What a US company really costs: count three years, not one day
The "from $99" figure is true and incomplete. What decides the cost is not what you pay today but what recurs every year — here is the full arithmetic.
Why the advertised numbers mislead
"Form your company from $99" is a real figure — for one line item out of six. It does not lie; it answers a question you did not ask. Your actual question is: what will this company cost me by the end of its third year?
The six line items
1 — State filing fee
Paid once to the Secretary of State, and it varies widely by state. This is a pure government charge and nobody should be adding a margin to it — we show it at its actual amount on the states page.
2 — Registered agent
Mandatory in every state, renewed annually. This is the line that appears "free for the first year" in promotional offers and gets invoiced in the second. In our plans it is included, not a first-year gift.
3 — Annual report and franchise tax
The most important line in the arithmetic because it recurs. Some states ask nothing of LLCs; others charge a fixed annual amount regardless of activity. This difference — not the formation price — is what actually makes one state cheaper than another. See the annual report and franchise tax.
4 — The EIN
Obtaining it from the IRS is free. What you pay anyone is for completing the form, filing it through the international route and following it up. Anyone presenting a few hundred dollars as a government fee for an EIN is selling you something the government gives away.
5 — Tax filings
Always forgotten in the initial sum, and a certain annual cost. Form 5472 is required of a foreign owner of a single-member LLC even with no profit, and neglecting it starts at $25,000. A saving on this line is not a saving.
6 — Bookkeeping
Optional in year one if activity is light, close to unavoidable afterwards. Disorganised books make the tax return more expensive, because the accountant starts from nothing every time.
The lines that appear later
- A US business address, if you need one distinct from the registered agent's.
- A Certificate of Good Standing when a bank or partner asks.
- Foreign qualification if you develop a presence in another state.
- Amendments — changing the name or adding a member carries a fee in every state.
A worked three-year example
No figures here, because states change them — but the method does not. Add it up like this:
- Year one = filing fee + plan subscription + (annual report and franchise tax, if they fall due in the same year).
- Years two and three = plan subscription + the state's annual fees + the cost of the tax filing.
- Total ÷ 3 = the real annual cost. That is the number to compare providers, or states, against.
You will usually find that the filing fee — the one line most advertising quotes — is the smallest part of the total.
Where the hidden numbers usually sit
- "Free registered agent." Free for a year, then at full price every year after. Ask for the renewal price, not the starting one.
- A margin on a government fee. State fees are published on the Secretary of State's site; compare what you are quoted with the official figure.
- An EIN fee presented as a government charge. Obtaining it is free — what is paid is for the work, not for the number.
- "Tax filing not included." A certain annual cost left outside the quote to make the price look smaller.
- Cancellation or transfer fees. Ask before, not after — you will meet them if you ever move.
When the cheapest company is the most expensive
An arithmetic worth sitting with: a company that saved $100 a year and missed Form 5472 once pays a penalty equal to 250 years of that saving. And a company that lost good standing because nobody tracked its annual report can be effectively frozen at the exact moment it needs a certificate for the bank.
The real cost is not what you pay. It is what you pay plus the expected cost of what happens when nobody is watching.
How we present the number
Two line items and no third: the annual plan subscription, and the state government fee at cost with no markup. Any add-ons you choose appear separately. All three are shown before the payment screen, not after.
And year two holds no surprises: the recurring costs are published from day one on the pricing page and on each state's page. The second-year surprise is the single most common complaint against formation platforms, which is exactly why we put it in front of you first.
This is general information for educational purposes and is not a substitute for advice from a licensed CPA or attorney about your own situation.