How Much Does It Cost to Start an LLC in 2025? (And How to Save More)

Starting an LLC involves far more than the initial state filing fees; ongoing compliance requirements, surprise penalties, and scattered third-party services can quietly add up to thousands each year. By using automation and consolidated platforms like Lettuce, solopreneurs can replace multiple vendors, avoid manual mistakes, and save more than $8,000 annually through streamlined formation, compliance, payroll, and tax optimization.

Setting up your LLC or S Corp used to be a hassle; lawyers, paperwork, and long waits that made starting a business feel harder than running one. Now, automation has completely changed the game. Forming your business structure is as simple as ordering lunch online and often costs less. Filing fees vary by state, from about $35 in Montana to $500 in Massachusetts, with most landing in the $100–$200 range. But here’s the real truth: the biggest costs aren’t the filing fees; it’s what happens after formation. Ongoing compliance, tax optimization, and hidden admin tasks can add up quickly if you’re not set up strategically from the start.

The best part? You no longer need a team of accountants or lawyers to handle it all. Smart automation tools have made LLCs and S Corps accessible to every solopreneur, giving you the same legal protection and tax advantages that big companies use. That means less paperwork, fewer mistakes, and major time savings. Platforms like Lettuce take it a step further, handling everything from business formation and S Corp election to payroll and tax filings automatically. In just 10 minutes, you can set up your structure, automate your compliance, and start saving thousands each year.

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Breaking Down the Real Cost to Start an LLC in 2025

Starting an LLC in 2025 isn’t as expensive or as simple as many people think. While filing fees grab the headlines, they’re just one part of the total cost of forming your business. State filing fees range widely, from $50 in states like Arizona, Colorado, and Michigan to $520 in Massachusetts, with most states falling somewhere between $100 and $200. In Florida, the total is about $125 once you include the required registered agent fee, while California adds an $800 annual minimum tax on top of your filing costs. These numbers represent your real upfront investment before your business even earns a dollar.

Beyond the state fee, several other expenses can add up quickly:

• Registered agent services: Typically required by most states, costing between $100–$300 per year.

• Operating agreement: Essential for protecting your business structure and partners’ roles (some states require it).

• Local business licenses: Depending on your city or county, expect anywhere from $50–$500 in fees.

• EIN (Employer Identification Number): Free through the IRS, but many filing services charge extra to include it.

• Publication requirements: States like New York require publishing your LLC formation in local newspapers, which can cost $425–$1,200.

What Are the Hidden and Ongoing Costs of LLC Formation?

The real cost picture extends far beyond that initial state filing fee. What starts as a one-time expense quickly becomes a recurring financial commitment with ongoing compliance, state-specific requirements, and potential penalties that add up fast.

Here's what catches most solopreneurs off guard:

• Annual reports and franchise taxes become your new reality: Average annual fees hit $91 across all states, but some states demand much more: California's $800 minimum franchise tax applies whether you earn $1 or $100,000.

• Miss a deadline and watch the penalties pile up: Federal failure-to-file penalties start at 5% per month, with a minimum of $510 for late returns. States can dissolve your LLC entirely for missed annual reports, forcing costly reinstatement that often costs more than your original filing fee.

• Piecemeal providers create paperwork headaches and duplicate costs: Using separate vendors for formation, registered agent services, banking, and compliance means juggling multiple relationships, deadlines, and fee structures that often overlap or leave coverage gaps.

• S Corp elections add payroll complexity you didn't expect: Electing S Corp status for tax savings means committing to formal payroll requirements, quarterly payments, and additional filings that create ongoing costs and penalty exposure.

• Multi-state operations double your compliance workload: Operating outside your formation state typically requires foreign entity registration. That means duplicate annual reports, franchise taxes, and compliance deadlines in multiple states.

• Formation companies hide ongoing fees behind low upfront pricing: Many advertise cheap formation but charge separately for registered agent services, compliance monitoring, and annual reports. Lettuce's transparent pricing bundles everything with no hidden fees, so you know exactly what you're paying upfront and ongoing.

From Complex to Automatic: How Lettuce Simplifies LLC and S Corp Setup

Setting up your business shouldn’t feel like assembling a jigsaw puzzle with missing pieces, but that’s exactly what most solopreneurs face. You pay one service to form your LLC, hire an accountant for taxes, find another for payroll, and somehow still end up buried in spreadsheets. Between fees, filings, and follow-ups, your “simple” setup can quickly cost thousands and eat up hours every month that could be spent growing your business instead.

Lettuce makes all of that effortless. For $299 a month, you get everything in one place: LLC formation, S Corp election, EIN setup, business banking, payroll, bookkeeping, tax payments, and compliance tracking, all fully automated and completely transparent. No setup fees. No hidden costs. Just a clean, modern system that files your paperwork, calculates your salary, and keeps your taxes on track while you focus on what you do best. Think of it as your financial back office, powered by automation instead of admin work.

How Much Does It Cost to Start an LLC: Frequently Asked Questions (FAQs)

We hear these questions all the time from business owners figuring out the smartest way to set up their company. Whether you’re comparing state filing fees, planning a move to S Corp status, or curious how automation can simplify the process, these FAQs break down what you really need to know, so you can make confident, informed decisions about your next step.

How does automation help me avoid costly compliance mistakes?

Manual compliance processes are expensive and error-prone; missing quarterly tax payments alone can trigger penalties of hundreds or thousands of dollars, plus interest. Automation streamlines data collection, analysis, and reporting to ensure accuracy and consistency, leading to substantial cost savings. Lettuce automates everything from quarterly tax calculations to annual report filings, so you never miss a deadline or face penalties that could have been easily avoided with proper systems in place.

Can I convert my existing sole proprietorship to an LLC or S Corp with Lettuce?

Converting from sole proprietorship is surprisingly straightforward and won't disrupt your existing business operations. You'll form an LLC first (which provides liability protection), then elect S Corp tax status if it makes sense for your income level, typically when you're 80,000 in business profits annually. Lettuce handles the entire process in about 10 minutes, including Form 2553 filing for S Corp election, and you can even make retroactive elections in many cases.

Are there any ongoing fees I should watch out for after formation?

Beyond your monthly Lettuce subscription, watch for state-specific annual fees that vary widely by location. Some states, like Florida, require $138.75 annually but charge $538.75 if filed late, while New York has income-based fees starting at $25 but increasing with revenue. The key is staying compliant with deadlines. Late fees can be substantial, and some states offer no extensions.

Will switching to an LLC or S Corp disrupt my business or tax situation?

The transition is typically seamless when handled properly, and you'll likely see immediate benefits rather than disruption. S Corp election can save high earners $10,000-$15,000+ annually in self-employment taxes by splitting income into salary and distributions. Your clients and vendors won't notice any operational changes, and you'll gain liability protection plus access to better retirement contribution limits and business expense deductions.

Stop Overpaying: Automate Your LLC Setup and Save More

Most solopreneurs assume the cost of starting an LLC ends with the state filing fee, but that’s just the beginning. Depending on where you register, state fees typically range from $40 to $520, but once you factor in formation services, accountants, payroll providers, and bookkeeping software, total first-year costs often climb into the thousands. Between annual reports, registered agent fees, and late-filing penalties, it’s easy for new business owners to overspend without realizing it. Automation changes that by streamlining the entire process, cutting out redundant vendor fees, and ensuring every compliance step happens on time; no stress, no guesswork.

With Lettuce, you get big-company financial systems designed for a business of one. In about 10 minutes, you can form your LLC, elect S Corp status, open a business bank account, and automate everything from payroll to taxes. It’s everything you need to build a professional, tax-optimized foundation that saves you time and thousands in unnecessary costs. Ready to see how much you could save? Try Lettuce and discover your real savings in minutes.