Right now, somewhere in America, a small business owner is losing sleep over a lawsuit they never saw coming. A customer slipped on a wet floor. A client claims the work was never delivered. A supplier didn’t get paid on time and is threatening to sue for everything, the business and the owner’s personal savings, car, even their home. If that business was a sole proprietorship, everything the owner has ever earned is on the table. If it was an LLC, the lawsuit stops at the business’s front door. That single difference is why forming a limited liability company has become one of the most searched small business questions in the country, and why you are here right now trying to figure out exactly how to start an LLC.
The good news is that starting an LLC in 2026 is faster, cheaper, and more accessible than it has ever been. You do not need a lawyer, you do not need thousands of dollars, and in most states you can file entirely online in under an hour. But you do need to get the details right, because a rushed filing can cost you your liability protection, your tax status, or hundreds of dollars in penalties. This guide walks you through every step, state by state, with real numbers pulled from government sources so you know exactly what to expect before you spend a dime.
What Is an LLC, and Why Does Everyone Recommend One?
A limited liability company, or LLC, is a business structure that blends the liability protection of a corporation with the tax simplicity and flexibility of a partnership or sole proprietorship. According to the U.S. Small Business Administration, an LLC lets you take advantage of the benefits of both business structures: your personal assets, such as your car, house, and savings account, generally stay protected if your business faces a lawsuit or bankruptcy, while profits and losses pass through to your personal tax return so you avoid the double taxation that corporations face.
You are clearly not alone in choosing this path. The U.S. Census Bureau’s Business Formation Statistics show that Americans filed 473,679 new business applications in August 2025 alone, seasonally adjusted, and the Bureau projected roughly 28,725 of those would grow into businesses with employees within a year. The vast majority of new small businesses in the United States now choose the LLC structure over sole proprietorships and corporations, because it offers the strongest combination of protection, simplicity, and low ongoing cost.
LLC vs Sole Proprietorship: Which One Actually Fits You?
Before you file anything, it helps to understand what you are walking away from. A sole proprietorship is the default structure you already have the moment you start selling a product or service under your own name, and it requires no paperwork to create. That simplicity is exactly the problem. The SBA explains that with a sole proprietorship, you and the business are legally the same entity, which means you are personally responsible for all of the business’s debts, losses, and liabilities. With an LLC, business and personal liabilities are kept separate, similar to a corporation, but without the heavy recordkeeping and double taxation corporations carry.
- Choose a sole proprietorship if you are testing a low-risk side hustle, have no employees, and want zero paperwork or cost.
- Choose an LLC if: you interact with customers or clients, sign contracts, carry any risk of being sued, or want to build business credit and open a dedicated business bank account.
- Choose an LLC if you own valuable personal assets, like a home or savings, that you want shielded from business risk.
There is a real cost to that protection, but as you will see in the next section, it is often far lower than most people assume.
How Much Does It Cost to Start an LLC in 2026?
This is the single most searched question on this topic, and the honest answer is: it depends entirely on your state. According to a 2026 nationwide cost analysis, state filing fees range from as little as $35 in Montana to as much as $500, or $520 with expedited processing, in Massachusetts. The average cost to form an LLC across the United States in 2026 sits at roughly $132, though that figure does not include the recurring annual or biennial fees many states charge to keep your LLC in good standing.
Your total first-year cost typically includes three layers of expense, and understanding each one now will save you from an unpleasant surprise later.
- The one-time filing fee: paid to your Secretary of State when you submit your Articles of Organization. This ranges from $35 to $500 depending on the state.
- The recurring annual or biennial fee: sometimes called an annual report, franchise tax, or renewal fee. Most states charge between $0 and $300 a year, though California’s flat $800 minimum franchise tax and Nevada’s combined $350 in yearly fees sit at the high end.
- Optional extras: a registered agent service typically runs $100 to $300 a year if you hire one, name reservation fees run $10 to $50, and states like New York and Arizona require newspaper publication that can add $300 to $1,500.
If you want to do everything yourself without hiring a formation company or an attorney, your minimum possible cost is the state filing fee alone, which can be as low as $35. Hiring an attorney to handle the entire process typically runs $1,000 to $1,500, which most single-member LLC owners simply do not need.
LLC Filing Fees by State (Selected States, 2026)
Every state sets its own price, and the table below shows verified 2026 figures for a representative cross-section, from the cheapest states to the most expensive. Always confirm the current fee on your state’s Secretary of State website before you file, since these numbers can change.
| State | Filing Fee | Annual/Biennial Fee | Notes |
| Montana | $35 | $20/yr | Cheapest filing fee in the U.S. |
| Kentucky | $40 | $15/yr | Low-cost formation |
| Arkansas | $45 (online) / $50 (paper) | $150/yr franchise tax | Franchise tax adds up |
| Arizona | $50 | $0 (publication required) | No annual report; must publish notice |
| Colorado | $50 | $25/yr (periodic report) | Fully online filing |
| Hawaii | $50 | $15/yr | Low ongoing cost |
| Iowa | $50 | $45 biennial | Report due every 2 years |
| Michigan | $50 | $25/yr | Straightforward online filing |
| Minnesota | $155 (online) / $135 (mail) | $0 | No annual report fee |
| Mississippi | $50 | $0 | No annual report fee |
| Missouri | $50 | $0 | No annual report requirement |
| New Mexico | $50 | $0 | No annual report fee |
| Wyoming | $100 | $60/yr minimum license tax | Popular for non-resident owners |
| Florida | $125 | $138.75/yr | Mid-range formation cost |
| Texas | $300 | $0 (Franchise Tax Report required) | Most LLCs owe $0 in franchise tax under the no-tax-due threshold |
| Delaware | $110 (Certificate of Formation) | $300/yr franchise tax | Popular for holding companies, not required for small local businesses |
| New York | $200 | Biennial statement $9 | Requires 6-week newspaper publication, roughly $300 to $1,500+ |
| California | $70 | $800/yr minimum franchise tax | Franchise tax applies even with zero income |
| Nevada | $75 | $350/yr (list of managers + business license) | No state income tax, but high recurring fees |
| Massachusetts | $500 ($520 expedited) | $500/yr | Most expensive filing fee nationwide |
| Tennessee | $300 | $300/yr flat annual report | Simplified to a flat fee in 2025 |
Source: compiled from 2026 state fee comparisons, cross-checked against individual Secretary of State filing portals.
What Is the Best State to Start an LLC?
Formation companies love to advertise Delaware, Nevada, or Wyoming as the best state to start an LLC because of their business-friendly reputations, but for the vast majority of small business owners, that advice is misleading. If you live in Ohio and open a bakery, forming your LLC in Wyoming does not exempt you from Ohio taxes or regulations. You would still have to register as a foreign LLC in Ohio, which means paying filing fees and maintaining a registered agent in two states instead of one.
The realistic answer is that the best state to form your LLC is almost always the state where you actually live and do business. The exceptions are narrow: Delaware makes sense if you plan to raise venture capital and need its well-established business court system, and Nevada or Wyoming can appeal to online businesses with no fixed physical location and no strong tie to any single state. For everyone else, forming locally keeps your costs, your paperwork, and your legal exposure in one place.
How to Start an LLC: Your Step-by-Step Process
Step 1: Choose and Check Your Business Name
Your LLC name has to be distinguishable from every other business already registered in your state, and it generally needs to include a designator like LLC, L.L.C., or Limited Liability Company. Before you fall in love with a name, search your Secretary of State’s business name database to confirm it is available, and check the U.S. Patent and Trademark Office’s database to make sure you are not stepping on an existing trademark. Many states let you reserve a name for a small fee, usually $10 to $50, while you finish your paperwork.
Step 2: Appoint a Registered Agent
Every state requires your LLC to designate a registered agent, meaning a person or company with a physical street address in your state who is available during business hours to accept legal documents and official state mail on your behalf. You can act as your own registered agent if you have a physical address in the state and are consistently available, or you can hire a registered agent service, which typically costs $100 to $300 a year and keeps your home address off public record.
Step 3: File Your Articles of Organization
This is the document that legally creates your LLC, and in some states it is called a Certificate of Formation or Certificate of Organization instead. You file it with your state’s business filing agency, usually the Secretary of State, either online, by mail, or in person. Most states process online filings within a few business days, and many offer expedited service for an extra fee if you need your LLC formed faster. The document typically asks for your business name, registered agent information, business address, and the names of the LLC’s members or managers.
Step 4: Write an LLC Operating Agreement
An operating agreement is an internal document that spells out how your LLC will be owned and run: how profits and losses are split, how decisions get made, what happens if a member wants to leave, and how the business would be dissolved. Only a handful of states legally require one, but skipping it is a mistake even for a single-member LLC, because without it your state’s default rules apply automatically and courts are more likely to question whether your LLC is truly separate from you personally, a risk formation attorneys call piercing the corporate veil. If you have business partners, this document is not optional in any practical sense; it is the single most important thing standing between you and a future dispute.
Step 5: Get an EIN for Your LLC
An Employer Identification Number, or EIN, is a nine-digit number the IRS assigns to your business, functioning much like a Social Security number for your LLC. You need one to open a business bank account, hire employees, and file federal taxes, and most banks will not let you open an account without it. Do you need an EIN for an LLC with just one owner and no employees? Technically a single-member LLC can sometimes use the owner’s Social Security number instead, but getting an EIN is still strongly recommended because it keeps your personal and business finances separate and protects your Social Security number from unnecessary exposure. Applying is free and takes about ten minutes through the IRS website, and you should never pay a third party for something the IRS provides at no cost.
Step 6: Open a Business Bank Account
Once you have your Articles of Organization and your EIN in hand, open a dedicated business bank account immediately. Mixing personal and business funds, a habit sometimes called commingling, is one of the fastest ways to lose your liability protection if you are ever sued, because it lets a court argue that your LLC is not really a separate entity from you. Most banks ask for your Articles of Organization, your EIN confirmation letter, and your operating agreement to open the account.
Step 7: Get the Right Business Licenses and Permits
Forming an LLC does not automatically give you permission to operate. Depending on your industry and location, you may still need a general business license from your city or county, a professional or trade license, a seller’s permit if you sell taxable goods, or health and zoning permits. The SBA’s business license and permit lookup tool is the fastest way to confirm exactly what your specific business needs at the federal, state, and local level.
Step 8: Stay Compliant With Annual Reports and Franchise Taxes
Your work is not finished once your LLC is formed. Most states require an annual or biennial report to keep your business in good standing, and missing that deadline is the single most common reason small LLCs get administratively dissolved. Some states also charge a separate franchise tax, an ongoing fee owed regardless of whether your business made a profit. Set a calendar reminder the moment your LLC is approved so this never catches you off guard.
Single-Member LLC vs Multi-Member LLC
A single-member LLC has one owner and is taxed by default as a sole proprietorship, meaning profits and losses flow directly onto your personal Schedule C. A multi-member LLC has two or more owners and is taxed by default as a partnership, with each member reporting their share of profits and losses on a Schedule K-1. Both structures offer the same liability protection; the difference is purely in ownership and tax filing complexity. If you bring on a business partner later, you will need to update your operating agreement and inform the IRS of the change in your tax classification.
Frequently Asked Questions
How much does it cost to start an LLC?
State filing fees range from $35 in Montana to $500 in Massachusetts, with a national average around $132 for the initial filing. Factor in annual report fees, which range from $0 to $800 a year depending on the state, and optional costs like a registered agent service.
How long does it take to start an LLC?
Processing time varies widely by state, ranging from same-day approval in states with fast online systems to two or three weeks in states that still rely heavily on mail processing. Most states offer expedited processing for an additional fee if you need your LLC formed faster.
Do you need an EIN for an LLC?
You need an EIN if your LLC has more than one member, has employees, or wants to open a business bank account, which nearly every LLC does. Single-member LLCs with no employees can technically use the owner’s Social Security number, but an EIN is still the safer, more professional choice, and it is always free through the IRS.
What is the best state to start an LLC?
For most people, the best state is the one where they actually live and conduct business, since forming elsewhere usually means registering as a foreign LLC at home anyway and paying fees in two states. Delaware, Nevada, and Wyoming are worth considering only for specific situations like raising venture capital or running a location-independent online business.
Can I be my own registered agent?
Yes, as long as you have a physical street address, not a P.O. Box, in the state where your LLC is formed and can be available during normal business hours to receive legal documents. Many owners still choose a registered agent service to keep their home address off public record.
Do I need a lawyer to form an LLC?
No. Most states let you file your Articles of Organization directly through the Secretary of State’s website, and the process typically takes fifteen to thirty minutes. A lawyer becomes worth the cost mainly for complex multi-member arrangements or unusual industries with heavy regulation.
What is an LLC operating agreement, and is it required?
An operating agreement is an internal document outlining ownership percentages, profit distribution, and management rules for your LLC. Only a few states legally require one, but skipping it, even as a single-member LLC, weakens the legal separation between you and your business.
Sources and References
This guide draws on primary data from federal agencies and established financial and legal publishers. Figures are current as of 2026 and should be verified against your state’s official filing portal before you rely on them for a filing decision.
U.S. Small Business Administration, Choose a Business Structure — https://www.sba.gov/business-guide/launch-your-business/choose-business-structure
U.S. Small Business Administration, Choosing the Right Business Structure: Three Factors to Consider — https://www.sba.gov/blog/choosing-right-business-structure-three-factors-consider
U.S. Census Bureau, Business Formation Statistics, September 2025 Release — https://www.census.gov/econ/bfs/current/index.html
U.S. Census Bureau, Business Formation Statistics Program Overview — https://www.census.gov/econ/bfs/index.html
Internal Revenue Service, Limited Liability Company (LLC) — https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc
Chamber of Commerce, LLC Costs by State: Filing Fees Comparison (2026) — https://www.chamberofcommerce.org/llc-costs-by-state/
LLC University, LLC Filing Fees by State (2026) — https://www.llcuniversity.com/llc-filing-fees-by-state/
World Population Review, LLC Cost by State 2026 — https://worldpopulationreview.com/state-rankings/llc-cost-by-state
