How much does it cost to start an LLC in 2025?

Gorgev // Shutterstock Every new administration brings changes to the national economic landscape, and no one feels these changes more acutely than small businesses. In 2025’s rapidly shifting economy, it’s smart for entrepreneurs to be prepared so they can take advantage of favorable conditions–and avoid bad ones, as recent changes to business law may increase legal risks and create a more competitive business environment, LegalZoom notes. Forming an LLC in 2025 shields your house, car, and other personal assets against business liabilities and mishaps. But, before you begin the formation process, it’s a good idea to get a general sense of how much money you need to start your venture. What Is an LLC? A limited liability company, or LLC, is fairly easy to establish and is often a good choice of business entity for an entrepreneur looking to start a small company. It’s a popular type of business model that has the flexibility of a partnership but the liability protection of a corporation. It’s also easier to set up an LLC than it is to establish a corporation. When you form an LLC, you gain a range of advantages–from personal liability protection and business credibility to flexible management and tax benefits. Plus, LLCs offer tax benefits: As a pass-through entity, LLC owners can report their LLC profits through their personal taxes and don’t have to deal with corporate taxes (unless they elect to do so). Mandatory LLC Startup Costs Laws for forming an LLC vary by state, which means the costs associated with setting up a limited liability company depend on where you’re registering it. Some of the startup costs are mandatory and unavoidable while others are optional. The one mandatory cost every business owner will encounter when forming an LLC is for the articles of organization–the document on which you will divulge all of the basic details about the LLC, including its name and address, registered agent, and management structure. This foundational LLC formation document may have different names in different states, but it serves the same purpose: to tell your state’s business regulation authority basic information about your business. Your state’s Secretary of State (or similar agency that handles LLC registration) should list specific information about the required fees for filing on their website. The state filing fees for LLC formation documents vary widely–from $35 in Montana to $500 in Massachusetts–though most states charge between $50 and $200. The cost may also be different if you are registering a domestic LLC (founded in the state) or a foreign LLC (founded in another state but licensed to do business in the new state). State-by-state filing fees Here’s a breakdown of the filing fees by state. Business Licenses and Permits LegalZoom If you operate in a regulated industry (such as healthcare, insurance, real estate, food and beverage, or public broadcasting) or require professional licenses and permits to conduct your business, you may have to pay fees to acquire or maintain your licenses. Many states, counties, and cities also require some sort of operating license. While not every LLC will require a license or permit, many small businesses do.  Common business licenses and permits required for an LLC include: General business license Sales tax license Professional license Health permit Zoning permit Sign permit The cost of licenses and permits are dependent on type of business, size, and location. In most states, a general business license will cost between $15-$200. For instance, Tennessee LLCs that have a business income between $3,000 and $100,000 need to secure a general business license. The cost for this license is $15. These licenses and permits have to be renewed periodically, so don’t forget to account for the business license renewal fees as part of your ongoing operational budget. The Small Business Administration is a good resource for determining what sorts of licenses and permits you may need, or you can work with LegalZoom to help determine which business licenses you may need–and stay on track with their renewals. Publishing Fees In a few states, you must take additional steps to set up your LLC beyond filing your articles of organization, and these additional steps usually come with additional costs you can’t escape. For example, in New York, as per the state’s Limited Liability Company Law, you must announce your domestic or foreign LLC’s creation by publishing notices in two newspapers. The newspaper publishing fees depend on your business’ location and the newspapers’ advertising rates–and you’ll also have to pay a $50 fee to file a Certificate of Publication with the state. Publication costs are also applicable to forming an LLC in Nebraska and Arizona. The filing of a publication notice or affidavit is $25 in Nebraska and free in Arizona.  Optional LLC Startup Costs Apart from the state filing fee and any necessary licenses or permits, there are typically no other mandatory LLC costs–most other expenses are based on the types of services you need. For instance, you can expect additional costs if you decide to reserve a business name, require expedited processing, get legal help, do business in multiple states, or hire a registered agent.  Here are the types of costs to be aware of: Name reservation Your LLC’s company name must be different from the names of other business entities in your state. Check your state’s online business name database to ensure that your chosen LLC name is available. If you are concerned that a name will be taken, you may choose to reserve the name with the state to secure your right to use it before you file your LLC paperwork. Most states allow you to reserve the name for a limited period of time for a fee. LLC name reservation fees are nominal and run between $15-$75. Fictitious business name Perhaps your hair salon’s name is “Jones Hair, LLC” on all legal documents, including formation paperwork, but you want to operate the business as “Jones Hair.” If you wish to operate your LLC under a name that’s not your official name, you will need to file a DBA, also known as a doing business as, trade name, or fictitious name. Again, the cost for a DBA varies quite a bit but generally falls between $10-$150. In some states–for instance, Maine and Georgia–DBA fees vary by county. However, you’ll find that most states typically charge around $25, making it a manageable expense. Expedited filing fee If you are ready to take the plunge and start building your LLC immediately, you may choose to pay an additional fee to speed up the processing of your articles of organization. Expedited filing fees can be anywhere between $25 to $500, depending on how quickly you need a response. In Delaware, you can get a confirmation on your LLC formation documents within two hours if you pay an extra $500. The state of Georgia offers same day processing for an additional $275. Registered agent services A registered agent is the person or entity designated to accept service of process and legal documents on the company’s behalf. The agent’s address is public record and requires availability at that physical address during regular business hours. All LLCs must have a registered agent–either an individual or a business that provides commercial registered agent services. Some LLC owners or members may decide to serve as their business’ registered agent, but many business owners use a registered agent service for privacy reasons (remember, the registered agent’s contact information is public record). Costs for registered agents vary depending on whom you hire for this responsibility. A registered agent service usually costs between $100 and $300 annually. LLC operating agreement Every LLC should have an operating agreement, which is a contract among the members establishing each one’s share in the business and management responsibilities. In fact, some states require you to file your operating agreement with them. Your cost to develop an operating agreement will vary depending on its complexity and how you decide to go about it. While you can find an operating agreement template online, those standardized forms may not be suitable for your business’s needs. Unclear wording or overgeneralization can leave you open to disputes. Annual report fee In addition to the initial filing fee, most states charge a periodic fee to maintain an LLC in the state. Maintenance usually only requires filing an annual or biennial report to keep the state updated with regard to the name, address, and ownership of the company. Filing the report and paying these fees keeps your company in good standing and confirms that your company is still active.  Like most other costs, biennial and annual LLC fees also differ by state. The general fee range for an LLC annual report is between $15 and $300. However, some states charge a franchise tax in lieu of or in addition to an annual fee. Franchise taxes are often a flat tax but can vary according to the company’s earnings or the number of LLC members.  For instance, in California, the annual report is known as a statement of information and the filing fee is $20. However, a California LLC is also required to pay $800 in franchise tax to the California Franchise Tax Board. Costs of legal and tax advice You can complete many, if not all, of the steps required to form an LLC on your own. However, many business owners seek expert assistance from an attorney or accountant who has prior experience setting up business entities. For example, you may want tax advice before deciding whether you want your LLC to be taxed as a pass-through entity or corporation. Retaining an attorney can help ensure your company is set up legally and correctly to avoid any future problems. This can make forming your company more expensive, though, especially if you have a lawyer do everything for you. The upfront cost of hiring an attorney for LLC formation comes to around $260 per hour, but this figure could be different as lawyers have different ways to charge clients. You can also use a an online service that offers attorney-guided LLC formation plans for a variety of budgets. What Is the Total Cost to Start an LLC in 2025? There are upfront and ongoing costs that you need to consider when it comes to starting an LLC in 2025. The average upfront cost to start a domestic LLC with no business licenses is $123–the national average of state LLC filing fees. Are you curious about how much it would cost to get an LLC if you opt for all the extra services like appointing a registered agent, drafting an operating agreement, reserving a business name, and securing licenses and permits? For this, you should budget for at least $700 to $1000–a small price to pay for peace of mind.  When Should You Start an LLC? The decision to start an LLC depends on your appetite for risk and your business’ profitability, management structure, and costs. Certain pivotal moves like hiring employees, signing contracts, increasing profitability, or entering high-risk markets justify the need for an LLC. Below are some real-world examples that could warrant a switch from a sole proprietorship to an LLC. Launching the business Many people start an LLC as soon as they decide to become their own boss. Forming an LLC makes your business official and adds a credibility stamp. This business structure also creates a formal legal distinction between you and your business, which helps build brand identity and protect your personal assets. Furthermore, having an LLC makes it easier for you to open a business bank account, obtain a business credit card, and secure funding from external sources. Hiring employees As your business grows, you may require more hands on deck. While hiring employees is a great sign, it brings forth more liabilities and risks. It’s wise to protect yourself from situations where employee actions can lead to company liability. Consider this example: An employee at your cleaning business forgets to put up a “wet floor” sign, causing a client to slip and break their wrist. The client then sues your business. With an LLC, the company would be liable for the damages–not you. Recruiting investors An LLC adds a credibility tag to your business, which makes it easier to attract investors for external funding. Forming an LLC offers flexibility in terms of profit-sharing, investing, and operations. For instance, it’s easier for an investor to say “I will give you $X in funding in return for a 2% stake in your business” with an LLC than a sole proprietorship. The formal distinction between the business and the LLC owner(s) is also attractive to investors because they may feel they are backing a business plan and not just an individual. Plus, an LLC is easier to scale than a sole proprietorship, giving LLCs a greater chance to return and grow an investment. Reaching sustained profitability Another good time to move on to a formal business structure is when your business starts generating a sustained business income. Forming an LLC protects your hard-earned money from unexpected business debts or lawsuits. An LLC also offers tax advantages and flexibility. For instance, you can choose to file taxes as a pass-through entity on your personal taxes, or have the LLC taxed as a corporation. As an LLC, you also have additional tax planning opportunities and can claim deductions for a variety of business-related expenses. Signing contracts Contracts are great for setting expectations and assigning responsibilities. But a breach of contract can spell legal and financial trouble. In case your business is accused of a contract breach, you want the liability to fall on the company rather than you personally–this is exactly what an LLC is designed to do. Transitioning from a side hustle to a full-time business If your online side hustle has become a full-time business, it’s time to consider an LLC. The added credibility of an LLC can serve as a competitive advantage and create a “corporate shield” between personal and business finances. An LLC also offers flexibility in management and taxation, so you can choose what works best for your business.  Buying or renting commercial real estate If you foresee your business buying or renting commercial real estate, consider forming an LLC first. An LLC can provide you with potential tax breaks, allowing you to claim tax deductions on property rent, repairs, utilities, and other operating expenses. How to Start Your LLC in 2025 Starting an LLC in 2025 is a great way to supercharge your entrepreneurial aspirations. While the exact steps may differ by each state, the main procedure is quite standardized. Pick a unique and distinguishable name. Select a name that’s unique, memorable, legally compliant, and available. A business name generator makes brainstorming business names a whole lot easier. Appoint a registered agent. While you can be your own registered agent, the additional administrative responsibilities can create a burden. Appointing LegalZoom as your registered agent ensures privacy while allowing you to focus on more important aspects of running a business. Create an operating agreement. An operating agreement is the go-to guidebook for your LLC. It should include all details relevant to the day-to-day functioning of the business–from high-level structure (single-member LLC or multiple-member LLC) to on-the-ground operating procedures. File articles of organization. Complete the necessary legal documents and pay the LLC filing fees to register your company with the state. Secure business licenses and permits. Licenses and permits give you the authority to operate legally. They also show vendors, clients, and state governments that you’re playing by the rules. Your local county office, Secretary of State office, or an online legal service can guide you on the required licenses and permits.  Secure an EIN from the Internal Revenue Service. This nine-digit federal tax identification number makes it easier for you to pay taxes, hire employees, and open a business bank account. Open a business bank account. A dedicated bank account for your new business entity draws a line between the business and your personal finances. If you are ready to form an LLC, this comprehensive seven-step guide can help transform your business dream into a thriving reality. FAQs What’s the cheapest state to start an LLC? It is cheapest to form a domestic LLC in Montana. The state’s LLC filing fees are just $35 if you are a single-member LLC and $70 if you are a single-member foreign LLC. Kentucky is the second cheapest state, with filing fees of $40. To register as a foreign limited liability company operating in the state, you would have to get a Certificate of Authority from the Kentucky Secretary of State. The cost for that is $90. Can you start a limited liability company for free? No, you can’t. At the very minimum, you have to pay the formation fee associated with submitting your articles of organization to the state. While some LLC formation services offer their expertise for free (including LegalZoom), you will still have to pay your state’s LLC fees. Where can you find grants to help start a business? Small business grants are a great way to fund your startup. The best part is that grants don’t have to be paid back. You can find matching grants through a grant marketplace like Instrumentl or GrantWatch. Grants.gov is also an excellent source to identify state or federal government sponsored grants. Your local chamber of commerce or Small Business Development Center may also have information on available grants. What are some ongoing LLC costs? Your annual/biennial report (if required by your state), business license renewal, and sales tax license are all ongoing costs typically associated with maintaining an LLC. Fortunately, most of these expenses are quite manageable, especially if you work with a bookkeeper or accountant and are prepared for these maintenance expenses from the beginning. This story was produced by LegalZoom and reviewed and distributed by Stacker.