Every year, many new businesses are started, and for a good reason. Many people prefer to start their own business rather than working as an employee for a large corporation. Owning a business comes with many benefits as independence, financial rewards, and personal satisfaction.
But starting a business isn’t free. Entrepreneurs need to pay fees, and the cost can be high depending on the state they register in. One of the critical differences between states is the amount each charges for creating and maintaining a business.
Determining The Business Registration Costs
AdvisorSmith, a leading provider of small business and insurance content, released its newest study. They analyzed state filing fees and related costs from all 50 states and the District of Columbia to determine the most and least expensive states to register a business.
To determine the registration costs of starting a business in each state, AdvisorSmith analyzed fees for forming and maintaining corporations and limited liability companies (LLC). The fee costs were determined by examining published filing fees from the secretary of state or similar offices in each state.
Corporation initial filing fees were determined by examining the minimum corporation filing fees for corporations in each state. AdvisorSmith also included additional one-time payments such as publication fees (estimated) and initial report fees in calculating the total corporation filing cost. Additionally, they also calculated the cost to maintain the corporation, which consists of corporation annual report fees and franchise tax or similar fees.
LLC Organization Fees
AdvisorSmith calculated the minimum LLC organization fees in each state for LLC fees, including any one-time payments such as publication fees and initial report fees. They also included the cost to maintain the LLC, including any annual report fees and any minimum franchise tax or fees levied on LLCs.
AdvisorSmith created a model that was weighted two-thirds toward LLC fees and one-third toward corporation fees to rank the states. The states were then ranked based on their composition of LLC and corporation fees.
The study found that the average cost to register a business was $145, including filing, publication, and initial report fees. The annual cost to maintain a business in good standing was $133, including annual report fees and franchise taxes.
For corporations, the average business registration cost nationwide was $141. The corporate formation fees ranged from as low as $40 in Kentucky to as high as $725 in Nevada. The yearly maintenance costs for corporations averaged $147.
LLC formation fees averaged $149 nationwide. These fees ranged from a low of $40 in Kentucky to a high of $650 in New York. The annual maintenance costs for LLCs averaged $119.
The Most and Least Expensive States to Register a Business
The state with the highest business registration costs was Massachusetts. The corporate filing fee in Massachusetts is $275, and the LLC filing fee is $500.
The least expensive state to register a business was Mississippi. The initial corporate filing fee is only $50, and the price for an LLC is also $50.
States with the Highest Business Registration Costs
States with the Lowest Business Registration Costs
To view the complete study and see the business costs in every state, please visit https://advisorsmith.com/