Cheapest states to form an
LLC in 2025

LLC formation costs vary by state for several reasons. The primary cost driver is the state filing fee charged by the Secretary of State to register the Articles of Organization. These range from $40 (Kentucky) to $500 (Massachusetts). Some states add mandatory annual report fees ($0 to over $300), franchise taxes (California charges a flat $800 minimum franchise tax regardless of revenue), or publication requirements (New York and Arizona require publishing a notice of formation in local newspapers, which can cost $200 to $1,200+ depending on the county).

Registered agent fees are a universal cost, every state requires an LLC to designate a registered agent with a physical address in the state. While you can serve as your own agent in most states, professional registered agent services typically charge $100 to $300 per year. We use a representative estimate of $125 per year in our calculations to normalize across states. Some business owners choose to use a registered agent in a different state (like Wyoming or Nevada) to reduce formation costs, but this creates additional compliance requirements if you are actually operating in a different state.

The cheapest states to form an LLC tend to share common characteristics: low or moderate filing fees, no mandatory annual report or a free one, and no publication requirement. Kentucky, Arkansas, and New Mexico consistently rank among the most affordable. However, the cheapest formation state is not always the best choice, you should form your LLC in the state where your business has a physical presence, employees, or significant operations. Foreign registration (registering an out-of-state LLC in your home state) usually negates any cost savings and adds administrative burden.