Free LLC
Dreaming of starting your own business? Here are several ways to form an LLC while minimizing the startup costs.
PRO TIP: Right now, one of the best LLC formation deals can be found with Tailor Brands:
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Starting an LLC without spending anything might be a stretch, but cutting down costs is achievable. Specifically, you don't have to spend a dime on LLC formation services.
Learn how to bypass fees for LLC formation services and trim down extra LLC expenses with this guide.
Set Up Your LLC - $0 + State Fees
- Free business plan included (no credit card required)
- Lifetime compliance alerts
- Comprehensive name check
- Lifetime customer support via email and phone
Form Your LLC at $0 + State Filing Fees
- Articles of organization
- Name check service
- Digital welcome packet
- Customizable website
Starter - $0 + State Filing Fees
- Includes 1 optional free year of Worry-Free Compliance that renews at $199/year
- Standard filing speed
- 100% accuracy guaranteed
- Other services are available with additional costs
Fee Waivers for Veteran-Owned LLCs
If you're a veteran planning to form an LLC, check if the state has special provisions that waive or reduce filing fees for veterans.
For example, veterans who form an LLC in Texas between January 1, 2022, and December 31, 2025, are eligible for a fee waiver. It covers the $300 filing fee and a five-year exemption from the state's franchise tax.[1]
Meanwhile, Michigan waives filing fees like formation fees and annual statement fees for LLCs whose majority of interests are owned by veterans.[2]
Eligibility requirements and application procedures can change, so always check the latest information with the Secretary of State before claiming the fee waiver. You can also check if the state offers other incentives for veteran-owned businesses, such as reduced fees for business licenses and tax incentives.
Not a veteran? Perhaps some of the government assistance programs below could help with startup costs...
Government Assistance Programs
Some federal and state programs provide assistance for small businesses, including help with LLC formation fees. Here are some options to explore:
- Microloans
The SBA
offers microloan programs through intermediary lenders, providing small loans up to $50,000 to help with startup costs.
- SBA-Guaranteed Loans
The SBA also guarantees loans from traditional lenders, making it easier for small businesses to obtain financing. These loans can be used for a variety of purposes, including startup costs. - Federal Grants
Grants.gov is a central resource for finding federal grant opportunities. There might be grants available for your specific industry or business type. - State and Local Grants
Check with your state and local government agencies for potential grant programs that support small businesses or entrepreneurs.
These programs don't directly cover the cost of forming an LLC. However, they can provide financial assistance and resources to help you overcome the financial hurdles of starting a business.
Do It Yourself
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If you want to save on costs when starting an LLC, consider a "do-it-yourself" approach. This way, you won't have to pay for an LLC formation service. These can cost anywhere from $50 to $300 depending on the package and state filing fees.
Each state's LLC formation process varies to some degree. You can start by learning about the general steps involved.
No. At a minimum, you need to pay the formation filing fee, which varies per state. Montana has the lowest domestic LLC filing fee at $35, while Massachusetts demands a heftier chunk of change at a whopping $500.[3][4]
Select a State
You can create an LLC in any state. Your "home state" or "domestic state" is where your business is legally formed and recognized. If you want your LLC to legally do business in another state, you then register in that area as a "foreign LLC."
Forming an LLC where you live is easier for filing paperwork and managing your business in person. However, if you primarily serve customers in another state, it might be more convenient to form your LLC there.
| State | Domestic LLC Filing Fee | Foreign LLC Filing Fee | Annual or Biennial Report Fee |
|---|---|---|---|
| Arizona[5] | $50 | $150 | None |
| Arkansas | $45 (online) $50 (paper)[6] | $270 (online) $300 (paper)[7] | $150 each year[8] |
| Colorado[9] | $50 | $100 | $10 each year |
| Hawaii[10] | $50 | $50[11] | $15 each year |
| Iowa[12] | $50 | $100 | $30 every two years (online) $45 (paper) |
| Kentucky[13] | $40 | $90 | $15 each year |
| Michigan[14] | $50 | $50 | $25 - $75 each year |
| Mississippi[15] | $50 | $250 | $250 each year (for foreign LLCs only) |
| Missouri[16] | $50 (online) $105 (paper) | $105 (paper) | None |
| Montana[17] | $35 | $70 | $20 each year |
| New Mexico[18] | $50 | $100[19] | None |
| Utah[20] | $54 | $54 | $18 each year |
Generally speaking, yes. For example, in South Dakota, the online domestic LLC fee is $150 while the foreign LLC fee is $750.[21] This is primarily due to the additional administrative processes involved in approving an already established LLC to operate in another state.
Name Your LLC
When completing the formation documents, you'll be asked to write your desired LLC name. There's usually no additional cost to naming your LLC because it's already included in the filing fee.
When deciding on a business name, it's important to do a business name search first to check if it's still available in that state.
Additionally, you must review the state's naming regulations to avoid getting rejected. For example, all states require that your business name end with some version of "Limited Liability Company" or "L.L.C." to indicate it's an LLC.
If you already have a business name in mind but aren't ready to form an LLC yet, you can reserve your desired name instead. Doing so will prevent others from using that name for 30 to 180 days.
For an additional fee, your LLC can register a trade name or a DBA (Doing Business As) if you want to operate under a name different from what's officially registered. This is ideal if you want to use a more marketable business name or one without "LLC" at the end.
Create an Operating Agreement
An operating agreement details the important rules for managing an LLC. It can also help solve business disputes that may arise later on. Most states don't require LLCs to have an operating agreement, but it's still better to have one.
Ideally, you should have a signed operating agreement before forming an LLC. That way, all LLC members are already on the same page about how the business will be run.
But if you already have an LLC, you can still make an operating agreement. You can create one for free using online templates. Alternatively, you can hire an attorney to draft yours, but that could cost upward of $500.
In most states, LLCs without an operating agreement are member-managed by default. This means all members have equal voting rights, which can sometimes lead to a gridlock when making management decisions.
Choose a Registered Agent
A registered agent is responsible for receiving business and legal documents on your LLC's behalf. Most states require LLCs to have one listed in their Articles of Organization.
You can be your LLC's registered agent as long as you're at least 18 years old and have a physical street address in the state where your LLC is doing business. You must also be available during regular business hours to receive the documents.
However, as the registered agent, your address will become part of the public record. Consider hiring a registered agent service instead to protect your privacy.
Registered Agent Service - $125/year
- Business address included
- Free mail forwarding
- Lifetime guide service with business experts
- Never sell your data. Ever.
Registered Agent - $249/Year
- Includes unlimited cloud storage for your business documents
- Includes a Compliance Calendar (valued at $69) for critical tax and annual report deadlines
- Renews automatically each year. Renewal rate is subject to change.
- Cancel your service plan online or by calling (877) 808-8977
Registered Agent - $199/Year
- Get a registered agent for LLCs and corporations
- Available in 50 states
- Get notifications via mail of important legal notices
- Find important documents scanned and uploaded to your dashboard
Some states require the appointed agent's written acceptance of the role. However, even if it's not required, be sure to appoint someone who understands the responsibility of receiving sensitive legal and tax documents.
Submit Your Articles of Organization
Once you have a business name and a registered agent, you can begin filling up the LLC's formation documents.
Commonly called the Articles of Organization, this document contains important information about your LLC, including:
- LLC name and business address
- LLC organizer's name and contact details
- Registered agent's name and address
- Business purpose
A registered agent and an LLC organizer have different roles. A registered agent serves as the LLC's point of contact and receives important documents. Meanwhile, an LLC organizer handles the paperwork to form the LLC.
You must submit the Articles of Organization and the formation filing fee to the Secretary of State.
Set Up Your LLC - $0 + State Fees
- Free business plan included (no credit card required)
- Lifetime compliance alerts
- Comprehensive name check
- Lifetime customer support via email and phone
Form Your LLC at $0 + State Filing Fees
- Articles of organization
- Name check service
- Digital welcome packet
- Customizable website
Starter - $0 + State Filing Fees
- Includes 1 optional free year of Worry-Free Compliance that renews at $199/year
- Standard filing speed
- 100% accuracy guaranteed
- Other services are available with additional costs
The LLC formation filing fee is a one-time mandatory cost that establishes your LLC. Filing fees vary per state, with Montana having the lowest at $35.[22] While Tennessee has one of the highest, costing up to $3,000 depending on the number of the LLC's members.[23]
Get an EIN
An Employer Identification Number (EIN) is a unique nine-digit number assigned by the Internal Revenue Service (IRS). It's used to identify a business entity for tax-related purposes.
You're not required to get an EIN if you have a single-member LLC. However, you might still need it down the line if you want to hire employees or open a business bank account.
Applying online is the fastest and easiest way to get an EIN. Visit the IRS website and use their Business Taxpayer Identification Number (TIN) Matching Application.
Once you enter all the required information about your business and yourself, you'll receive your EIN immediately.
Some LLC formation services offer to process your EIN for an extra fee. However, the IRS never charges fees for obtaining an EIN.[24] If you register online, you can get an EIN in 15 minutes at no cost.
Select a Free LLC Package
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Forming an LLC yourself can be a valuable learning experience. However, the formation process can be complex, especially for first-time entrepreneurs.
LLC services can make it easier for you by providing expert advice and support. They can answer questions, clarify doubts, and ensure you're following the correct procedures.
Fortunately, you don't always have to pay for LLC formation services. Below are some companies that can process your Articles of Organization for free.
Set Up Your LLC - $0 + State Fees
- Free business plan included (no credit card required)
- Lifetime compliance alerts
- Comprehensive name check
- Lifetime customer support via email and phone
Form Your LLC at $0 + State Filing Fees
- Articles of organization
- Name check service
- Digital welcome packet
- Customizable website
Starter - $0 + State Filing Fees
- Includes 1 optional free year of Worry-Free Compliance that renews at $199/year
- Standard filing speed
- 100% accuracy guaranteed
- Other services are available with additional costs
Some LLC formation services may offer to process your Articles of Organization for free. However, you still have to pay for other services, like a registered agent service or an operating agreement. You'll often see the total amount at checkout.
ZenBusiness
ZenBusiness has a starter package for new entrepreneurs. It includes an LLC formation service and a 100% accuracy guarantee. This means your formation documents will be refiled for free if there are mistakes due to their error.
If you decide to form an LLC with ZenBusiness, it will ask you a few quick questions about you and your business. You can also opt to use its Worry-Free Compliance service, so you never have to worry about missing your annual report's deadline.
Starter - $0 + State Filing Fees
- Includes 1 optional free year of Worry-Free Compliance that renews at $199/year
- Standard filing speed
- 100% accuracy guaranteed
- Other services are available with additional costs
While ZenBusiness offers several business formation packages, its registered agent service always comes with an additional fee, regardless of which plan you choose. The current starting price for their registered agent service is $199/year.[25]
Bizee
Bizee, formerly known as Incfile, offers a Silver Package that comes with free LLC formation. You just need to pay the state filing fee.
Its free LLC formation service includes preparing and filing your Articles of Organization. The processing time varies per state, but you can pay an expedited fee if you need your LLC formed quickly.
If you form an LLC with Bizee, it will ask for your basic company information. This includes the company name, designator (LLC, L.L.C., etc.), and business purpose. You can use its website to check if your desired business name is still available.
You won't pay any fees for the registered agent service during your first year with Bizee. Its registered agent service includes receiving and scanning important legal documents on your behalf, such as tax notices and service of process.
Tailor Brands
Tailor Brands doesn't charge a fee for LLC formation services.[26] It will handle the paperwork for you after you answer a few questions about your business.
The first thing that Tailor Brands will ask is your desired business name. It will then tell you whether it's still available in your chosen state after conducting an initial check. It'll do a more thorough check when it processes your LLC application.
Tailor Brands can help you open a business bank account through Mercury. Mercury accounts have no monthly maintenance fees and don't require a minimum balance to keep your account open.
Other Steps to Do After Forming an LLC
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Once your LLC is formed, you'll need to do a few more things to get your business up and running while still complying with state rules. Take note of the more important ones below.
Publish a Notice of Formation
There are two types of publications you might encounter when forming an LLC:
- LLC Formation Publication
Newly formed LLCs must publish a notice in a local newspaper. It typically includes essential information about the LLC, like its name, address, and business purpose. - DBA Publication
If your LLC wants to operate under a fictitious business name, it must publish a notice in a local newspaper about this intent. This informs the public that your LLC will be conducting business under a different name.
Only a few states, like New York and Arizona, still require newspaper publication.[27][28] The publication requirements vary per state. You typically have a few weeks to fulfill this requirement after your Articles of Organization is approved.
It depends on several factors, like:
- Rates charged by the newspapers
- Number of newspapers the state mandates the notice to be published in
- Duration of the publication
- Administrative filing fee for the publication (if any)
Register Business Permits and Licenses
Like any business, LLCs need to obtain various business permits and licenses. However, the number of permits and licenses your LLC needs depends on several factors, like its business purpose or location. These also affect the associated fees.
For example, some states require a statewide business license, which can cost anywhere from $20 to $300. City and county governments also each have their own set of required permits and licenses. And the fees vary from one jurisdiction to another.
Additionally, some businesses may be regulated simultaneously by several governmental offices, potentially racking up the total cost to over $1,000.
A franchise tax, also called a privilege tax, is a fee an LLC pays to the state for the privilege of doing business in that area. Not all states require a franchise tax. The amount also varies. For example, Delaware has a flat $300 annual tax.[29] In California, the minimum annual franchise tax is $800 and increases depending on the amount of your LLC's income.[30]
Open a Business Bank Account
An LLC provides limited liability protection, meaning personal assets (like your home and car) are protected from business debts and liabilities. However, mixing personal and business finances in one bank account can weaken this shield.
If you can't clearly distinguish between personal and business transactions, a court might hold you personally liable for business debts. A separate business bank account creates a clear separation of personal and business finances.
Opening a bank account for your LLC must be done in person by someone who has the authority to do so. You can give someone this authority in your Operating Agreement and Initial Resolution.
Don't forget to bring a Certificate of Good Standing, which is commonly required by banks. Some states, like Wyoming, offer a free electronic Certificate of Good Standing.[31] While others charge a minimum fee, ranging from $5 to $20.
Create a Business Website
A website and social media presence are dedicated online spaces for your business. They're essential for marketing, customer engagement, and brand visibility in today's digital world.
You can create one yourself using a website template through popular content management systems (CMS) like WordPress and Wix. This option will cost you around $15 to $20 a month.
Alternatively, you can hire a professional web developer if you want a highly customized and unique website.
Even if you're not planning to build a business website now, it's a good idea to at least buy the domain name. This prevents others from using your LLC's name as a web address.
Domain squatters often monitor newly registered LLC names. They then purchase the corresponding domains and resell them at significantly higher prices.
Get Business Insurance
Business insurance premiums are the annual or monthly fees for coverage against various risks. While an LLC provides some legal protection to personal assets, business insurance covers expenses from unexpected events like lawsuits and property damage.
When shopping around for business insurance, consider the specific risks your LLC faces. Prioritize getting the right coverage for your specific needs and get quotes from multiple providers.
Additionally, most states require businesses with at least one employee to have workers' compensation insurance. This ensures that employees are compensated for medical expenses and lost wages if they're injured on the job, regardless of who was at fault.
Investing in the right insurance can help protect your business from financial losses. For example, business property insurance covers your LLC's furniture and equipment against damage or loss.
Budget for Annual Expenses
After forming an LLC, you still have to budget for its ongoing requirements, like the annual/biennial report filing fee and business taxes.
- Annual/biennial report
An annual or biennial (every two years) report generally includes updated information about your business. This includes the current address, the names of members or managers, and changes in contact details.Not all states require an annual or biennial report for LLCs. For example, LLCs in Arizona don't have this requirement. But for states that do, it's typically submitted to the Secretary of State, along with the filing fee.
Non-Submission of Annual or Biennial Report
If you fail to submit your annual or biennial report for your LLC, some states will impose late fees. These fees can accumulate over time. If the report is not filed for an extended period, the state could close your LLC. - Business taxes
LLCs are treated as pass-through entities by default. This means profits and losses are passed directly to members and reported on their tax returns.However, LLC members are considered self-employed and must pay self-employment taxes on their share of the profits. The current combined self-employment tax rate is 15.3%, with 12.4% going to Social Security and 2.9% to Medicare.[32]
Additionally, most LLC members must pay both federal and state income taxes. Your business might also be subject to additional taxes depending on its purpose and nature.
Free LLC Resources
Take advantage of free LLC resources available online to save on LLC formation and annual expenses. Here are some of the best ones:
- State Government Websites
Each state typically has a Secretary of State website or equivalent. It's the official source for LLC formation information and usually shows:- Step-by-step guides
- Free downloadable forms (Articles of Organization, Annual Report, etc.)
- Fee Schedules
- FAQs
- Contact information for assistance
- Step-by-step guides
- LLC Formation Services (Free Plans)
The best LLC formation services offer free resources too. For example, Northwest Registered Agent offers free state forms and business forms. Get templates for operating agreements, LLC membership certificates, and LLC capital contributions. - Informational Websites and Blogs
Informational websites often include free resources too. For example, if you're curious to know how much it costs to maintain an LLC in your state, use the calculator below to get a clear picture of your ongoing expenses.
What the Experts Say
CreditDonkey asked a panel of industry experts to answer readers' most pressing questions. Here's what they said:
Bottom Line
Although services like Bizee and ZenBusiness waive their fees for LLC formation, this doesn't mean that you can start one completely for free. You still need to pay the filing fees and other expenses.
To reduce startup costs, you can take advantage of state-specific discounts and waivers, like filing fee waivers for veteran-owned LLCs. Additionally, consider a "do-it-yourself" approach so you won't have to pay others to process your LLC's paperwork.
Ultimately, there's no getting around the fact that you'll have to spend money when running a business. The initial LLC formation service might be free, but you still need to prepare for the financial responsibilities that come with entrepreneurship.
References
- ^ Texas Veterans Commission. New Veteran-Owned Business Pre-Qualification Process , Retrieved 02/15/2024
- ^ Licensing and Regulatory Affairs. Waiver of fees for veterans, Retrieved 02/15/2024
- ^ Montana Secretary of State. Business Services Filing Fees, Retrieved 02/15/2024
- ^ Secretary of the Commonwealth of Massachusetts. Limited Liability Company Information, Retrieved 02/15/2024
- ^ Arizona Corporation Commission. Schedule of Fees Limited Liability Companies, Retrieved 02/18/2024
- ^ Arkansas Secretary of State. Domestic Limited Liability Company, Retrieved 02/18/2024
- ^ Arkansas Secretary of State. Foreign Limited Liability Company, Retrieved 02/18/2024
- ^ Arkansas Secretary of State. Franchise Tax / Annual Report Forms, Retrieved 02/18/2024
- ^ Colorado Secretary of State. Business FAQs: Q2. Can anyone be a registered agent?, Retrieved 02/18/2024
- ^ DCCA Hawaii. Domestic Limited Liability Company Fees, Retrieved 02/18/2024
- ^ DCCA Hawaii. Foreign Limited Liability Company Fees, Retrieved 02/18/2024
- ^ Iowa Secretary of State. Business Entity Forms and Fees, Retrieved 02/18/2024
- ^ Office of the Kentucky Secretary of State. Business Filings Fees, Retrieved 02/18/2024
- ^ Michigan Department of Licensing and Regulatory Affairs. Filing Fees, Retrieved 02/18/2024
- ^ Mississippi Secretary of State. Business Documents Filing Fees, Retrieved 02/18/2024
- ^ Missouri Secretary of State. Schedule of Fees and Charges, Retrieved 02/18/2024
- ^ Montana Secretary of State. Business Services Filing Fees, Retrieved 02/18/2024
- ^ New Mexico Secretary of State. Domestic NM LLC, Retrieved 02/18/2024
- ^ New Mexico Secretary of State. Foreign Limited Liability Company, Retrieved 02/18/2024
- ^ Utah Division of Corporations & Commercial Code. Fee Schedule, Retrieved 02/18/2024
- ^ South Dakota Secretary of State. Filing Fees, Retrieved 02/15/2024
- ^ Montana Secretary of State.
Business Services Filing Fees, Retrieved 02/15/2024 - ^ Tennessee Secretary of State. Business Forms and Fees, Retrieved 02/15/2024
- ^ Internal Revenue Service. How to Apply for an EIN, Retrieved 03/20/2024
- ^ ZenBusiness. Products & Pricing, Retrieved 03/20/2024
- ^ Tailor Brands. LLC Formation, Retrieved 03/20/2024
- ^ The New York State Senate. Section 206 Affidavits of publication, Retrieved 03/20/2024
- ^ Arizona State Legislature Arizona Revised Statutes 29-3201, Retrieved 03/20/2024
- ^ Delaware Division of Corporations. LLC/LP/GP Franchise Tax Instructions, Retrieved 02/16/2024
- ^ California Franchise Tax Board. Limited Liability Company, Retrieved 02/16/2024
- ^ Wyoming Secretary of State. FAQ: How do I obtain a certificate of good standing?, Retrieved 02/16/2024
- ^ Internal Service Revenue. Self-Employment Tax (Social Security and Medicare Taxes), Retrieved 02/16/2024
- ^ IRS. IRS provides tax inflation adjustments for tax year 2024, Retrieved 03/12/2024
- ^ California Franchise Tax Board. Tax rate schedules, Retrieved 03/20/2024
- ^ New York State Department of Taxation and Finance. Tax rates and tables, Retrieved 03/20/2024
- ^ Arizona Department of Revenue. Individual Income Tax Forms, Retrieved 03/20/2024
- ^ Michigan Department of Treasury - Taxes. Income Tax Rate Change Overview, Retrieved 03/20/2024
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