State by State Business Formation Requirements
What Every State Requires
Despite the state-by-state variations in cost and process, the fundamental requirements are consistent across all 50 states plus the District of Columbia. Every state requires you to file a formation document (Articles of Organization for LLCs, Articles of Incorporation for corporations) with the Secretary of State or equivalent agency. Every state requires a registered agent with a physical address in the state. Every state requires the business name to be distinguishable from existing registered entities. And nearly every state requires some form of periodic reporting (annual report, biennial report, or statement of information) to keep the entity in good standing.
The formation document in every state asks for the same core information: the entity's legal name, the registered agent's name and address, the principal office address, the entity type (LLC, corporation, etc.), and the name of the organizer (the person filing). Some states require additional information like a statement of purpose, the names of initial members or managers, or whether the LLC is member-managed or manager-managed. The form itself is usually one to three pages and can be completed in 15 to 30 minutes.
The Cheapest States to Form an LLC
If you are forming in your home state (which you should, for reasons explained in our LLC formation guide), the cost is what it is and you cannot change it. But if you are curious about where your state falls, the cheapest states for LLC formation based on initial filing fee are: Kentucky ($40), Arkansas ($45), Mississippi ($50), Colorado ($50 online), Iowa ($50), Arizona ($50), and Michigan ($50). These states also tend to have low or no annual report fees, making them inexpensive for ongoing maintenance as well.
The total first-year cost is more meaningful than the filing fee alone. A state with a $50 filing fee but a $300 annual report fee costs more in the first year than a state with a $150 filing fee and a $0 annual report. States with the lowest total first-year LLC cost (filing fee plus first annual report, if due in year one) include Kentucky ($55 total), Colorado ($60 total), Mississippi ($50 total, no annual report), Missouri ($50 total, no annual report in the first year), and Ohio ($99 filing, $0 annual report).
The Most Expensive States
California is the most expensive state for small LLCs because of the $800 minimum annual franchise tax, which is due regardless of whether your business earns any revenue. A California LLC that earns $0 in its first year still owes $800 to the Franchise Tax Board. This tax applies in addition to the $70 Articles of Organization filing fee. California does offer a first-year exemption for new LLCs (the $800 is not due until the second year), but the ongoing annual cost of $800 minimum makes California expensive for very small or part-time businesses. If your California LLC earns gross revenue above $250,000, the franchise tax increases on a sliding scale up to $11,790 for revenue above $5 million.
Massachusetts has the highest LLC formation fee at $500. New York has a unique publication requirement that adds significant cost: within 120 days of formation, New York LLCs must publish a formation notice in two newspapers (one daily, one weekly) in the county where the LLC's office is located for six consecutive weeks. The publication cost varies dramatically by county, from approximately $200 in less expensive upstate counties to $1,500 or more in New York City and surrounding counties. After publication, you must file a Certificate of Publication with the Department of State for an additional $50 fee. Failure to complete the publication requirement within 120 days means your LLC's authority to do business in New York is suspended until you comply.
Illinois charges a relatively high $150 formation fee plus a $75 annual report fee. Tennessee charges $300 per member for LLC formation (minimum $300, maximum $3,000). Nevada has a $75 filing fee plus a mandatory $150 initial list of members filing and a $200 annual business license fee, bringing the first-year total to $425. These costs are still modest in the context of running a business, but worth knowing so the total does not surprise you.
Processing Times
Standard processing times for LLC formation range from same-day (online filings in Colorado, Wyoming, and a few others) to four to six weeks (New York, California for paper filings). Most states process online filings within 3 to 10 business days. Mail filings take longer because of postal transit time plus the processing queue.
Nearly every state offers expedited processing for an additional fee. Expedited fees range from $25 (for next-business-day processing in many states) to $500 (for same-day processing in states like New York). Common expedited tiers include same-day ($50 to $500), 24-hour ($25 to $100), and 3-day ($25 to $50). If you need your LLC formed quickly for a contract deadline, bank account opening, or business license application, the expedited fee is usually money well spent.
Online filing is faster than mail filing in every state. Most states now have fully functional online filing portals where you can submit your Articles of Organization, pay the fee with a credit card, and receive your filed documents electronically within a few days. Some states (Wyoming, Colorado, Florida) provide instant online approval with your filed documents available for download immediately after payment. If your state offers online filing, there is no reason to file by mail unless you have a specific situation that requires it.
Annual Report Requirements
Most states require LLCs to file an annual report (sometimes called a biennial report, statement of information, or periodic report) that confirms the LLC's current information: legal name, principal address, registered agent, and names of members or managers. The report is typically due on the anniversary of the LLC's formation date or on a fixed calendar date that varies by state. Annual report fees range from $0 (Missouri, Ohio for LLCs) to $300+ (Massachusetts, California when combined with the franchise tax).
States with no annual report for LLCs include Missouri and Ohio. States with biennial (every two years) reporting include Arizona, Illinois (though they charge annually), and several others. The most common annual report fee range is $25 to $100. Some states base the fee on the LLC's revenue or assets, with higher-revenue businesses paying more. California's $800 franchise tax technically applies in addition to any annual report fee, though the franchise tax serves a similar purpose of maintaining the entity's good standing.
Missing your annual report deadline triggers penalties in most states. The penalty might be a late fee ($25 to $200), an additional fine, or administrative dissolution of the LLC after a grace period (typically 60 to 180 days). Administrative dissolution does not eliminate the LLC's debts or obligations. It means the LLC loses its authority to do business in the state, cannot enforce contracts or file lawsuits, and may face additional fees to reinstate. Set a calendar reminder at least 30 days before your annual report due date to avoid this entirely preventable problem.
Delaware and Wyoming: The Myth for Small Business
Delaware and Wyoming are frequently recommended by formation services and online articles as the "best" states for LLC formation. This advice is misleading for small business owners. Delaware and Wyoming have favorable laws for large corporations and complex business structures: Delaware has a specialized business court (the Court of Chancery) with judges who are experts in corporate law, and Wyoming was the first state to adopt the LLC structure and has very privacy-friendly laws.
For a small business owner who lives and operates in another state, forming in Delaware or Wyoming creates additional cost and complexity with no practical benefit. You must maintain a registered agent in the formation state (ongoing annual cost), register as a foreign LLC in your home state (additional filing fee), maintain a registered agent in your home state (additional annual cost), file annual reports in both states, and comply with the laws of both states. The total cost is roughly double what you would pay by forming in your home state, and the "favorable" Delaware or Wyoming laws provide no meaningful advantage for a standard small ecommerce business. Form in your home state unless a qualified business attorney advises otherwise for a specific, documented reason.
Foreign LLC Registration
If your LLC does business in states other than where it was formed, you may need to register as a foreign LLC in those states. "Doing business" generally means having a physical presence (office, warehouse, employees) in the state, not merely selling to customers in the state. An ecommerce business based in Texas that ships products to customers in all 50 states does not need to register as a foreign LLC in every state. However, if that same business opens a warehouse in Ohio, it needs to register as a foreign LLC in Ohio.
Foreign LLC registration requires filing an Application for Authority (or similar document) and paying a filing fee (typically $100 to $250) in the foreign state. You will also need a registered agent in that state and must comply with that state's annual report requirements. The economic nexus rules for sales tax are separate from foreign LLC registration requirements. You can owe sales tax in a state where you are not registered as a foreign LLC, and you can be registered as a foreign LLC in a state where you do not owe sales tax.