What Business Owners Should Know Before Choosing a State
One of the biggest concerns for entrepreneurs and small business owners is the ongoing cost of maintaining an LLC. While most states require LLCs to file an annual report and pay an annual fee, there are a few states that do not charge an LLC annual fee—even though a report may still be required.
Understanding which states have no LLC annual fee, and what that really means, can help you make a smarter and more cost-effective decision when forming or maintaining your LLC.
In this guide, we’ll cover:
- What an LLC annual fee is
- Why some states do not charge an annual fee
- States with no LLC annual fee
- Hidden costs to watch out for
- Whether forming in a no-fee state is right for your business
What Is an LLC Annual Fee?
An LLC annual fee is a recurring charge required by many states to keep your Limited Liability Company active and in good standing. This fee is often combined with an annual report or periodic filing.
Across the United States:
- LLC annual fees typically range from $20 to $800 per year
- Some states charge a flat fee
- Others base the fee on revenue, number of members, or business activity
Failing to pay the required annual fee can result in penalties, late fees, or administrative dissolution of your LLC.
Why Do Some States Have No LLC Annual Fee?
Not all states operate the same way. Some states choose to:
- Charge a one-time formation fee only
- Require reports without charging a fee
- Collect revenue through other taxes or licensing requirements
A state having no LLC annual fee does not always mean there are zero compliance responsibilities—it simply means there is no recurring annual payment for maintaining the LLC itself.
States With No LLC Annual Fee
There are a limited number of states that do not charge an LLC annual fee, although some still require periodic filings or reports.
Below are the most commonly cited states with no LLC annual fee:
Arizona
Arizona does not require an LLC annual report or annual fee. After forming your LLC, there are minimal ongoing state-level compliance requirements.
However, businesses may still need to:
- Maintain a registered agent
- Renew local or industry-specific licenses
- Comply with tax obligations
Arizona is often considered attractive for small businesses due to its low ongoing administrative burden.
Idaho
Idaho does not charge an LLC annual fee, but it does require an annual report. The good news is that the annual report is free to file and can be completed online.
This makes Idaho one of the most affordable states in terms of ongoing LLC compliance.
Minnesota
Minnesota does not charge an LLC annual fee if you file your annual report on time. The report itself is free when submitted by the deadline.
Late filings may result in penalties, so staying organized is essential.
Mississippi
Mississippi does not require an LLC annual report or annual fee. Once your LLC is formed, the state does not impose recurring maintenance fees.
Businesses must still comply with:
- State and federal tax requirements
- Registered agent rules
- Industry-specific regulations
Missouri
Missouri does not charge an LLC annual fee and does not require annual reports for LLCs.
This makes Missouri one of the more cost-effective states for maintaining an LLC from a compliance standpoint.
New Mexico
New Mexico does not require an LLC annual report or annual fee. This simplicity makes it appealing for entrepreneurs looking to minimize recurring administrative tasks.
That said, businesses operating in New Mexico must still meet tax and licensing requirements.
Ohio
Ohio does not charge an LLC annual fee and does not require annual reports for LLCs.
However, businesses must remain compliant with:
- State taxes
- Local business regulations
- Registered agent requirements
South Carolina
South Carolina does not require an LLC annual report or annual fee for LLCs taxed as pass-through entities. Some business structures may have additional filing requirements, but most LLCs enjoy low ongoing compliance costs.
Texas
Texas does not charge a traditional LLC annual report fee, but it does require businesses to file a Franchise Tax Report annually.
While many small LLCs owe no franchise tax, the filing requirement still exists. This is an important distinction—Texas may have no annual fee, but compliance is still required.
Important Note: No Annual Fee Does NOT Mean No Costs
Even in states with no LLC annual fee, business owners should be aware of other potential costs, including:
- Registered agent fees
- Business licenses and permits
- State and federal taxes
- Accounting and compliance costs
Additionally, if you operate your business in a different state than where the LLC is formed, you may need to register as a Foreign LLC, which can add new fees and filing obligations.
Should You Form an LLC in a No-Fee State?
Forming an LLC in a state with no annual fee can sound appealing—but it’s not always the best choice.
You should usually form your LLC in your home state if:
- You have a physical office
- You have employees
- You meet customers in that state
- You conduct regular business operations there
Forming out of state may require foreign LLC registration, which often costs more than the annual fee you were trying to avoid.
When a No-Fee State Might Make Sense
There are limited situations where forming in a no-fee state may be reasonable:
- Fully remote or online businesses
- Asset-holding LLCs
- Businesses with no physical presence in another state
- Strategic multi-state or international structures
In these cases, professional guidance is highly recommended.
Compliance Still Matters
Even without an annual fee, failing to meet filing or reporting requirements can result in:
- Loss of good standing
- Administrative dissolution
- Difficulty opening bank accounts
- Legal and tax complications
Staying compliant is essential regardless of where your LLC is formed.
How Epics Deal Helps With LLC Compliance
At Epics Deal, we help businesses:
- Choose the right state for LLC formation
- Understand annual fees and reporting requirements
- Avoid unnecessary foreign LLC filings
- Stay compliant year after year
- Manage multi-state LLC structures
Our goal is to simplify LLC formation and maintenance—so you can focus on growing your business, not paperwork.
Final Thoughts: Focus on Total Cost, Not Just Annual Fees
While states like Arizona, Idaho, Minnesota, Mississippi, Missouri, New Mexico, Ohio, South Carolina, and Texas offer no LLC annual fee, that should only be one factor in your decision.
The best state for your LLC depends on:
- Where you do business
- Ongoing compliance requirements
- Tax obligations
- Long-term operational costs
Choosing wisely from the start can save you time, money, and legal headaches.