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15 Cheapest State to Form an LLC In The USA

Max Smith

Reading Time: 5 minutes

Are you about to start an LLC but have a tight budget? Then, look no further than the cheapest state to form an LLC. 

Not all of the states are expensive. Some states will offer you less expenditure to file and form your LLC. 

You can also get the chance to pay lower taxes or no taxes. Thus, you can save money and invest it in your LLC for business operations. 

So, let’s go deep down for a better understanding.

State Name

Corporation Filling Fees

LLC Filing Fees

Allows anonymous LLCs

Mississippi

$50

$50

No

Ohio

$99

$99

No

Colorado

$50

$50

Yes

Missouri

$79

$50

Yes

Hawaii

$50

$50

Yes

Pennsylvania

$257

$125

No

South Carolina

$135

$110

No

Idaho

$100

$100

Yes

Oklahoma

$50

$100

Yes

New Mexico

$125

$50

Yes

Delaware

$110

$300

Yes

Wyoming

$100

$60

Yes

Nevada

$75

$350

Yes

Alaska

$250

$50

No

South Dakota

$150

$50

No

You have the right to open an LLC in any state in the U.S. However, it is recommended that you open an LLC in your home state. It’s the cheapest, easiest, and most valuable option for a new LLC owner. 

If you file an LLC in your home state, it will be your domestic LLC. It gives you advantages like fewer expenses to bear and also tax benefits. 

Filling out an LLC in your home state will save you money compared to filing in a foreign state. Again, it may cost you double franchise taxes and fees. 

Moreover, if you want to avoid your home state, choose the state with the lowest cost of forming an LLC. 

Do you know which state is the most affordable for forming an LLC? Its Kentucky! Registration fee is only $40. 

Arkansas, Arizona, Mississippi, and other states have comparatively lower state fees. Most of them will cost you between $40 and $100.

Furthermore, tax payments can also increase your expenses. Do you know what to do to enjoy less taxation? We discuss it in detail in the next section. 

The Lowest LLC Taxes State

Do you take taxation as an unavoidable expense while running an LLC? Yes, it is expensive, but some states offer you cheaper taxation. 

For example, Wyoming is one of the best states to form an LLC as it helps to avoid state income tax, with no franchise tax and a low LLC filing fee of $100. Besides, there is also no corporate or individual income tax in South Dakota. 

Plus, other states offer lower LLC taxes. You will pay no personal income taxes in Nevada. Also, in Montana, the filing fees and annual fees are lower. Moreover, there is no sales tax to pay for an LLC owner. Utah can be one if you are looking for a business-friendly state. Another low-burden state for LLC taxes is Alaska. 

Wyoming can be a great place to start if you want to shift your LLC or create one. It has no income tax and will cost you sales tax. But the sales tax rate is only 4%. Plus, the filing fee is $100.

Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming offer no state income tax facilities. However, high-income individuals in Washington are subject to a state capital gains tax.

Moreover, several easy ways exist to form an LLC with less spending. Do you want to know what the ways are? Then make sure to read the next section below. 

The Cheapest Way to File LLC

The cheapest state to incorporate an LLC usually involves cutting a few costs. Like minimizing filing fees, agent services, and other optional charges. Here is an outline of some techniques to cut costs.

1. DIY Approach to Filing

Several states offer cheap LLC filing options for submitting the necessary documents. You can use their Division of Corporations or Secretary of State websites.

Thereafter, follow the state’s instructions and complete the filing process quickly and easily. You can do it without paying additional fees. 

Lastly, file the LLC paperwork yourself instead of employing a professional one. It will save you money. 

2. State Jurisdiction Consideration

The LLC formation fees and the annual operating charge vary among states. You can find the most economical solution by investigating and comparing jurisdictions.

In fact, states like Delaware, Wyoming, and Nevada are favorable to entrepreneurs. Not only do they have relatively affordable fees, but they also have LLC-supportive business laws.

3. Registered Agent Services

A registered agent is necessary for every LLC. They accept legal documents on the company’s behalf. It means hiring a registered agent service is a convenient option. However, this raises the total cost of incorporating an LLC.

So hire a less-expensive registered agent service that features a reduced price. Also, you can act as your registered agent.

4. Optional Expense Awareness

Apart from being mindful of LLC filing fees and registered agent service costs, entrepreneurs should be aware of optional expenses, too. These additional costs may affect overall LLC formation costs, as well.

Some filing companies provide add-on services for an extra cost, such as a good standing certificate, compliance monitoring, or speedy processing. You can avoid these unnecessary expenses and keep the price down.

5. Utilizing Free Resources

Government organizations often provide free resources and templates to form LLCs. Sometimes, many states offer guidelines for drafting Articles of Organization and Operating Agreements.

On the other hand, the IRS provides a free online application to apply for an EIN for tax purposes. You can utilize these free resources without paying for expensive legal counsel.

6. Comparing Different Service Providers

When selecting a filing company or registered agent service, you should compare prices and look into several providers. It will be an economic action.

Different companies provide multiple pricing structures and service packages. Evaluate each option carefully. To guarantee that you get the best pricing for your money, prioritize upfront pricing, reasonable rates, and dependable services.

7. Prioritization of Compliance and Legal Requirements

Although cost-cutting measures are essential, compliance and legal requirements should be prioritized. It is to prevent potential future problems.

It is imperative to follow all procedures and complete all paperwork accurately. It ensures that the LLC is properly formed and legally compliant.

Conclusion​

If you are focusing on saving money, look for the cheapest state to form an LLC. It is also wise to choose your home state; it will save you money and time and avoid complications. If you have decided to start your LLC in your home state, you can also choose Kentucky, the lowest state. 

Some states offer lower costs for importing, maintaining, and paying taxes for your limited liability company. 

Lastly, do you know the cheapest way to start an LLC in Texas?

Key Points

Now it’s time to sum up. Check out the essential factors to note below.

  • The home state can be an ideal option for saving your budget compared with a foreign state.
  • Kentucky is the cheapest state for your LLC. It will cost you only $40 to file your LLC. 
  • Several states do not ask for extra taxes or fees. However, Wyoming is the most suitable for LLCs, as it does not ask for any income tax but only a sales tax of only 4%.
  • There are ways to save money on your LLC. For example, you can apply yourself, get a legal assistant, cut unnecessary costs, and much more.

Frequently Asked Questions

What are the LLC annual fees by state?

There are fixed fees or expenses that an LLC must pay. It can be annual or biennial. It does not matter whether your LLc is enjoying a job or doing business; you must pay annual fees if you have registered an LLc.

Which state is best for a non-resident?

Delaware and Wyoming are two states that are the best for a non-resident to start a new LLC. The rules of these two states help entrepreneurs, online business owners, or e-commerce owners form and control businesses easily. Delaware has better legal protection facilities than other states in the USA.

Max Smith - LLC Formation

He is a seasoned entrepreneur and legal expert at LLC Formation Hub. With a stellar track record in both business and law, Max simplifies the complexities of LLCs. His practical insights, featured on LLC Formation Hub, empower entrepreneurs across the USA. Max merges business finesse with legal acuity to guide businesses toward success.


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