The cheapest state to file in is Montana at $35, then Kentucky ($40) and Arkansas ($45). But the cheapest state to run an LLC is almost always the one you already live in — because a business must register wherever it operates, forming somewhere cheaper usually means paying two states instead of one.
This guide ranks it honestly: the lowest filing fees, the states with no annual fee at all, and the foreign-qualification trap that turns a $35 bargain into a double bill.
Cheapest filing fees, ranked
If you are choosing among states you could genuinely call home — or you run a location-independent business with no fixed nexus — here is where the one-time formation fee is lowest in 2026. Three states sit below $50; eight more are tied exactly at it.
- Cheapest to file
- $35
- Montana
- 2nd cheapest
- $40
- Kentucky
- 3rd cheapest
- $45
- Arkansas
- $50 cluster
- 8 states
- AZ, CO, HI, IA, MI, MS, MO, NM
| Rank | State | Formation fee | Recurring fee |
|---|---|---|---|
| 1 | Montana | $35 | $0 on-time ($35 late) |
| 2 | Kentucky | $40 | $15/yr report (+ $175/yr minimum LLET — applies to virtually every KY LLC) |
| 3 | Arkansas | $45 | $150/yr franchise tax |
| 4 (tie) | Arizona | $50 | None |
| 4 (tie) | Colorado | $50 | $25/yr periodic report |
| 4 (tie) | Hawaii | $50 | $12.50/yr report ($15 by mail) |
| 4 (tie) | Iowa | $50 | $30 biennial report (odd years only) |
| 4 (tie) | Michigan | $50 | $25/yr annual statement |
| 4 (tie) | Mississippi | $50 | $0 report (filing required) |
| 4 (tie) | Missouri | $50 | None |
| 4 (tie) | New Mexico | $50 | None |
For the full 50-state table, see LLC cost by state.
Cheapest to maintain: the states with no annual fee
For most businesses the recurring cost matters far more than the formation fee, because you pay it every year for as long as the LLC exists. A short list of states charge no recurring LLC fee at all:
- Ohio — $99 to form, then nothing. No annual report, no franchise tax on the LLC.
- Missouri — $50 to form, then nothing.
- South Carolina — $110 to form ($125 filed online), then nothing (unless taxed as an S-corp).
- Arizona — $50 to form, then nothing.
- New Mexico — $50 to form, then nothing — no annual, biennial, or triennial report at all.
Run the math over five years and the picture inverts. A Missouri LLC costs $50 total for five years of existence. An Arkansas LLC costs $45 to open plus $150 a year — $795 over the same span. The state with the third-cheapest filing fee ends up roughly sixteen times more expensive to hold. That is why “cheapest to form” and “cheapest to own” are different questions, and why you should always look at the recurring column before the headline.
Arizona and New Mexico are the standouts here: they sit in the $50 formation cluster, and neither charges any recurring state fee — both are as cheap to hold as it gets. New Mexico also does not name members on the public record. But — and this is the whole point of the next section — none of that helps if you do not actually operate there.
The real ranking: five-year totals
A formation fee is paid once. A recurring fee is paid for as long as the company exists — so the only ranking that answers “cheapest” honestly is the one that runs both out over time. Here is the same shortlist re-sorted by formation fee plus five years of recurring state cost, which is roughly the horizon most founders should be planning against.
| Rank | State | Form | Recurring | 5-year total |
|---|---|---|---|---|
| 1 | Montana | $35 | $0 on time | $35 |
| 2 (tie) | Arizona | $50 | None | $50 |
| 2 (tie) | Mississippi | $50 | $0 (filing required) | $50 |
| 2 (tie) | Missouri | $50 | None | $50 |
| 2 (tie) | New Mexico | $50 | None | $50 |
| 6 | Ohio | $99 | None | $99 |
| 7 | Iowa | $50 | $30 / 2 yrs | ≈$110–$140 |
| 8 | Hawaii | $50 | $12.50/yr | ≈$113 |
| 9 | South Carolina | $125 | None | $125 |
| 10 (tie) | Colorado | $50 | $25/yr | $175 |
| 10 (tie) | Michigan | $50 | $25/yr | $175 |
| 12 | Wyoming | $100 | $60/yr | $400 |
| 13 | Arkansas | $45 | $150/yr | $795 |
| 14 | Kentucky | $40 | $190/yr | ≈$990 |
Two names move violently. Arkansas falls from third-cheapest to near the bottom, because a $150 annual franchise tax dwarfs a $45 filing fee within the first year. And Kentucky — second-cheapest to file at $40 — finishes last on this list, because its $15 annual report is the small half of the bill. The other half is the Limited Liability Entity Tax, a $175 annual minimum that applies to virtually every Kentucky LLC (an LLC with $3 million or less in gross receipts pays exactly $175). It is not a tax that switches on once you get big; it is the floor. Five years of $190 turns the second-cheapest sticker price in America into roughly $990 — about twenty times a Missouri LLC over the same span.
Montana’s $35 assumes the on-time report waiver holds: the statutory fee is $20, the Secretary of State has waived it for on-time filers in each of the last four years through 2027, and filing after April 15 costs $35 regardless. Iowa’s range reflects a biennial report that falls only in odd-numbered years, so a five-year window catches either two or three of them depending on when you form.
The honest headline: the cheapest state is usually your home state
One rule governs everything above: a state requires any LLC doing business within its borders to be registered there. Forming somewhere cheaper does not replace your home-state filing — it adds a foreign qualification on top of it. The mechanics of that trap, and why the state of formation never moves your tax home, are covered in full in best state to form an LLC.
What it does to the cheapest math is the part worth spelling out here. Take the classic version: a $35 Montana LLC for a business actually run from Georgia. You pay Montana’s $35 and its annual report, plus Georgia’s foreign-registration fee, a Georgia registered agent, and Georgia’s $60 annual registration — every one of which you would have owed anyway had you simply formed in Georgia for $110 and been done. The $35 was never a discount. It was a surcharge, and unlike a formation fee it repeats: two registered agents, two annual filings, two chances to blow a deadline, every year the company exists.
That inverts the table above for anyone with a physical business — a storefront, an office, employees, or just a desk you work from in one state. Rank by total cost and your home state wins even when its filing fee is triple Montana’s, because it is the only state on the list you can pay once.
Whichever state ends up being yours, every LLC needs a registered agent on file — a person or service with a street address in the state of formation. FilingDesk includes the registered agent free for the first year on every plan, so that line item is one less thing to shop for separately.
When a cheap out-of-state LLC actually makes sense
There is exactly one profile where shopping on formation fee is the right move: a business with no operating nexus in any particular state. Think e-commerce brands, SaaS, digital agencies, content businesses, holding companies, and non-resident founders — work that is not tied to any single state’s ground.
For that profile, the best value is not the cheapest filing fee at all — it is Wyoming:
| State | Formation fee | Annual cost | Income tax | Best for |
|---|---|---|---|---|
| Montana | $35 | $0 on time ($35 late) | Yes | People actually based in Montana |
| New Mexico | $50 | None | Yes | Low-cost hold; privacy; NM operators |
| Missouri / Ohio | $50 / $99 | None | Yes | Cheapest to maintain in-state |
| Wyoming | $100 | $60/yr min. | None | Location-independent business, holding company, non-resident |
| Your home state | Varies | Varies | Varies | Almost everyone with a physical business |
Wyoming costs $100 to form — nearly triple Montana’s $35 — but for a location-independent business it wins on everything that matters after day one: $60 a year to maintain, no state income tax, members not named on the public record, and strong charging-order asset protection. Because a location-independent business creates no nexus to trip over, there is no foreign qualification to cancel out the benefit. That is the narrow case where forming out-of-state genuinely pays. Full detail is in the Wyoming LLC guide, with the Wyoming vs Delaware comparison if you are also weighing the startup path, and the non-resident specifics if you are outside the U.S.
Holding companies are another clean fit — an entity that owns rental property, a boat, or other LLCs has no operating storefront, so cost and privacy drive the choice. See Wyoming holding company and LLC for rental property for those setups.
Which of these applies to you
The full four-question framework — physical nexus, location-independent, the VC track, and everything else — is laid out in best state to form an LLC. Read purely through the cost lens, it collapses to this: if you have a physical business, form in that state and stop reading rankings, because foreign qualification eats any headline saving. If you are genuinely location-independent, Wyoming’s $400 over five years buys no state income tax and real privacy alongside it. And if you already live in Montana, Missouri, New Mexico, Arizona or Ohio, congratulations — your home state is the cheap state, and the two answers agree for once.
Want the numbers for your own situation? Run our LLC cost calculator or check your state’s annual-report deadline before you decide.
Where FilingDesk fits
FilingDesk forms your LLC in whichever state is genuinely cheapest for you: describe your business in plain English, and we run the name check, prepare and file the formation documents — a human specialist reviews every filing before it goes to the state — then handle your EIN and operating agreement, plus a free first-year registered agent wherever one’s required. One flat plan: $99 plus the state’s filing fee, passed through at cost, with a 60-day money-back guarantee and $99/year after your first year. Live for filing today: Wyoming ($199 all-in), Florida ($224), and Delaware ($209), with more states available on request via a specialist. No upsells — see pricing or start here.
Frequently asked questions
What is the cheapest state to form an LLC in?
Which states have no annual LLC fee?
Is Montana really the cheapest place to form an LLC?
Does forming in a cheap state help if I run my business elsewhere?
Is Wyoming the cheapest state overall?
What is the truly cheapest state for most people?
Sources
- Montana Secretary of State — Business Services (filing fees)
- Kentucky Secretary of State — Business Filings
- Ohio Secretary of State — Business Filing Fees
- Wyoming Secretary of State — Business Division
- Georgia Secretary of State — Annual Registration (filing fees)
- IRS — Limited Liability Company (LLC)
This guide is general information, not legal advice. FilingDesk is not a law firm.