What is the cheapest state to start an LLC in?


3

I'm curious about filing fees and annual taxes in the various states. Is there anywhere that breaks this information down in a clear easy to understand format?

LLC Incorporation

asked Apr 22 '11 at 13:13
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Abe Miessler
264 points
  • check out legalzoom.com they make it really easy to start one up for under $200 – Clifgray 6 years ago

8 Answers


6

Generally, it's least expensive to form an LLC in the state where you will be doing business. The reason: If you form the LLC in another state (such as NV or WY) because of its ostensibly low or non-existent taxes, you will pay annual fees to that state, but you also will pay annual fees as a "foreign" LLC to the state where you are doing business. Please see Why (not) form an LLC in Nevada (or Wyoming)?.

Disclaimer: This information does not constitute legal advice and does not establish an attorney-client relationship.

answered Apr 23 '11 at 07:11
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Dana Shultz
6,015 points

5

Don't focus on cheap. Focus on what's best for your investors and for you.

Delaware has done an outstanding job of working to become a remarkably "LLC Friendly" state. Good laws on the books and good infrastructure to help you get started.

Here's a link to "Why Choose Delaware?" from the state. Nicely done.

answered Apr 22 '11 at 20:29
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Fitness Guy
316 points
  • No investors, just me. What's good for me is getting started without having to invest thousands of dollars. That may change with time, but at the moment that is my main concern. – Abe Miessler 8 years ago
  • The general rule of thumb that I've heard is Delaware is best for class C corporations for the business oriented legal system. Nevada is best for pass through structures like Class S corps and LLC's. – Nicholas Hebb 8 years ago

2

Me and the wife have a small software startup. NO investors (yet). We LLC'ed in Delaware. Works for us.

answered Apr 23 '11 at 00:36
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Ron M.
4,224 points
  • ...and it's the only state that has "ware" in its name ! – Ron M. 8 years ago
  • Do you live in Delaware? If not, have you encountered any problems in your home state? Do you still have to pay taxes in your home state? Do you mind if I ask what your start up and annual fees? – Abe Miessler 8 years ago
  • I just like that you used LLC as a verb, i.e. "I totally LLC'ed". – Nick 8 years ago
  • @ronM. When someone incorporates, Do they to need publications to be recognized as a LLC in Delaware? – Zapoo 7 years ago

1

It costs $50.00 to register your Limited Liability Company, Incorporation, Limited Liability Partnerships, Limit Liability Limited Partnerships, General Partnerships, Professional Corporations and Professional Limited Liability Corporation in Arkansas. As long as you are a 'domestic' company. The yearly franchise tax is .3% of outstanding shares if a Corporation ($150 minimum), $300 for corporations that do not issue shares, and $150 for Limited Liability Companies. The State has become very business friendly and the taxes are relatively low compared to east and west cost states. If you don't mind spending $25 a year for a registered agent/office I would highly recommend Arkansas now.

answered Mar 31 '12 at 00:49
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Trey
11 points

1

I have setup a few LLCs in Arizona. Including publishing your LLC in a newspaper the cost is just over $95. The nice part about Arizona is its proximity to California, we actually have a major city and the corporate tax rate is around 7%.

answered Dec 11 '12 at 10:02
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Bill Hayden
76 points
  • What's the tax advantage over other states mentioned? – Karlson 6 years ago
  • In Arizona, there are no yearly fees to keep your LLC. The corporate tax rate is around 7%. I am not certain how this compares to the other states. – Bill Hayden 6 years ago
  • You might want to put this in the answer. – Karlson 6 years ago

0

Dana Shultz's post is spot on.

Keep in mind as well that some states have what I think is a horrible requirement- the "publication requirement" for LLCs. New York is one and there are a few others. The requirement is that you must publish an announcement in a local paper when you form the LLC in the state or have it qualified to do business as a foreign LLC. Various service providers can handle it for you, but that costs a few hundred, usually.

answered Apr 23 '11 at 08:44
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User6492
1,747 points

0

Delaware also has laws that protect your private information (such as home address and phone number) from being released, whereas many states that is considered public information.

There's more than taxes that you have to think about though. You need to think about the protections your business, and you individually, receive from the laws.

answered Feb 5 '13 at 17:42
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Randy E
632 points
  • Awww I got tricked...why is this showing up so close to the top :/ – Randy E 6 years ago

0

Delaware has created an entire industry around making it cheap and easy to start an LLC even if you don't live there. You can file all of the initial paperwork and get a registered agent (someone who acts as your representative and lives in the state) for about $200 for the first year and $100 for subsequent years.

That said, there's other legal and tax implications depending on your state, but overall, Delaware is petty darn cheap and business friendly.

answered Apr 23 '11 at 23:24
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Alex Miller
632 points

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