Cheapest Way to Start an LLC (Step-by-Step)
The cheapest way to start an LLC is to file the formation documents yourself directly with your state, act as your own registered agent, and avoid unnecessary add-ons. This guide walks through exactly how to start an LLC at the lowest possible cost while still staying compliant and protecting your business.
What Is the Cheapest Way to Start an LLC?
Starting an LLC cheaply means minimizing upfront and ongoing costs without cutting corners that could expose you to legal or compliance risks.
At a minimum, you will always need to pay:
State filing fees
Any required annual or franchise taxes
Everything else—like registered agent services or formation packages—is optional, depending on your situation.
Step 1: Choose a Business Name (Free)
Choosing a compliant business name is one of the first steps—and it costs nothing.
How to Keep It Free
Search your state’s business name database online
Avoid reserving a name unless necessary (this often costs extra)
Choose a name that meets state requirements (includes “LLC” or similar)
You can also check domain availability at the same time, but purchasing a domain is optional at this stage.
Step 2: Act as Your Own Registered Agent (Free Option)
One of the easiest ways to save money is to serve as your own registered agent.
Requirements
You must have a physical address in the state
You must be available during normal business hours
Your address will become public record
Tradeoffs
While this is free, there are downsides:
Less privacy (your address is public)
Risk of missing important legal documents
Must always be available during business hours
If you want reliability and privacy, see our registered agent service as an affordable alternative.
Step 3: File Your LLC Formation Documents Yourself
This is the only required step that costs money.
What You’ll File
Articles of Organization (or Certificate of Formation, depending on your state)
Typical Filing Fees
Low-cost states: $50–$100
Mid-range states: $100–$200
Higher-cost states: $200–$300+
How to Save Money
File directly on your state’s official website
Avoid third-party filing services that charge markup fees
This step officially creates your LLC.
Step 4: Skip Unnecessary Add-Ons
Many formation services upsell products you may not need immediately.
Common Add-Ons You Can Skip
Expedited filing (unless you’re in a hurry)
Template operating agreements (you can create your own)
EIN filing services (you can apply for free with the IRS)
Compliance kits or binders
Being selective here can save hundreds of dollars.
Step 5: Get an EIN for Free
An Employer Identification Number (EIN) is required for most LLCs.
How to Get It for Free
Apply directly with the IRS online
Receive your EIN immediately in most cases
This is cheaper than paying third-party services that charge for EIN registration.
Step 6: Create a Basic Operating Agreement (Low or No Cost)
While not always legally required, an operating agreement is strongly recommended.
Low-Cost Options
Use a free template
Draft a simple agreement tailored to your business
Why It Matters
Defines ownership and responsibilities
Helps preserve liability protection
Prevents disputes (especially for multi-member LLCs)
Learn more about how to start an LLC properly to avoid common mistakes.
Step 7: Open a Business Bank Account
This step is typically free and essential.
Why It’s Important
Keeps personal and business finances separate
Helps maintain liability protection
Simplifies accounting
Most banks do not charge to open an account, though minimum balance requirements may apply.
Step 8: Only Get Required Licenses
Avoid overpaying for licensing services.
How to Save Money
Research requirements directly through your state and local government
Apply only for licenses your business actually needs
Some services charge unnecessary fees for basic filings you can do yourself.
Step 9: Plan for Ongoing Costs
Even the cheapest LLC setup requires ongoing compliance.
Common Ongoing Costs
Annual report fees
Franchise taxes (in some states)
Registered agent (if you choose to use a service later)
Understanding these costs upfront helps you avoid surprises.
Learn more about annual report requirements to stay compliant.
Cheapest States to Start an LLC
If you have flexibility in where to form your LLC, some states are significantly cheaper than others.
Lower-Cost States
Kentucky
Arkansas
New Mexico
Mississippi
Higher-Cost States
California (due to annual franchise tax)
New York (due to publication requirement)
However, you should usually form your LLC in the state where you actually operate.
When “Cheapest” Isn’t the Best Option
While saving money is important, cutting the wrong corners can create bigger problems.
Risks of Going Too Cheap
Missing legal notices
Losing liability protection
Falling out of compliance
Paying penalties later
For example, acting as your own registered agent can be risky if you’re not consistently available.
DIY vs Using a Service: Cost Comparison
DIY Approach
Filing fees only
Total cost: $50–$300 depending on state
Using a Service
Filing fee + service fee
Total cost: typically $100–$500+
What You Get with a Service
Filing accuracy
Registered agent included
Compliance reminders
Reduced risk of errors
See our LLC formation service if you want a balance between cost and convenience.
Common Mistakes When Trying to Start an LLC Cheaply
Filing in the wrong state to save money
Missing required filings or deadlines
Using an unreliable registered agent setup
Skipping an operating agreement
Mixing personal and business finances
Avoiding these mistakes can save far more than you spend.
Frequently Asked Questions
What is the cheapest way to start an LLC?
The cheapest way is to file the Articles of Organization yourself, act as your own registered agent, and avoid paid add-ons.
Can I start an LLC for free?
No. You must pay your state’s filing fee. However, you can minimize costs by handling most steps yourself.
Is it worth paying for an LLC service?
It depends. If you want convenience, compliance tracking, and reduced risk of mistakes, a service can be worth the cost.
Can I be my own registered agent?
Yes, as long as you meet your state’s requirements. However, this comes with privacy and reliability tradeoffs.
What is the biggest hidden cost of an LLC?
Ongoing compliance costs, such as annual reports or franchise taxes, are often overlooked but required.
Start Your LLC Without Overpaying
Starting an LLC doesn’t have to be expensive. By handling key steps yourself and avoiding unnecessary services, you can form your business at a minimal cost while still maintaining compliance.
That said, the goal is not just to start cheaply—it’s to start correctly. If you want to avoid missed filings, errors, or compliance risks, consider using a professional service that keeps your business on track without overcharging.
