimum or flat amount where applicable.
• 5-year total — filing fee + (annual fee × 4). We multiply by 4 because you pay the annual fee in years 2, 3, 4, and 5 after the initial filing year.

We do not include registered agent fees, EIN costs, or formation service markups — those are optional and vary by provider. The table shows only what the state itself charges.

The Cheap Filing Fee Trap

Many articles rank states by filing fee alone. That's misleading. Here's why:

Kentucky has the lowest filing fee ($40) but Missouri and New Mexico are actually cheaper over 5 years because they charge no annual report. Always look at the 5-year total, not just the sticker price.

Should You Form in a Cheap State or Your Home State?

This is the most common question, and the answer is usually: form in your home state. Here's why:

• If you live and work in State A but form in State B, you'll likely need to foreign-qualify in State A anyway
• Foreign qualification means paying filing fees + registered agent fees in both states
• You'll still owe taxes in the state where you actually earn income
• The "savings" from a cheap state are usually wiped out by double fees

Exceptions where out-of-state formation makes sense:

• You're raising venture capital (investors prefer Delaware)
• You're a digital nomad with no fixed home state
• You hold passive assets (real estate, IP) and want specific legal protections

Hidden Costs People Forget

• Registered agent: $50–$300/year if you don't serve as your own
• Name reservation: $10–$50 if you want to hold a name before filing
• Certified copies: $10–$50 each (banks and investors may require them)
• Expedited processing: $25–$500 extra for same-day or 24-hour filing
• Late filing penalties: $50–$500+ if you miss an annual report deadline

Our LLC Cost Calculator includes all of these so you see the true total before you commit.

The Cheapest States, Examined One by One

Missouri — Cheapest Over 5 Years

Missouri's $50 filing fee is mid-pack, but it charges no annual report fee and no franchise tax — so your cost never goes up after formation. The Secretary of State's online portal is straightforward, and processing typically completes within a few business days. The catch: Missouri requires annual registration for some entity types, so confirm your specific structure. For a standard LLC, it's the lowest-maintenance cheap state.

New Mexico — Cheapest with Maximum Privacy

New Mexico matches Missouri's $50 filing and zero annual fees, and adds a bonus: member names are not required on the Articles of Organization, making it one of the more private cheap states. No annual report means no recurring paperwork. If you want Wyoming-style privacy without Wyoming's annual fee, New Mexico is the value pick — though you'll still need a registered agent with a New Mexico address.

Arizona — Cheap with a Publication Quirk

Arizona's $50 filing and no annual report make it cheap on paper. One quirk to know: Arizona historically required newspaper publication of LLC formation notices in some counties (a requirement that has been phased out for most filers, but check current rules before filing). Processing is fast online, and the state's eCorp portal is one of the better-designed government systems.

Kentucky — Lowest Filing Fee

At $40, Kentucky has the lowest filing fee in the country. The $15 annual report keeps the 5-year total around $100 — still excellent. Kentucky's One Stop portal handles formation and tax registration together, which saves a step. A good pick if you're physically based in Kentucky; less compelling from out of state once foreign qualification enters the math.

Colorado — Cheap Plus Fast

Colorado's $50 filing and $10 annual report are both near the bottom nationally, and its online filing system approves most LLCs within minutes — genuinely instant in many cases. The periodic report is due each year on the anniversary of formation. Colorado also has a flat 4.4% income tax, moderate by national standards. For speed plus low cost, it's hard to beat.

Montana — Low Fees, No Sales Tax

Montana's $35 filing is the second-lowest in the country, with a $20 annual report. Montana also has no state sales tax, which matters for certain business models. The trade-off is a slower, more manual filing process than Colorado or Arizona, and fewer online conveniences.

Taxes in the Cheapest States: The Full Picture

Filing fees are only one slice of what a state takes from your business. Here's how the cheap states stack up on the taxes that actually recur every year:

Two lessons from this table. First, "cheap to form" doesn't mean "cheap to operate" — New Mexico's gross receipts tax hits service businesses on revenue, not profit, which can outweigh the $50 filing savings. Second, if your business is location-flexible, Montana's lack of sales tax and Arizona's flat 2.5% income tax are genuinely meaningful advantages for the right business model. Always model your actual revenue against these rates before choosing on fees alone.

Cheapest State by Business Type

The pattern is consistent: the cheapest state is almost always the one where your business actually operates. Out-of-state formation only wins in the narrow cases — privacy holding structures and genuinely location-independent owners — covered in our best state decision framework.

Moving an Existing LLC to a Cheaper State

Already formed in an expensive state? You have three paths, each with different costs and consequences:

1. Domestication (Cleanest)

If both states allow it, domestication transfers your LLC — same EIN, same history, same contracts — to the new state. Typical total cost is $100–$300 in combined filing fees. Not every state pair supports this; check both states' statutes before planning around it.

2. Dissolve and Reform (Simplest)

Wind down the old LLC and form a new one in the cheaper state. You'll get a new formation date, which can complicate bank accounts, credit history, and existing contracts. Total cost: $100–$500 including dissolution fees.

3. Keep Both (Sometimes Right)

If the original state offers something you still need (Delaware's court system for a company raising investment), keep it and foreign-qualify where you actually operate. This is the most expensive path but occasionally the correct one.

Before moving anything, run the math honestly: if you're saving $60/year in annual fees but spending $300 to move, the payback period is five years. Domestication usually makes sense when escaping a high recurring cost — California's $800 franchise tax is the classic example — not when chasing a small annual saving.

How Cheap-State Fees Compare to the National Average

To put these numbers in perspective, here's how the cheapest states compare against what a typical U.S. state charges. The national median LLC filing fee sits around $100–$130, and the median annual report fee is roughly $50–$100 — so the states at the top of this list are charging a fraction of what most owners pay:

Three takeaways from this comparison. First, the spread is enormous — a California LLC costs roughly 80 times more over five years than a Missouri or New Mexico LLC, purely in state fees. Second, the cheap states aren't obscure outliers; Missouri, Colorado, and Arizona are mainstream business states with modern online filing systems. Third, the annual fee matters far more than the filing fee over time: a state that charges $50 once and nothing again beats a state that charges $40 upfront and $150 every year, every single time. When you evaluate any state, start with the 5-year total column, not the headline filing fee.

Frequently Asked Questions