Cheapest LLC State (Top 3 States by Overall Cost) – Are They Really The Cheapest?
When you are looking to launch your LLC, one of the biggest questions that usually comes to mind is where you should form your company. Should you do it in your own state, which tends to be the simplest option, or find the cheapest or more ‘business friendly’ option? Each state has its own regulations and fees attached to LLC formation, which means that some are a lot more expensive than others.
Regardless of where you are based, you can form an LLC in any state that you wish to. Before selecting a state to form your LLC in, be sure to consider all of your options. Let’s take a look at the three cheapest states to form an LLC in.
- Jump to Cheapest LLC Formation Services
- 3 Cheapest LLC States in U.S.
- Things to Consider When Choosing The “Cheapest LLC”
- Cheapest LLC Formation Services
- Final Words On Cheapest States for Your LLC
3 Cheapest LLC States in U.S.
Delaware earns a spot as one of the best states to form an LLC. In fact, more than 50% of all US publicly traded companies are incorporated in Delaware. This is largely due to the fact that that it has simplified its filing process, which means your business will be up and running in no time, but it also has very low filing fees and franchise taxes. Delaware also does not tax out of state income for foreign LLCs.
With low filing fees, low franchise taxes, no corporate income taxes for foreign LLCs taxed as corporations and a court purely used for businesses, it is one of the cheapest and most business friendly states out there.
LLC set up fee: $90.
LLC annual fee: $300.
Nevada is another state that is known for being LLC formation friendly, especially due to the fact that there are very few taxes that you are required to pay. The state has no tax on business income, which is taxed in most other states, there is no capital gains tax, which can reduce the tax implication for the LLC owner when filing taxes, plus there is no inheritance tax. The fact that there are no franchise fees could literally save you thousands of dollars, and in comparison to other states, the annual fees are on the lower end of the scale.
LLC set up fee: $425.
LLC annual fee: $350.
Wyoming is an extremely business-friendly state, largely thanks to you not having to pay any personal income, corporate income, or franchise taxes, making it an extremely affordable place to run a business. Running a business here is similar to running a business in Nevada, but has other perks such as having a lifetime proxy.
LLC set up fee: $100.
LLC annual fee: $50.
Things to Consider When Choosing The “Cheapest LLC”
You may need to form a foreign LLC. If you have looked at the all the variables and decide that you don’t want to form your LLC in your home state, you should consider the fact that you might then also need to create a foreign LLC in your home state if you want to conduct business there. Not only will this mean double the formation fees, but you will also have to pay twice as many taxes. What seems like a good idea to start with to save you money, may actually end up costing you even more.
All states have a formation fee when it comes to creating an LLC that goes to the secretary of state office. All of the states charge different fees, so this is something to look into when deciding what state to go with. The price of state fees vary massively, with places like Arkansas and Colorado only charging a $50 formation fee, but Connecticut charging a huge $455.
Most states will also charge annual fees after the initial formation fee, and again, these can vary from state to state. Florida and Ohio are the only states that do not require this. California has the cheapest annual fee at just $21, but in Nevada you have to pay $325 a year just to keep your business up and running.
Some states impose a franchise tax on your LLC, and some states don’t, so this is definitely something you should look out for. The method for working out how much franchise tax you need to pay is different for each state. For example, although California has the cheapest annual fee, they charge an annual franchise tax with a minimum tax of $800 a year, even if you are losing money, so it may not work out the cheapest state if you add everything together. Nevada and Wyoming are the only two states that don’t charge any franchise tax at all.
Corporate Income Tax
State corporate income tax. Nevada, Ohio, South Dakota, Texas, Washington and Wyoming all have no corporate income tax at all, while others like Ohio, Texas and Washington all require you to pay tax on the gross company revenues. This shows that even if a state has a cheap formation fee, it will not necessarily save you money in the long run.
Cheapest LLC Formation Services
There are plenty of companies that can help you form an LLC online, and while it is good to have plenty of options, it could just make the decision of picking one even harder. One of the biggest factors that people are likely to think about is the price, and two companies really stand out here for being the cheapest, while remaining trustworthy and reputable.
#1: Zen Business
Zenbusiness has some of the lowest overall pricing in the industry, while still providing all the services needed to form an LLC. This well rounded service provider charges just $49 for its basic package, which is a real bargain for what you get. For the price, you will get registered agent services for 12 months, a custom-made operating agreement, a worry-free CPA assessment and more. They do have a few upsells, but they are not at all pushy about them, so if you don’t want them you can just click past.
You can also read a full ZenBusiness review here.
Review count: 4100+
Form an LLC today with ZenBusiness for only $49. They Have 98% customer satisfaction rating and over 4000+ verified reviews.
IncAuthority is the cheapest LLC formation service out there. In fact, they will form your LLC for you for free. They are a pretty big name in the industry and have helped literally thousands of businesses form successfully, with plenty of positive online customer feedback available online. The company also guarantees that your formation paperwork will be filed with the state in just one business day.
Here’s our full review of IncAuthority.
Review count: 4500+
Form an LLC today with IncAuthority starting at $0+state fees. They’re one of best-known services with lots of great customer experience.
Final Words On Cheapest States for Your LLC
As you can see, there are many things to consider if budget is your biggest factor when deciding where is the best place to form your LLC. Even if a state seems attractive with cheap filing fees, there you should also be sure to look into taxes and annual fees. Picking the right LLC formation service company can also play a big factor in the overall price of starting and running your business.