The Cheapest States to Form an LLC in 2026

The state with the lowest filing fee is almost never the cheapest place to actually own an LLC. "Cheapest to form" is a one-time number; "cheapest to keep" is the one that bills you every year for as long as the company exists — and that is the number that decides what your LLC really costs.

Two recurring charges do the damage: the annual (or biennial) report fee your Secretary of State charges to keep the company in good standing, and any flat franchise or privilege tax the state levies regardless of whether you make a dollar. Montana has the lowest formation fee in the country at $35, but it charges a $20 report every year. Missouri and New Mexico charge $50 to file — $15 more — yet require no annual report at all, so after year one they cost you nothing to maintain. Over five years that gap flips the ranking completely.

All figures below are the standard online filing fees and recurring charges as of July 2026, and assume you act as your own registered agent (a $0 option covered further down). Fees change often — treat these as the current picture, not a guarantee.

The lowest total-cost states, ranked

Here are the least-expensive states to form and hold an LLC in for five years, using the do-it-yourself registered-agent option and ignoring income-based taxes (which depend on your revenue, not your state). The "5-year total" counts the filing fee once plus the report fee every time it comes due — five times for an annual report, twice for a biennial one.

*Arizona has no report fee, but a one-time newspaper publication requirement applies unless your statutory agent is in Maricopa or Pima County, where the state publishes the notice for free (those two counties cover more than three-quarters of Arizona LLCs). Outside them, budget roughly $60–$120 once.

The takeaway is the headline of this whole guide: Montana wins on the sticker price and loses on the five-year price. New Mexico and Missouri are the true low-cost champions because the meter stops after you file — no report, no franchise tax, no privilege fee. If you genuinely have no physical operations tying you to a specific state (a rare situation covered below), these are the ones worth a look.

The Delaware / Wyoming / Nevada myth

Search "best state to form an LLC" and you'll be told to file in Delaware, Wyoming, or Nevada for the privacy and the "tax savings." For a small business that operates somewhere else, that advice is usually wrong — and often the single most expensive choice on the menu.

Start with the states themselves, at their 2026 rates:

Wyoming is genuinely cheap on its own — but Delaware's flat $300/year tax and Nevada's $425 to form plus $350/year already cost far more than a home-state New Mexico or Kentucky LLC before you add the real problem. The real problem is that forming out of state doesn't replace your home-state costs. It adds to them.

The foreign-qualification double-cost trap

An LLC has to be registered in every state where it actually does business. The state where you formed it treats it as a domestic LLC; every other state where you have physical nexus — an office, employees, a storefront, inventory, you working from your kitchen table — makes you register as a foreign LLC. Foreign qualification means a second filing fee, a second registered agent, and a second annual report, forever.

So if you live and work in, say, Ohio but form your LLC in Wyoming "to save on taxes," you now pay both: Wyoming's $100 filing and $60/year, a commercial Wyoming registered agent (mandatory, since you have no Wyoming address — about $150/year), and a foreign registration back in Ohio plus Ohio's own requirements. You've bought two LLCs to run one business.

Worked example: a California business "escaping" to Wyoming

California is the sharpest illustration because its tax is the one people most want to dodge — the $800 minimum annual franchise tax, due in the first taxable year with no current exemption. Here's what actually happens when a California-based business forms in Wyoming to avoid it:

The $800 franchise tax follows the business, not the paperwork. Because the company operates in California, California taxes it — so the Wyoming filing fee, the annual license tax, and the mandatory out-of-state registered agent are pure extra cost, roughly $1,150 more over five years for zero benefit. The "Wyoming saves you the California tax" claim has it exactly backwards.

Registered agent: the line item that moves the total

Every state requires your LLC to name a registered agent with a physical street address in the formation state, available during business hours to receive legal notices. You have two options, and the choice matters more than the state you pick:

• Be your own agent — $0/year. Free if you have a qualifying (non-PO-box) street address in the state and can reliably be there during business hours. This is what makes a New Mexico or Missouri LLC cost about $50 for five years.
• Commercial registered agent — about $100–$300/year (roughly $150 typical). Required if you form in a state where you have no physical presence — which is exactly the situation the Delaware/Wyoming strategy creates.

Because the agent fee recurs, it dominates the total in the cheap states. A $50 New Mexico LLC with a $150/year commercial agent isn't a $50 LLC anymore — it's about $800 over five years, sixteen times the do-it-yourself figure. This is the hidden reason the out-of-state "haven" is so costly: forming where you don't live forces the paid agent on you in that state, on top of the agent you may already need at home.