A lean consulting practice run from a laptop has almost nothing in common, cost-wise, with a restaurant that needs a lease, kitchen equipment, and a full staff roster. Setting up actually means two separate things: legally forming the entity, and having enough capital to launch and operate it until revenue arrives.
State choice, entity type, industry, location, business model, and the founder's own circumstances (including whether they're based overseas) all shift the final number. This guide walks through formation fees, licenses, professional services, staffing, premises, and a practical method for building your own budget instead of relying on someone else's average.
Key Takeaways
- Separate one-time formation costs from recurring operating expenses from day one
- Treat state filing fees as the entry cost; taxes, licenses, payroll, and insurance usually cost more over time
- Plan far less capital for lean service or online models than for product, retail, or restaurant ventures
- Budget separately for cross-border tax, banking, and compliance advice if you are a foreign founder
How Much Does It Cost to Set Up a Business in the USA?
There's no single national price tag for starting a US business, and anyone who tells you otherwise is oversimplifying. A basic legal formation budget covers only the paperwork needed to make your entity exist. A complete launch budget covers everything needed to actually open your doors, hire your first employee, or ship your first order.
State Filing Fees at a Glance
Formation fees differ by state of incorporation, and that choice also sets your recurring tax exposure:
| State | LLC Formation | Corporation Formation | Recurring Obligation |
|---|---|---|---|
| Delaware | $110 | $109 (minimum) | $400 annual LLC tax; corporation franchise tax + $50 report |
| California | $70 | $100 | $800 annual LLC tax; corporation minimum tax after year one |
| Texas | $300 | $300 | Franchise tax report; no-tax-due threshold $2.65M (2026-2027) |
| Florida | $125 | $70 | Annual report: $138.75 (LLC), $150 (corporation) |
| New York | $200 | $125 | Biennial statement $9; publication requirement for LLCs |
| Wyoming | $100 | $100 | Annual license tax: greater of $60 or a per-asset calculation |
Source: official state Secretary of State fee schedules, checked 2026.
Notice that Delaware and Texas formation fees look similar for LLCs and corporations, but the ongoing tax treatment diverges sharply once you're operating. Choosing a state purely because the filing fee is lower can backfire once annual taxes and reports kick in.
Three Practical Budget Profiles
A single headline figure rarely helps. These three profiles are more useful:
- Lean service or online business: formation fee, a business license where required, website and software subscriptions, basic insurance, and a modest marketing budget. Physical premises costs are minimal or absent.
- Standard small business with employees or outsourced support: the lean stack, plus payroll setup, employer taxes, possibly a coworking or small leased space, and outsourced bookkeeping or tax support.
- Capital-intensive business: premises fit-out, specialized equipment, inventory, extended compliance obligations, and a larger working-capital cushion for the months before revenue stabilizes.
The Small Business Administration distinguishes online, service, and brick-and-mortar business categories precisely because their cost structures don't overlap much. A basic formation estimate typically includes entity filing, a name reservation if needed, a registered agent, and initial reports. It usually excludes operating capital, payroll, inventory, insurance, and professional advice, which is where most underbudgeting happens.
Entity Type Changes the Math
LLCs, corporations, and sole proprietorships carry different formation costs and different downstream tax obligations:
- Sole proprietorship: usually no separate entity filing, though the owner reports income on Schedule C and may owe self-employment tax
- LLC: moderate filing fee, with flexible tax treatment as a disregarded entity, partnership, or corporation depending on election
- Corporation: filing fees often similar to an LLC, but the company files Form 1120 (or 1120-S with an S election) and may owe separate franchise tax
A low registration fee doesn't mean a low-cost business. Annual reports, franchise taxes, local permits, and professional services can add far more over a business's first few years than the initial filing ever did.
What Costs Should You Include in Your US Business Budget?
Build your budget around three categories: one-time costs (paid once, at launch), recurring costs (monthly or annual, ongoing), and periodic costs (renewals, license refreshes, occasional compliance filings). A simple startup-cost worksheet with an estimated amount, payment timing, and the source of each estimate keeps assumptions honest.
Formation, Legal, and Compliance Costs
This bucket covers state formation filing, name-related filings, registered-agent service, business licenses, industry-specific permits, local registrations, annual reports, and franchise taxes. Add legal document preparation and contract or intellectual-property support if your business needs them.
Check official state and local sources directly. Fee schedules change, and a permit that costs almost nothing in one county can carry a meaningful charge across a state line.
Professional, Tax, and Accounting Costs
Every US entity needs tax registration, bookkeeping, and periodic tax preparation, and costs climb with complexity:
- A 2024 practitioner survey reports average fees of $750-$1,250 for a Form 1120 corporate return
- Median bookkeeping in that survey runs about $53/hour
- Foreign-owned entities, multi-state operations, and businesses with investors typically pay more for specialist compliance work
Get a scope-specific quote rather than assuming a national average applies to your situation. This is one area where VJM Global supports founders directly. The firm handles US entity formation across LLC, C-corp, S-corp, and branch structures, plus EIN application, registered agent setup, and ongoing federal and state tax filing (Forms 1120, 1120-S, or 1065 depending on structure).
Premises, Equipment, Inventory, and Technology
Your cost profile here depends entirely on your business model:
- Home-based or remote: minimal premises cost beyond a home internet upgrade and basic software
- Coworking: monthly membership fee instead of a lease deposit
- Leased office or retail: deposit, fit-out, furniture, and utilities on top of rent — US office asking rents averaged $37.58 per square foot in Q2 2026, though actual costs vary hugely by market
- Manufacturing or hospitality: equipment, inventory, packaging, warehousing, and shipping add significant upfront cost
Website development and basic cybersecurity measures apply almost universally now, regardless of business model.
Staffing, Insurance, Marketing, and Working Capital
Once you hire, employer payroll taxes and benefits enter the picture. Employer Social Security and Medicare contributions total 7.65% of applicable wages, and federal unemployment tax adds a smaller amount on top. Insurance needs (general liability, property, workers' compensation) depend on your exposure and coverage level, so get quotes rather than guessing.
Marketing (launch campaigns, paid acquisition, and ongoing content) and working capital are easy to under-budget. Plan for customer-acquisition spend and at least 3–6 months of operating expenses so formation and early sales gaps do not stall the business.
| Cost Category | Service-Based | Online | Product-Based | Brick-and-Mortar |
|---|---|---|---|---|
| Premises | Rarely essential | Not needed | Warehousing often needed | Essential |
| Inventory | Not needed | Sometimes | Essential | Essential |
| Staffing | Deferrable early on | Deferrable | Grows with volume | Often essential from day one |
| Insurance | Usually essential | Often essential | Essential | Essential |
How to Estimate Your Total Startup Budget
A workable formula looks like this:
Total one-time launch costs + (recurring monthly costs × planned runway) + periodic compliance costs + a contingency reserve = your startup budget.
Follow this sequence to build three versions of your budget:
- Base case — realistic costs and revenue timing based on actual quotes
- Conservative case — slower sales, higher costs, longer runway needed
- Growth case — faster hiring or expansion, testing how quickly cash gets consumed
Then stress-test each scenario. What happens if hiring starts two months earlier than planned? If rent increases 15%? If your first sale takes six months instead of two? These questions matter more than the headline total.
To fill in real numbers, not guesses:
- Request vendor quotes for equipment, software, and premises rather than estimating
- Check government fee schedules directly for your chosen state and locality
- Compare similar businesses in your industry and region where data is available
- Speak with qualified advisors before finalizing entity choice or tax elections
- Separate confirmed costs from assumptions clearly in your worksheet
For founders entering the US market—especially from overseas—firms like VJM Global can help turn those worksheet assumptions into confirmed figures. Support typically covers entity formation, tax registration, payroll setup, and ongoing compliance across all 50 states.
No provider replaces state-licensed legal or tax advice for decisions specific to your situation. Use professional support as a complement to that advice, not a substitute.
How to Avoid Common Cost Mistakes and Reduce Startup Expenses
Focusing only on the incorporation fee is the single most common budgeting mistake founders make. It feels like the "official" cost of starting a business, so it anchors expectations, and everything else gets treated as an afterthought.
Common errors include:
- Choosing a state or entity type solely because the filing fee looks cheap, without checking annual tax exposure
- Overbuying equipment or software before validating actual usage needs
- Overlooking local permit requirements that vary by county or city
- Failing to budget for recurring compliance items like annual reports and franchise taxes
Practical ways to reduce costs without cutting corners:
- Start with a minimum viable setup and expand once revenue justifies it
- Compare vendor quotes for insurance, software, and services before committing
- Use coworking space instead of a lease until team size demands otherwise
- Lease or buy refurbished equipment where quality allows
- Outsource non-core functions like bookkeeping instead of hiring in-house early
- Delay nonessential features, but never delay legal, security, or compliance requirements
Those steps keep early spend under control. Foreign founders still face an extra layer of risk.
Skipping professional advice on ownership structure, cross-border taxation, US banking, reporting obligations, or immigration matters rarely saves money. Penalties, rework, and missed deadlines almost always cost more later.
Conclusion
Formation filing fees are only a small part of what it costs to set up a business in the USA. Your business model, chosen state, industry, staffing needs, premises requirements, and compliance obligations drive most of your year-one spend. A $70 LLC filing and a $110 LLC filing tell you almost nothing about what you'll actually spend.
Build a budget specific to your state and business model—one that balances immediate affordability with compliance and long-term value. That approach beats chasing the lowest number you can find online.
Frequently Asked Questions
What are 5 common startup costs for a business?
Formation and professional fees, business licenses and permits, equipment or technology, marketing, and early operating costs like payroll, rent, inventory, or insurance. The mix and scale depend heavily on your business model.
How much does it cost to start a business in the USA?
Costs vary widely by state, entity type, industry, and business model. Formation fees alone typically run $70 to $300, but the total launch and working-capital budget can be many times higher depending on staffing, premises, and inventory needs.
How much does it cost to form an LLC or corporation in the USA?
State filing fees typically run $70 to $300, with registered-agent and expedite options adding to that total. Always confirm the current official fee schedule for your chosen state before budgeting, since figures change over time.
What are the ongoing costs of running a US business?
Annual reports, franchise or state taxes, accounting, insurance, payroll, software, rent, inventory, and marketing all count as ongoing costs. Some, like California's $800 annual LLC tax, apply regardless of how small the business is.
What additional costs should foreign founders expect when setting up a US business?
Cross-border tax and reporting, legal structuring advice, US banking setup, registered-agent or local compliance requirements, currency transfer costs, and immigration advice where relevant. These typically add professional fees beyond the standard domestic formation budget.
