This article is general information, not legal or tax advice; all state fees, vendor prices, and federal figures were verified against primary sources in July 2026 and reflect fee schedules in effect at that date.
TL;DR — Quick Verdict
- State filing fees are the smallest line item: Delaware charges $110 for a Certificate of Formation, California $70 for Articles of Organization. Ongoing obligations cost far more.
- California’s $800 minimum annual franchise tax applies in the first taxable year for LLCs formed in 2024 and later — the AB 85 waiver window closed January 1, 2024, per FTB Publication 3556.
- An EIN costs $0 directly from the IRS. Third-party filers charging $50 to $79 for the same Form SS-4 add no legal value.
- Northwest Registered Agent charges $39 plus state fees with one year of registered agent service; ZenBusiness starts at $0 plus state fees with paid tiers at $199 and $299; LegalZoom’s registered agent renewal runs $249 per year.
- Domestic LLCs no longer file beneficial ownership reports. FinCEN’s interim final rule published March 26, 2025 exempted all U.S.-formed entities.
- Recommendation: file directly with your state, get the EIN yourself, and spend money only on a registered agent and an operating agreement.
Roughly nine out of ten new U.S. LLCs are formed in the owner’s home state, and the single largest cost driver is not the filing fee — it is the recurring annual obligation that arrives twelve months later. A founder in California pays $70 to file Articles of Organization, then owes $800 to the Franchise Tax Board whether the business earned a dollar or not. A founder in Delaware pays $110, then $300 every June 1. Neither number appears on the checkout page at LegalZoom or ZenBusiness.
This article walks the formation sequence in order — name clearance, registered agent, formation document, EIN, operating agreement, banking, and the first compliance filing — and attaches a verified dollar figure to each step. It models three realistic total-cost scenarios, compares filing yourself against the two dominant formation services, and identifies the five mistakes that cost founders the most money in year two. Every state fee cited comes from the relevant secretary of state or division of corporations fee schedule; federal figures come from the IRS and FinCEN directly.
The Seven Steps, In the Order They Actually Happen
Formation is sequential, and doing it out of order creates rework. You cannot get an EIN before the state approves your entity. You cannot open a business bank account before you have both. And you cannot elect S-Corp treatment before the LLC legally exists.
Step 1 — Clear the name. Every state runs a free entity-name search. Availability in the corporate registry is not the same as trademark clearance; the two systems are unrelated. Founders planning to build a brand should understand the difference between DBA, trademark, and entity name registration before committing to signage or a domain.
Step 2 — Appoint a registered agent. Every state requires a physical in-state address available during business hours. You may serve as your own agent, which costs nothing but publishes your home address in a searchable public database.
Step 3 — File the formation document. Called Articles of Organization in most states and a Certificate of Formation in Delaware and Texas. This is the filing that creates the entity.
Step 4 — Apply for an EIN. Free at IRS.gov. Per the Instructions for Form SS-4 revised December 2025, applicants with a U.S. principal place of business receive the number immediately at the end of the online session.
Step 5 — Execute an operating agreement. Required by statute in only a handful of states but requested by nearly every bank and every court testing whether your liability shield holds.
Step 6 — Open a dedicated business bank account. Commingling funds is the single most common factual basis for veil-piercing arguments.
Step 7 — Calendar the first compliance deadline. California requires a Statement of Information within 90 days of formation. Delaware requires the annual tax by June 1.
What Each Step Costs: Verified 2026 Fee Data
Costs split into three tiers — mandatory state fees, mandatory federal filings, and optional service purchases. Only the first two are unavoidable.
Sources: California Secretary of State and Franchise Tax Board; Delaware Division of Corporations fee schedule (verify at corp.delaware.gov and ftb.ca.gov). Figures current as of July 2026.
Delaware’s late-payment structure deserves attention: miss the June 1 annual tax and the Division of Corporations applies a $200 penalty plus 1.5% monthly interest on the combined tax and penalty. There is no proration — an LLC active for a single day in a calendar year owes the full $300. Fees vary enormously across jurisdictions, and the full state-by-state formation fee comparison shows spreads of more than $700 in first-year cost between the cheapest and most expensive states.
Three Total-Cost Scenarios, Modeled
Headline pricing hides the real number. Below are three founders forming in the same month with different execution paths, using the verified California figures above.
Scenario A — Freelance designer, files directly, serves as own agent. $70 Articles of Organization plus $20 Statement of Information plus $0 EIN plus $0 registered agent plus $0 template operating agreement. Year-one out-of-pocket: $90. Year-two obligation: $800 franchise tax. Two-year total: $890.
Scenario B — Two-partner consultancy, uses Northwest, buys an attorney-drafted agreement. $70 state fee plus $39 Northwest service fee plus $0 first-year registered agent plus $20 Statement of Information plus roughly $850 in attorney time for a custom multi-member agreement. Year-one out-of-pocket: $979. Year two adds $125 registered agent renewal plus the $800 franchise tax. Two-year total: $1,904.
Scenario C — E-commerce seller who forms in Delaware but operates in California. $110 Delaware Certificate of Formation plus roughly $125 Delaware registered agent plus $70 California foreign registration plus $20 Statement of Information. Year one: $325 in fees. But this founder now owes both the Delaware $300 annual tax and the California $800 franchise tax — $1,100 per year, permanently, for one operating business. The arithmetic behind out-of-state formation costs almost never favors a single-state operator, and the foreign qualification requirement is what converts a perceived saving into a permanent duplicate expense.
The gap between Scenario A and Scenario C is $1,010 in recurring annual cost, generated entirely by a structural choice made in week one.
DIY Filing vs. Formation Service: Which Is Better for a First-Time Founder?
Formation services do not file anything a founder cannot file. What they sell is data entry, a compliance calendar, and a registered agent address. Whether that bundle is worth the price depends almost entirely on whether you want your home address off the public record.
Vendor pricing verified July 2026 against published rate cards and Forbes Advisor’s February 2026 comparison (verify at forbes.com). State filing fees excluded from all figures.
Run the five-year math. Northwest costs $39 plus four renewals at $125, or $539 in service spend. LegalZoom’s $0 formation plus four renewals at $249 reaches $996 — $457 more for a functionally identical registered agent. That premium buys brand familiarity and access to a broader legal-services catalog, not a better filing.
Verdict
A single-member LLC forming in its home state should file directly and keep the $39 to $299. The paperwork is a one-page form. Founders who need their home address kept out of the public registry should use Northwest at $39 plus $125 per year — the lowest recurring registered agent cost among the three major providers, and roughly half LegalZoom’s renewal rate. Pay for a formation service only when you are buying the agent address, not the filing.
The registered agent decision recurs annually and compounds; a detailed registered agent cost comparison matters more over a decade than the one-time formation fee ever will.
What Most People Get Wrong
Five errors account for most of the avoidable money lost in the first two years of an LLC’s life.
Mistake 1: Paying for an EIN. Third-party filers charge $50 to $79 to submit the identical Form SS-4. Consequence: pure waste, plus a delay, since the IRS online assistant issues the number within a single session. Correct action: apply directly at IRS.gov during the portal’s operating hours.
Mistake 2: Skipping the operating agreement because the state does not require one. Consequence: default state statutes govern your ownership, distributions, and exit terms — rules you never read and probably would not have agreed to. In a two-member split, this is the document that decides who keeps the client list. Correct action: execute one before the first dollar moves, weighing template versus attorney-drafted costs against the complexity of your ownership split.
Mistake 3: Assuming the LLC itself creates a tax benefit. A single-member LLC is a disregarded entity by default; the tax return does not change. Consequence: founders form an LLC expecting savings and get none. Correct action: understand that savings come from the S-Corp election and its filing deadlines, not from formation, and that the election only pays at specific profit levels covered in the LLC versus S-Corp comparison by profit level.
Mistake 4: Commingling personal and business funds. Consequence: the strongest available argument for a plaintiff seeking to reach your personal assets. Correct action: separate account from day one, and understand the real boundaries of limited liability protection — it does not cover your own negligence or personally guaranteed debt.
Mistake 5: Forming an entity you do not yet need. Consequence: an $800 annual bill in California for a business generating $4,000 a year. Correct action: compare against the sole proprietor liability and tax profile before filing, and check whether membership structure changes the calculus under single versus multi-member tax treatment.
Is Forming an LLC Worth It for You?
Conditional logic beats general advice here. Four tests decide it.
Form now if you have third-party liability exposure. Contractors, food businesses, anyone whose work can physically injure someone, and anyone signing client contracts with indemnity clauses. The annual cost is trivial against a single claim.
Form now if a counterparty requires it. Many corporate clients will not onboard a sole proprietor. Some platforms and lenders require an entity and an EIN before disbursement.
Wait if annual profit is under roughly $10,000 and liability exposure is low. In a $70-filing-fee, $800-annual-tax state, the entity consumes 8% of revenue at that level. A freelance writer with professional liability coverage may be better served by insurance.
Consider a different structure entirely if you plan to raise institutional capital. Venture investors generally require a C-Corp. The long-term entity tax cost comparison shows the crossover points, and converting later is possible but not free — see how LLC to S-Corp conversion costs accumulate. If the venture does not work out, closing cleanly matters too, since dissolution without residual liability requires formal filings in every state where you qualified.
One structural change worth noting: domestic LLCs no longer carry a federal beneficial ownership filing obligation. FinCEN’s interim final rule, published in the Federal Register on March 26, 2025, redefined “reporting company” to cover only foreign-formed entities registered to do business in a U.S. state, and exempted all entities created in the United States along with their beneficial owners. Foreign-formed entities still have live obligations.
Frequently Asked Questions
How long does LLC approval take?
It varies by state and filing method. Delaware generally processes filings within about ten business days for standard service, with expedited tiers available at additional cost — the Division of Corporations publishes surcharges up to $1,000 for one-hour handling. California offers expedited processing for roughly $350 to $750 depending on speed. Online filing is faster than mail everywhere.
Does California really charge $800 in the first year?
Yes, for LLCs formed in 2024 or later. The AB 85 first-year exemption applied only to LLCs organized on or after January 1, 2021 and before January 1, 2024, per FTB Publication 3556. Some commercial sites still describe an active waiver; the Franchise Tax Board’s published guidance controls. Verify at ftb.ca.gov before budgeting.
Can I be my own registered agent?
In every state, yes, provided you have a physical street address in the formation state and are available during business hours. The cost is $0. The trade-off is that your address becomes part of a public, searchable record. Commercial agents charge $125 per year at Northwest and $249 per year at LegalZoom for the same statutory function.
Do I need an EIN for a single-member LLC with no employees?
Not strictly for federal tax purposes — a disregarded entity can use the owner’s SSN. In practice, nearly every bank requires an EIN to open a business account, and using an EIN keeps your SSN off vendor W-9 forms. Since the IRS issues it free within one online session, there is no reason to skip it.
How We Researched This Article
Every fee figure in this article was pulled from a primary government source in July 2026 rather than from secondary aggregators. State filing fees and annual tax obligations for Delaware came from the Delaware Division of Corporations fee schedule and its LLC/LP/GP franchise tax instructions, available through the Delaware Division of Corporations. California figures — the $70 Articles of Organization fee, the $20 Statement of Information fee, and the $800 minimum annual franchise tax — were verified against the California Secretary of State’s business filing fee schedule and the California Franchise Tax Board, including Publication 3556, which governs the closed AB 85 first-year exemption window.
Federal figures came directly from the issuing agencies. EIN cost and issuance mechanics were taken from the IRS Instructions for Form SS-4 revised December 2025. The beneficial ownership reporting status was verified against the FinCEN beneficial ownership information page and the underlying interim final rule as published in the Federal Register on March 26, 2025.
Vendor pricing is trade-source data and was cross-checked across published rate cards and Forbes Advisor’s February 2026 service comparison. Vendor pricing changes without notice and frequently differs by promotion, referral link, and state; the figures here represent list prices at the time of writing and should be confirmed at checkout.
Limitations warrant explicit statement. The three total-cost scenarios are modeled, not measured — they combine verified fee inputs with representative assumptions about attorney time and service selection, and no scenario reflects an actual surveyed founder. Attorney fees for operating agreements are the least reliable figure in this article, since rates vary by market, complexity, and membership structure, and no national fee survey with primary-source authority was available for the 2026 period. Local business license and permit costs are excluded entirely because they are set at the municipal level and range too widely to generalize. Research was last conducted July 2026. All figures were verified against named primary sources before publication.