Starting a business is exciting, but the costs of forming a legal entity can catch new entrepreneurs off guard. Whether you’re forming an LLC (Limited Liability Company) or electing S-Corp status, the good news is that there are ways to keep your formation costs low without cutting corners on compliance.

In this guide, we’ll walk through the cheapest ways to register an LLC or S-Corp in the USA, what actually drives up costs, and how to avoid unnecessary fees.

LLC vs S-Corp: A Quick Refresher

Before diving into costs, it’s important to understand the difference:

• LLC (Limited Liability Company): A business structure that protects your personal assets from business liabilities. It’s simple to form and offers flexible tax treatment.
• S-Corp: Not actually a business structure, but a tax election. An LLC or corporation can elect S-Corp status with the IRS to potentially save on self-employment taxes once the business is profitable enough.

Most small business owners start as an LLC and later elect S-Corp taxation once their income justifies the added paperwork.

Average Cost to Register an LLC in the USA

LLC filing fees vary by state, ranging from as low as $35 (Montana) to as high as $500 (Massachusetts). On average, most states charge between $50 and $200 for LLC formation.

Here’s a general cost breakdown of what’s typically involved:

Cost Item	Estimated Range
State filing fee	$35–$500 (one-time)
Registered agent fee	$0–$150/year
Annual report/franchise tax	$0–$800/year (varies by state)
EIN (Employer Identification Number)	Free (via IRS)
Operating agreement	Free–$200 (if drafted professionally)
S-Corp election (Form 2553)	Free (self-filed with IRS)

The Cheapest States to Form an LLC

If you’re not tied to operating in a specific state, forming your LLC in a low-cost state can save money. Some of the most budget-friendly states include:

1. Montana – Low filing fee, no sales tax
2. Kentucky – Affordable filing and annual fees
3. Arkansas – Low-cost formation and maintenance
4. Missouri – No annual report requirement in most cases
5. New Mexico – No annual report fee, strong privacy protections

However, if you plan to operate physically in a specific state (like California or New York), you’ll typically need to register as a foreign LLC in that state too — which adds extra fees. In most cases, it’s cheaper and simpler to just form your LLC in the state where you actually do business.

Step-by-Step: Cheapest Way to Register an LLC

1. File Directly With Your State (Skip Expensive Middlemen)

Many people pay $300–$800 to third-party formation companies for services you can do yourself for free or at a fraction of the cost. Filing directly through your state’s Secretary of State website is the most affordable route.

2. Be Your Own Registered Agent (If Allowed)

Most states require a registered agent — a person or entity that receives legal documents on your behalf. If you have a physical address in the state, you can often act as your own registered agent for free instead of paying $100–$150/year for a service.

3. Get Your EIN Directly From the IRS — It’s Free

Many formation companies charge $50–$100 to get you an EIN (Employer Identification Number). This is completely free when applied for directly on the IRS website and only takes a few minutes.

4. Draft Your Own Operating Agreement

While it’s smart to have an operating agreement, you don’t need to pay a lawyer hundreds of dollars for a basic one. Free templates are widely available, and for straightforward single-member LLCs, this is usually sufficient.

5. File S-Corp Election Yourself (Form 2553)

If you want S-Corp tax treatment, IRS Form 2553 can be filed directly and for free. There’s no need to pay a service hundreds of dollars just to submit this form on your behalf.

6. Choose a Low-Fee State (If You Have Flexibility)

If your business operates online or isn’t tied to a specific location, forming in a low-cost, low-tax state can reduce ongoing costs significantly.

Hidden Costs to Watch Out For

Even the “cheapest” path can come with surprise costs if you’re not careful:

• Annual report fees – Some states charge yearly fees just to keep your LLC active
• Franchise taxes – States like California charge an $800 minimum franchise tax annually, regardless of income
• Foreign qualification fees – Required if you operate in a state different from where you formed your LLC
• Business license fees – City or county-level licenses may apply depending on your industry
• Late filing penalties – Missing annual report deadlines can result in fines or administrative dissolution

DIY vs Hiring a Professional: What’s Actually Cheaper?

DIY formation is the cheapest option upfront, but it comes with risks:

DIY Formation

• Lowest upfront cost
• Full control over the process
• Risk of errors in paperwork, missed deadlines, or incorrect tax elections

Professional Formation Services

• Slightly higher upfront cost ($100–$500 depending on the provider)
• Ensures compliance with state and federal requirements
• Saves time and reduces risk of costly mistakes
• Often includes guidance on choosing the right structure (LLC vs S-Corp) for tax savings

For business owners who are confident and have simple needs, DIY is often the cheapest route. But for those unfamiliar with compliance requirements — especially international founders or those forming an S-Corp for the first time — a small investment in professional help can prevent expensive mistakes down the line, such as missed tax elections or penalties.

Can Foreigners Register an LLC or S-Corp in the USA Cheaply?

Yes. Non-residents can legally form an LLC in the USA, and many choose low-cost states like Wyoming or Delaware for their business-friendly laws and reasonable fees. However, foreign founders should be aware that:

• You cannot elect S-Corp status unless all owners are US citizens or resident aliens
• You’ll need an EIN, which may require additional steps without a US Social Security Number
• Opening a US business bank account may involve extra verification

For non-residents, working with a formation service familiar with international filings can actually save money in the long run by avoiding rejected applications or missed requirements.

Final Thoughts

The cheapest way to register an LLC or S-Corp in the USA comes down to a few key habits: file directly with the state, act as your own registered agent when possible, get your EIN for free from the IRS, and choose a state with low ongoing fees. DIY formation can cost as little as $35–$200, but professional guidance is often worth the extra cost if you want to avoid compliance mistakes, especially when electing S-Corp tax status.

If you’re ready to form your LLC or S-Corp the right way — without overpaying — Accountico Inc offers affordable company formation services for both US residents and non-residents, including EIN filing and S-Corp election guidance.