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Business Formation in the U.S.: What the Price Is Made Of
Quick Answer
The total you pay to open a company has two parts, and it helps to keep them separate. The first is the state filing fee, which doesn’t depend on who files for you: from $50 in Arizona and $100 in Wyoming to $300 in Texas and $500 in Massachusetts. The second is the work itself: choosing the state and structure, preparing and filing documents, obtaining an EIN, drafting bylaws or an operating agreement, and electing a tax status.
The Illion Tax & accounting service fee is [Illion price — to be filled in]. It covers the whole procedure, from the name check through to your registration confirmation and EIN.
The process works the same way for nonresidents, with a few extras: the EIN is obtained without an SSN on Form SS-4, and foreign-owned corporations pick up an annual Form 5472 obligation with a $25,000 penalty for missing it. Those are worth planning before you file, not after.
What the Service Includes
Formation isn’t a single filing — it’s a chain of decisions, each of which shapes your taxes and filings later. Here’s what the work covers.
- Choosing the structure: LLC, S-corp, C-corp or partnership, with the math for your expected profit and plans.
- Choosing the state based on where you actually operate, not just on the size of the filing fee.
- Checking name availability in the state registry and reserving it where that makes sense.
- Preparing and filing the formation documents: Articles of Organization for an LLC or Articles of Incorporation for a corporation.
- Appointing a registered agent and, if needed, sourcing a commercial agent in the chosen state.
- Obtaining an EIN from the IRS, including without an SSN for foreign owners.
- Preparing internal documents: an operating agreement for an LLC, or bylaws and the initial shareholder resolution for a corporation.
- Electing a tax status: filing Form 2553 for S-corp treatment, or Form 8832 where a different classification is needed.
- First obligations after formation: the initial report where a state requires one, and registering for state taxes.
Pricing
Here’s the cost structure. State fees are shown as ranges; the service fee drops in from your own price list.
| Item | Price | Frequency |
|---|---|---|
| Full-service formation | [Illion price — to be filled in] | One-time |
| State filing fee for formation documents | $50–$500 depending on the state | One-time |
| Registered agent (commercial) | $50–$300 per year | Annually |
| Obtaining an EIN | [Illion price — to be filled in] | One-time |
| Operating agreement or bylaws | [Illion price — to be filled in] | One-time |
| Form 2553 filing (S election) | [Illion price — to be filled in] | One-time |
| Initial state report where required | $0–$50 in state fees | One-time |
| Expedited filing | State surcharge where offered | One-time |
What Drives the Final Price
- State of formation. Fees vary tenfold — $50 in Arizona against $500 in Massachusetts — and annual reports range from nothing to several hundred dollars.
- Business structure. In several states a corporation’s fee depends on authorized shares or stated capital, so a careless clause in the articles makes formation more expensive for no benefit.
- Owner residency. A nonresident needs an EIN without an SSN and sometimes help with banking, which adds steps.
- Planned tax status. If you want S-corp treatment, Form 2553 joins the process with its own deadline.
- Operations in more than one state. Forming in one state and working in another means foreign qualification and a second fee.
- Speed. Some states charge extra for expedited processing; without it, filings take anywhere from a few days to a couple of weeks.
Worked Example
Take a common case: a single-member Wyoming LLC owned by a nonresident, EIN required, no S election planned. Here’s year one.
| Cost item | Calculation | Amount |
|---|---|---|
| Formation service | [Illion price — to be filled in] | [Illion price — to be filled in] |
| State filing fee (Wyoming) | $100 | $100 |
| Registered agent | $50–$300 per year | $50–$300 |
| EIN without an SSN | [Illion price — to be filled in] | [Illion price — to be filled in] |
| State annual report | Not due in the first year | $0 |
| Total government costs | — | $150–$400 plus the service fee |
For comparison, the same company costs $300 in filing fees in Texas, $500 in Massachusetts and $50 in Arizona. If the business actually operates in California, any of those options also picks up a foreign registration there plus the $800 minimum franchise tax every year.
From year two, costs come down to maintenance: the state annual report, agent service and tax filings. In Wyoming that’s $60 a year, in Texas the report is free, and in California it’s the $800 minimum tax.
That’s why the state should be chosen by where you operate, not by the filing fee. Saving $250 at the start easily turns into $800 a year and two sets of filings.
What Happens If You DIY or Skip It
The most expensive formation mistake is registering in a “tax-friendly” state while operating somewhere else. Tax follows nexus — an office, employees, inventory — and for the owner, tax residency. The result is two registrations, two sets of filings and not a dollar saved.
The second is missing first-year obligations. Several states require an initial report on a tight clock: New Mexico gives you 30 days, with a $200 penalty and cancellation after 60 days in default; Washington allows 120 days.
The third is the wrong tax status, or the right one elected too late. Form 2553 is due by the 15th day of the third month of the tax year. Miss it and the company is taxed as a C-corp for the entire year, with no self-employment tax savings.
The fourth concerns foreign owners. A corporation that is 25% or more foreign-owned files Form 5472 with Form 1120 every year. The penalty for not filing is $25,000, and it applies even to a company with no activity.
The fifth is a poorly drafted corporate charter. Virginia’s annual fee scales with authorized shares, Oklahoma’s filing fee is based on stated capital, and New Mexico’s depends on share count. A million-share template copied off the internet becomes a recurring overcharge.
How the Work Is Organized
- We talk through the task: where you live, where your customers and employees will be, expected profit, and whether you need U.S. banking.
- We select the state and structure, modeling taxes and annual fees for two or three options.
- We check the name and prepare formation documents, confirming the ownership structure and share or membership split.
- We file with the Secretary of State and obtain confirmation of registration.
- We obtain the EIN, prepare internal documents and, where needed, file the tax status election on Form 2553.
- We register the company for state taxes and hand you the compliance calendar: reports, returns and minimum taxes.
Which Option Fits Which Business
Here are typical scenarios so you can see what makes up the total in each case.
| Client situation | What we handle | Price guide |
|---|---|---|
| U.S. resident operating in their home state | LLC in the home state, EIN, operating agreement | State fee + service fee |
| Planning to save through S status | LLC or corporation plus a timely Form 2553 | State fee + service + 2553 filing |
| Nonresident without an SSN | LLC or C-corp, EIN via SS-4, in-state agent | State fee + service + agent |
| Existing company expanding to another state | Foreign qualification and registration there | Second state fee + support |
Common Client Mistakes
1. Picking a state by its filing fee
Consequence: Registered in one state, obligated in another, with double fees and double filings.
How to avoid it: Choose the state where you actually operate, and model savings over three years.
2. Using a template charter with a million shares
Consequence: In several states that directly raises the filing fee and the annual charge.
How to avoid it: Set share counts deliberately: 1,000 to 100,000 usually suffices, and you can amend later.
3. Missing the Form 2553 deadline
Consequence: The company is taxed as a C-corp all year and the S-corp savings disappear.
How to avoid it: Settle the status question at formation, not at year-end.
4. A foreign owner unaware of Form 5472
Consequence: A $25,000 penalty even with no business activity.
How to avoid it: Plan the filing calendar before forming: for foreign-owned companies this is mandatory, not optional.
FAQ
It combines the state filing fee ($50–$500 depending on the state) and the service fee — [Illion price — to be filled in]. The registered agent, EIN and internal documents are billed on top if they aren’t bundled.
The one where you actually operate. Wyoming, Texas and Florida work well for people based there; for everyone else, forming “for the taxes” just adds a second registration where you really work.
Yes. A nonresident can form an LLC or C-corp remotely with a registered agent in the state. S-corps are closed to nonresident aliens under federal rules.
Through Form SS-4 by fax or mail; the IRS online application requires an SSN or ITIN. Timing depends on IRS workload, typically from several days to several weeks.
For most small businesses an LLC is simpler: fewer formalities and flexible profit allocation. A corporation makes sense when you expect investors, employee equity, or plan to retain profit in the business.
Banks open accounts, not formation providers. We prepare the document package banks ask for and explain which options are realistic for nonresidents.
Since March 2025, companies formed in the U.S. don’t file with FinCEN; the requirement remains for foreign companies registered to do business in the U.S. The rules have changed before, so we confirm the status at formation.
Two routes: register as a foreign corporation in the new state, or redomesticate if both states allow it. The choice depends on taxes, contracts and bank accounts.
In most states online filings clear in one to five business days; paper filings in some states take up to two weeks. Expedited processing is available for an extra state fee.
Check whether an initial report is due and when, obtain the EIN, adopt internal documents, register for state taxes, and set up a calendar of annual obligations.