The 5 Cheapest States to Form an LLC in 2026
Everyone wants the cheapest state to form an LLC. The honest answer is that the filing fee is the least important number. What matters is the five-year cost: filing fee plus every annual fee, report, and tax the state charges.
Ranked by that full cost, here are the five cheapest states to form an LLC in 2026, what each one really costs, and the catch that can wipe out your savings.
How We Ranked Them
We counted only what every LLC owner must pay the state: the one-time formation filing plus recurring annual or biennial fees. Registered agent fees, licenses, and publication costs vary too much to rank fairly, so they are noted separately.
One more rule: a cheap formation state only saves you money if you actually operate there or run a fully remote business. Forming cheap out of state while operating at home usually means paying twice. More on that trap below.
| Rank | State | Formation fee | Annual fee | 5-year state cost |
|---|---|---|---|---|
| 1 | Montana | $35 | $20 | $115 |
| 2 | Kentucky | $40 | $15 | $100 |
| 3 | New Mexico | $50 | $0 | $50 |
| 4 | Arizona | $50 | $0 | $50 |
| 5 | Missouri | $50 | $0 | $50 |
1. Montana: $35 to Form
Montana has the lowest LLC filing fee in the country at $35. The annual report costs $20, due April 15 each year. Five years of state fees total $115.
Montana is genuinely cheap, but it is a small-state filing office with fewer online tools than bigger states. It suits Montana residents and businesses with a real presence there. Out-of-staters chasing the $35 fee usually lose the savings to foreign registration back home.
2. Kentucky: $40 to Form
Kentucky charges $40 to file Articles of Organization and $15 per year for the annual report, due June 30. Five-year state cost: $100.
Kentucky flies under the radar in cheapest-state lists, but the numbers hold up. Like Montana, the value is best for residents and businesses operating in the state. Kentucky also has a straightforward online filing system.
3. New Mexico: $50, Then Nothing
New Mexico charges $50 to form and requires no annual report and no annual fee. Ever. Your five-year state cost is $50, total, and your ten-year cost is the same.
This is why New Mexico tops most cheapest LLC state rankings for remote businesses. No recurring paperwork means no late fees and no compliance calendar to manage. The trade-off is thinner case law and less prestige than Wyoming or Delaware, which matters little for a typical online business.
4. Arizona: $50, Then Nothing
Arizona matches New Mexico: $50 to file, no annual report, no annual fee. Note that Arizona corporations face a publication rule, but LLCs do not, so LLC owners skip that cost entirely.
Arizona is a strong pick for residents of the Southwest and for remote founders who want zero maintenance. Processing is fast, and the state filing portal is easy to use.
5. Missouri: $50, Then Nothing
Missouri rounds out the list at $50 to form with no annual report and no annual fee. It is the overlooked Midwest option with the same zero-maintenance profile as New Mexico and Arizona.
Missouri works well for residents and for remote businesses that want the simplest possible compliance footprint. Few formation services market it, which says more about affiliate commissions than about the state.
Honorable Mentions
A few states just missed the top five and deserve a look depending on where you live.
Mississippi and Colorado
Mississippi charges $50 to form and requires an annual report with no fee attached. Colorado charges $50 to form with a $10 periodic report. Both are excellent values for residents.
Ohio
Ohio charges $99 to form and requires no annual report. The higher upfront fee keeps it off the cheapest list, but zero recurring cost makes it competitive over a decade. Over ten years, Ohio total state cost is just $99, which beats every state that charges an annual fee.
Wyoming
Wyoming costs $100 to form plus $60 per year, so it cannot win on fees alone. It earns its fame through no state income tax, strong privacy, and fast processing. See the full numbers in our Wyoming LLC cost breakdown.
What the Ranking Does Not Include
State fees are only part of year-one cost. If you do not live in your formation state, add a registered agent at $50 to $300 per year. Your EIN is free when you apply directly at irs.gov, so never pay a middleman for it.
Local business licenses are the other variable. Most cities charge $25 to $100 per year, and regulated trades need professional licenses on top. These apply no matter which state you form in, so they do not change the ranking, but they belong in your budget.
The Trap That Erases the Savings
Here is what the cheapest-state articles rarely say clearly. If you form in Montana but live and work in Texas, Texas considers you to be doing business there. You must register as a foreign LLC in Texas and pay Texas fees anyway.
Now you are paying in two states instead of one, and the cheap formation saved you nothing. For about 95 percent of small businesses, the cheapest state is the home state. There is one more wrinkle. Some owners form in a cheap state and never register at home, hoping nobody notices. States notice. Operating without foreign registration can mean fines, back fees, and being barred from state courts until you comply. The savings are not worth the risk. Out-of-state formation only pays when your business is fully remote with no physical footprint anywhere, or when you specifically need another state legal system. Our Wyoming vs home state guide walks through the math.
Watch the fine print
Some low-fee states hide costs elsewhere. Arkansas charges only $45 to file but hits LLCs with a $150 annual franchise tax. California charges $70 to form, then $800 every year in minimum franchise tax. Always check the recurring column, not just the filing fee. Our 50-state LLC fee comparison lists both for every state.
Frequently Asked Questions
What is the absolute cheapest state to form an LLC?
Montana, at $35 to file. But the cheapest to own over five years is a three-way tie between New Mexico, Arizona, and Missouri at $50 total, since none of them charge any annual fee.
Which state has no annual LLC fee at all?
Several: New Mexico, Arizona, Missouri, Mississippi (report required but free), and Ohio require no annual payment. Alabama, Delaware, and South Carolina also require no recurring report, though Delaware charges its $400 annual tax separately.
Should I form my LLC in a cheap state if I live elsewhere?
Usually no. If you have a physical presence, employees, or regular business activity in your home state, you will likely need to register there as a foreign LLC and pay its fees too. The double cost wipes out the savings.
Is New Mexico really a good state for an LLC?
For remote and online businesses, yes. The $50 one-time fee with zero annual reports is the lowest maintenance burden in the country. It lacks the investor prestige of Delaware, but most small businesses never need that.
Why is California so expensive compared to these states?
California charges a $800 minimum annual franchise tax on LLCs, due every year even with zero revenue. That single tax costs more than a decade of fees in New Mexico. See our California LLC cost guide for the full picture.
Do cheap states offer less liability protection?
No. Limited liability protection works the same in every state when you form correctly and keep business and personal finances separate. What differs is privacy rules, court precedent, and tax treatment. The SBA guide to choosing a business structure covers the fundamentals.
Pick the state that fits where you actually do business, then enjoy the low fees. Fees change, so verify the current numbers on the state Secretary of State website before you file. A five-minute check beats a surprise at checkout, and it is the habit that separates careful owners from the ones paying penalties later. If you are building a fully online business, our best state for an online business LLC guide goes deeper. And if you want to know who is behind these guides, read about LLC Lane.
