When you’re establishing a limited liability company (LLC) in the US, one of the first decisions you need to make is where to register. While your home state is an obvious choice, each state has different rules, fees, and tax structures for LLCs that can affect your profit.

Initial state LLC filing fees typically range from $40–$500, with total up-front costs varying based on annual reports, franchise taxes, and compliance rules. States such as Kentucky and Mississippi offer the lowest costs for initial formation, while others, such as New Mexico, require no annual fees.

Below, we’ll explain what factors make certain states cheaper than others for incorporating an LLC, from filing fees and ongoing maintenance costs to potential tax savings.

What’s in this article?

• How to choose the best state for incorporating your LLC
  
• Which states have the lowest LLC formation fees?
  
• What other costs are involved in forming an LLC?
  
• Cheapest states for ongoing LLC compliance costs
  
• What are the hidden costs of forming an LLC in a “cheap” state?
  
• Five of the least expensive states for startups
  
• How Stripe Atlas can help
  
• FAQs about the cheapest state to incorporate an LLC
  

How to choose the best state for incorporating your LLC

Unlike corporations, LLCs are formed rather than incorporated. Although the process of creating a corporation is similar, forming an LLC is slightly simpler and cheaper.

Here are the most important factors to consider when choosing a state for LLC formation:

• Business location: If your business operates primarily in one state, forming your LLC there is usually the easiest option. You can avoid the hassle and cost of registering as a “foreign LLC” in the state where you do business. In many cases, the benefits of forming in a cheaper state aren’t worth the administrative burden and fees for maintaining a foreign LLC.

• Privacy protections: Certain states have stronger privacy protections for LLC owners. If keeping your personal information out of public records is important to you, consider states such as Delaware and New Mexico that have strict confidentiality rules.

• Legal environment: Some states have well-established legal systems that cater specifically to business entities. For example, Delaware’s Court of Chancery is known for resolving corporate disputes with expertise and efficiency. This can make it an attractive option for businesses that anticipate complicated legal matters in the future.

• Pro-business reputation: Some states have a reputation for being more “business-friendly” than others, which can attract investors and partners. Delaware, for example, is a common choice for tech startups and large corporations because of its established corporate laws and pro-business climate.

• Future expansion: If you plan to scale your business beyond your home state, forming in a state such as Delaware, Nevada, or Wyoming might make sense. These states often have more flexible and lenient rules for LLCs that want to expand or operate in multiple locations.

• Taxes: States such as Wyoming and Nevada are known for offering businesses tax benefits. Consider income, sales, and payroll taxes, as well as other less obvious costs, in your decision.

• Fees: The fees to set up and maintain LLCs include filing fees, annual report fees, franchise taxes, and more. They vary by state. You’ll want to fully assess all initial and ongoing costs.

Which states have the lowest LLC formation fees?

Here are the states with the lowest fees for forming an LLC as of 2026.

Midrange states with strong tax or business benefits

Certain states balance reasonable initial formation costs with big operational advantages such as zero state income tax, robust asset protection, and business-friendly legal environments.

Famous LLC states (higher fees, specific benefits)

Entrepreneurs and established enterprises frequently choose to register in states such as Delaware and Nevada, even if they operate elsewhere. They’re willing to absorb higher up-front formation costs and recurring franchise taxes in exchange for world-renowned legal systems, specialized business courts, enhanced privacy protections, and investor familiarity during venture capital financing rounds.

What other costs are involved in forming an LLC?

While states with low filing fees can be a good option for businesses that want to save on formation fees, it’s worth considering other costs when you choose the best state for your LLC. Here are some other costs you should know when you choose a cost-effective state for an LLC.

Annual report fees

Many states charge a yearly fee to keep your LLC in good standing, often in the form of an annual report filing fee. It can range anywhere from $15–$50, depending on the state.

Franchise taxes

In addition to annual fees, some states require LLCs to pay franchise taxes. These are the costs for the privilege of doing business in the state. For example, California charges LLCs an annual tax of $800, while Wyoming and New Mexico have much lower ongoing costs.

Registered agent fees

Most states require your LLC to have a registered agent—someone who receives legal documents on behalf of the business. You can act as your own registered agent, but many businesses choose to hire a professional service, which typically costs anywhere from $100–$300 per year.

Foreign LLC registration

If you form your LLC in one state but do business in another, you’ll need to register as a foreign LLC in the state where you operate. This comes with additional filing fees and annual costs.

Cheapest states for ongoing LLC compliance costs

When you consider ongoing LLC compliance costs, certain states stand out for their lower annual report fees, franchise taxes, and other required expenses. While states such as Wyoming and New Mexico offer minimal ongoing compliance costs, it’s important to weigh these savings against other factors, including tax structures and the legal environment—especially if your business plans to scale or operate across multiple states.

Here are some of the states with the lowest ongoing fees for LLC compliance.

What are the hidden costs of forming an LLC in a “cheap” state?

A state with low up-front or ongoing costs might seem like the most appealing option for forming your LLC, but additional expenses can surprise you. Here are some of the most common hidden costs associated with registering in a “cheap” state:

• Foreign LLC registration: If you form your LLC in a state such as Wyoming or Delaware but primarily operate in another state, you need to register as a foreign LLC in the state where you do business. This means paying filing fees and ongoing annual fees in both states. For many small businesses, this can end up costing more than simply registering in your home state.

• Complex accounting: When you form an LLC in a state other than where you operate, your accounting can get more complicated. You’ll need to account for multistate tax filings and compliance, which might require more expensive accounting services. Working through multiple tax jurisdictions can also increase the risk of errors and the potential for fines or penalties.

• Registered agent fees: States often require LLCs to have a registered agent who resides in the state of formation. If you don’t live there, you’ll need to hire a registered agent service. That adds to your ongoing expenses.

• State taxes: Some states, such as California, charge hefty annual franchise taxes even if you’re not conducting much business there. If you form your LLC in a state other than your home state, you might also be required to pay income, sales, or use taxes in your home state. That can negate any tax benefits of incorporating elsewhere.

• Banking and financial barriers: Opening a business bank account or securing financing can be more difficult if you form in a state where you don’t physically operate. Banks and financial institutions might prefer to work with businesses registered in their own states or the states where they’re conducting business. This can potentially limit your options or result in higher fees.

• Unfavorable legal protections: States with fewer up-front formation costs might not offer the same level of legal protections for business owners as other states. For instance, Delaware is known for its strong legal framework and business-friendly courts. This can be important for protecting your personal assets and interests during a dispute. Forming an LLC in a state with weaker protections might save money initially, but it could cost more in the event of legal issues or liability exposure.

Five of the least expensive states for startups

If you look at the overall cost of launching and operating a new business beyond just the LLC filing fee, these five states stand out as among the cheapest:

• Utah: Utah was ranked the least expensive state to start a new business in 2025. It has low filing and annual renewal fees, strong privacy options, and simple digital filings.

• South Dakota: Low labor costs and a favorable tax environment make this state appealing.

• Colorado: This state is known for relatively low business formation costs and moderate operating expenses.

• Montana: Montana is particularly attractive for very small startups. Its LLC filing fee can be as low as $35, among the lowest in the country.

• Arizona: LLC formation costs $50 with no recurring annual filing fee, making an LLC in Arizona particularly inexpensive to maintain.

How Stripe Atlas can help

Stripe Atlas handles everything you need to legally launch your company—incorporation, employer Identification Number (EIN), equity setup, and tax filings—so you can fundraise, open a bank account, and start accepting payments in as little as two business days, from anywhere in the world.

Join 100,000+ startups incorporated using Atlas, including startups backed by top investors like Y Combinator, a16z, and General Catalyst.

Get started in minutes with Atlas

The application takes under 10 minutes. You'll choose your company structure, confirm your name is available, add up to four cofounders, set your equity split, and e-sign. Then, Atlas takes it from there, including notifying cofounders to sign their documents electronically.

Banking and payments before your EIN arrives

Atlas files your EIN application automatically after incorporation. You don't have to wait. Atlas enables pre-EIN payments and banking so you can start accepting payments and making transactions right away. US founders with a Social Security number are typically eligible for expedited IRS processing.

Automatic 83(b) tax election filing

Atlas files your 83(b) election for you—US and non-US founders alike—with USPS Certified Mail and tracking to reduce personal income taxes. You'll get a signed 83(b) election and proof of filing directly in the Stripe Dashboard, with certified mail confirmation.

World-class company legal documents

Atlas provides all the legal documents you need to start running your company—drafted by Cooley, one of the world’s leading venture capital law firms—and stores them directly in the Stripe Dashboard. These documents are designed to help you fundraise immediately and ensure your company is legally protected, covering aspects like ownership structure, equity distribution, and tax compliance.

$2,500 in Stripe credits, plus $50K+ in partner discounts

Atlas startups get $2,500 in Stripe product credits for their first year, plus $50,000+ in discounts on essential tools—Mercury, AWS, Carta, Xero, Perplexity, and more. Delaware registered agent service is also included free for your first year.

Learn more about how Atlas can help you set up your new business quickly and easily, or get started today.

FAQs about the cheapest state to incorporate an LLC