Deep Dive9 min readJuly 10, 2026

By Alexander Stylianoudis

Cheapest State to Form an LLC: The Sticker Price Trap

Montana has the cheapest LLC filing fee in the country at $35, with Kentucky close behind at $40. New Mexico is the cheapest state to keep an LLC running, at $0 per year with no annual report at all. And for most business owners, neither of those facts matters, because the cheapest state to form an LLC is almost always the state you already live in. Form anywhere else while operating from home and you generally have to register the company at home anyway, which means paying two states to get what one would have sold you cheaper.

That last sentence is the part the "cheapest state" listicles tend to bury, so this post leads with it. The tables below have the real numbers for both halves: what each state charges, and what the second registration costs when the cheap state isn't where you live. If you'd rather have your own situation scored than read fee tables, the free quiz does it in about five minutes.

This article is for general information only and does not constitute legal, tax, or financial advice. Laws and regulations change frequently. Consult a qualified professional before making decisions based on this content.

"Cheapest" is three different questions

Ask "what's the cheapest state to form an LLC" and you're really asking one of three things, and they have three different answers:

Cheapest to file. The one-time fee to create the LLC. Winner: Montana, $35.
Cheapest to keep. What the state charges every year after that. Winners: New Mexico, Arizona, Missouri, and Ohio, all at $0.
Cheapest to own. Everything, including the registered agent and what your home state charges you for the privilege of using someone else's. Winner, for most people: wherever you live.

Formation services compete on question 1 because it makes a great headline. Your bank account experiences question 3. The rest of this post takes them in order.

Question 1: cheapest states to file

The one-time filing fee for Articles of Organization, cheapest first:

State	Filing fee	Worth knowing
Montana	$35	Cut from $70 in 2023; annual report $20
Kentucky	$40	Annual report just $15
Arizona	$50	Publication requirement adds ~$60 to $120 outside Maricopa and Pima counties
Mississippi	$50	Annual report free for domestic LLCs
Missouri	$50	Online rate; paper filing costs more
New Mexico	$50	No annual report, ever
Colorado	$50	Periodic report ~$25/yr
Iowa	$50	Biennial report $30 (~$15/yr)
Michigan	$50	Annual statement $25
Wyoming	$100	Annual report from $60
Delaware	$110	Raised from $90 in 2024; $300/yr after that
Florida	$125	Annual report $138.75
Massachusetts	$500	Plus $500 every year. The other end of the spectrum

Two things jump out. First, the spread on filing fees is small money: the gap between Montana and Wyoming is $65, once, ever. Second, the states that dominate "cheapest state" marketing (Delaware, Wyoming, Nevada) aren't actually at the top of this table. They rank on search volume, not price.

Question 2: cheapest states to keep

Filing fees are paid once. Annual costs compound for the life of the company, so they matter more:

State	Annual state cost	Registered agent (if out of state)
New Mexico	$0	~$125/yr
Arizona	$0	~$125/yr
Missouri	$0	~$125/yr
Ohio	$0	~$125/yr
Mississippi	$0	~$125/yr
Kentucky	$15	~$125/yr
Montana	$20	~$125/yr
Wyoming	$60	~$125/yr
Florida	$138.75	~$125/yr
Delaware	$300	~$125/yr
California	$800 minimum	Not the point; see below

Notice the registered agent column. Every state requires one, and if you don't live in the state, you have to hire one, typically around $125 per year (verify current rates with a local advisor). Form at home and you can usually be your own agent for free. That single line item quietly erases most of the fee differences in the first table: a "free" New Mexico LLC owned from Georgia costs about $125 a year, while a Georgia LLC owned from Georgia costs $50 a year in annual registration and no agent.

California gets a special mention because it breaks the table's logic in the other direction: LLCs doing business in California owe a minimum $800 annual franchise tax no matter where they were formed. A Wyoming LLC run from a laptop in San Diego still owes California the $800. There is no formation-state cure for living in California.

Question 3: cheapest state to own (the part the listicles skip)

Here is the mechanism that undoes most cheap-state math. If your LLC is formed in one state but you run the business from another, your home state generally considers the company to be "transacting business" there and requires it to register as a foreign LLC. Foreign means out-of-state, not international, and registering usually costs as much as, or more than, forming locally would have:

Your home state	Foreign LLC registration	Ongoing
Texas	$750	Franchise tax filings (most small LLCs owe $0 tax, but must file)
New York	$250	Plus the newspaper publication requirement, often $600 to $1,200+
California	$70	$800/yr minimum franchise tax, plus statement of information
Illinois	$150	Annual report $75
Colorado	$100	Periodic report ~$25/yr

(Verify current rates with a local advisor; these move around.)

Now run one honest example, a Colorado freelancer who read that Wyoming is the cheapest state:

	Wyoming LLC, run from Colorado	Colorado LLC
Formation	$100	$50
Foreign registration at home	$100	$0
Annual: Wyoming report	$60	$0
Annual: Colorado report	$25	$25
Annual: registered agent	$125	$0 (be your own)
Year-one total	$410	$75
Each year after	$210	$25

The "cheap" state costs more than five times as much, every year, and delivers a second set of paperwork with two deadlines to miss instead of one. And the tax bill doesn't move an inch: Colorado taxes the income because that's where the work happens. Income tax follows operations, not the certificate. If that logic is new to you, where should you incorporate your business walks through it from the top, and the tax calculator will show you the full federal-plus-state picture for your own numbers.

So the honest answer to "what's the cheapest state to form an LLC" is: the one where you already pay taxes, for anyone with a fixed US base. The exceptions are real, and they're covered below, but they're exceptions.

The cheapest way to incorporate in Delaware

Delaware deserves its own section, because "cheapest way to incorporate in Delaware" is its own well-worn search, and the answer has two levels.

The literal answer: skip the middlemen and file directly with the Delaware Division of Corporations. For an LLC, the Certificate of Formation costs $110, and the only other mandatory purchase is a registered agent, which budget providers offer for roughly $50 to $125 per year. For a corporation, the filing fee starts at $89. Skip expedited processing (the standard queue is fine), skip the bundled EIN (the IRS issues them free), and skip the upsells for operating agreement templates.

The recurring bill is where Delaware stops being cheap. An LLC owes a flat $300 franchise tax every year. A corporation owes a minimum of about $225 per year ($175 minimum franchise tax plus a $50 annual report fee), and here's the famous trap: if you authorized the standard startup 10 million shares, Delaware's default bill uses the authorized shares method and can arrive showing roughly $85,000. That number is almost never what you actually owe. Recalculate under the assumed par value capital method and a typical early-stage company pays a few hundred dollars. Cheapest way to handle Delaware, step one: know that recalculation exists before the bill gives you a heart attack.

The truthful answer: for most bootstrapped businesses, the cheapest way to incorporate in Delaware is to not incorporate in Delaware. The $300-a-year LLC tax buys you access to a court system and case law built for companies with shareholders, boards, and disputes, which a single-member consulting LLC will never use. Unless you're on a venture funding path, you probably don't need Delaware, and if you're weighing it against the cheaper alternatives directly, the head-to-head pages have the numbers: Delaware vs Wyoming and Florida vs Delaware.

Who genuinely benefits from a cheap formation state

Everything above assumed a fixed US base. Remove that assumption and the cheap states earn their reputation:

Digital nomads with no fixed US state. No home state means no foreign qualification, no second registration, no double fees. The formation state's costs are the whole bill, so Wyoming ($60/yr) and New Mexico ($0/yr) are genuinely as cheap as they look. The trade-off between them is that Wyoming's name carries more weight with banks and payment platforms, while New Mexico is cheaper and quieter: Wyoming vs New Mexico breaks it down.
Non-US founders forming a US LLC. Same logic: no US home state, so the formation state's fee schedule is the real one. Wyoming and Florida are the common picks; Florida vs Wyoming covers that matchup, and note that foreign-owned single-member LLCs have a mandatory federal filing (Form 5472) with a five-figure penalty for missing it, which dwarfs any state fee difference.
Owners of truly passive entities. A holding LLC that owns assets and does no business in any state can sit wherever it was formed. Most operating businesses don't fit this description, even when their owners wish they did.

If you're not sure which side of that line you're on, that's precisely the kind of thing the quiz sorts out.

FAQ

What is the cheapest state to form an LLC?

Montana has the lowest filing fee at $35, followed by Kentucky at $40. For total cost of ownership, though, the cheapest state for most business owners is their home state, because an LLC formed elsewhere generally must also register in the home state, adding a second set of fees plus a registered agent bill of roughly $125 per year.

Which states have no annual LLC fees?

New Mexico, Arizona, Missouri, Ohio, and Mississippi charge no annual fee for a domestic LLC (Mississippi requires an annual report but files it free online). New Mexico is the most notable, combining a $50 filing fee with no annual report requirement at all.

What is the cheapest way to incorporate in Delaware?

Filing directly with the Delaware Division of Corporations: $110 for an LLC's Certificate of Formation or from $89 for a corporation, plus a budget registered agent at roughly $50 to $125 per year. The recurring costs are the real expense: $300 per year for an LLC, and a minimum of about $225 for a corporation, where companies with many authorized shares should recalculate under the assumed par value method to avoid a wildly inflated default bill.

Does forming an LLC in a cheap state reduce taxes?

Generally no. State income tax follows where the business operates and where the owner lives, not where the LLC was formed. A Wyoming LLC run from Oregon pays Oregon income tax, and a California resident owes California's $800 minimum franchise tax regardless of formation state. Cheap states reduce the formation state's own fees, nothing more.

Is Wyoming or New Mexico cheaper for an LLC?

New Mexico is cheaper on paper: $50 to file versus Wyoming's $100, and $0 per year versus Wyoming's $60 minimum annual report. Wyoming's counterweight is smoother recognition with banks and payment processors. For owners with no fixed US base choosing between the two, the difference is about $110 in year one and $60 per year after.

Is it cheaper to form an LLC in another state than where the business operates?

Rarely. Operating from a state generally triggers a requirement to register the out-of-state LLC there as a foreign LLC, which costs as much as or more than forming locally (Texas charges $750, New York $250 plus a publication requirement). The result is two states' fees, two annual reports, and an unchanged tax bill.

Sources

Primary sources for the rates and rules cited in this article:

About the author

Alexander Stylianoudis · Legal and Financial Executive

Alexander has spent over 15 years working with US, UK, Canadian, and European companies. He built IncorpAssist after getting tired of searching for objective incorporation guidance and finding formation-service marketing instead.