It’s really easy to form a company these days. There are lots of services available that will handle all the paperwork, like opening bank accounts, getting a mailing address and filing articles of incorporation. But the most straightforward way to form a business is by creating a limited liability corporation (LLC), and the cost to do so varies around the country.
- Some states require considerably more money than the rest to start a company. It costs $500 to form an LLC in Massachusetts.
- The cheapest state in the U.S. to found a company is Kentucky, where it only takes $40.
- Most states fall between these two extremes. It costs $100 to form an LLC in 12 states.
- The average cost to file an LLC across all 50 states and Washington, DC is only $122.
We prepared the data behind our visualization by researching the fee it costs to form an LLC around the country. We looked up the requisite numbers according to each state’s filing requirements. To keep things simple, we looked at only the regular, articles of organization fee to form an LLC. We did not take into consideration additional fees for expediting the filing process.
The 10 Most Expensive Places to Form an LLC
1. Massachusetts: $500
2. Tennessee: $300
3. Texas: $300
4. Alaska: $250
5. Washington, DC: $220
6. New York: $200
7. Washington: $200
8. Maine: $175
9. Kansas: $160
10. Illinois: $150
Massachusetts stands out as by far the most expensive in the country. At $500, forming an LLC is not a small decision. In fact, Boston ranks as one of the most expensive cities for startups, costing on average $389K to get off the ground. Contrast Massachusetts with the other end of spectrum, Kentucky, where it only takes $40 to form an LLC.
It’s curious how Delaware is not the absolute cheapest in the country. The state is famous as a friendly place for companies to incorporate. More than half of all the publicly traded companies in the U.S. are incorporated there. And yet it costs $89, more than half the price of Kentucky ($40). Delaware is so popular because of lots of other reasons, especially its court system and ability for companies to minimize taxes. To be fair, forming an LLC in Delaware is slightly cheaper than what it costs in most places. The most common price tag? $100 in 12 states.
There are lots of reasons why you should consider forming an LLC. If you’re doing any sort of work as a freelancer, or entering into contracts as a sole proprietor, you could be opening yourself up to unnecessary legal and financial risks. Creating an LLC is a great way to protect yourself, plus it conveys professionalism to your customers. If you’re thinking about starting a small business, you might be in the market for a loan. Our small business loan andequipment financing guides can help you get started.
Data: Table 1.1