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Editorial 6 MIN READ

Louisiana in 2023: a cheaper LLC than Delaware, on a civil-law foundation

A $100 formation, a $35 annual report, and a franchise tax that just vanished

The Editors
Staff, Incorporator.org
6 min read Updated
Contents 6 sections
  1. The formation mechanics
  2. Maintenance: the annual report is $35
  3. The franchise tax just disappeared
  4. The civil-law quirk
  5. Who this state makes sense for
  6. Sources

Louisiana LLC costs $100 to form through geauxBIZ and $35 a year to keep on the rolls. As of tax year 2023, corporations registered in the state no longer owe corporation franchise tax at all. That is the headline for anyone weighing Louisiana LLC filing fees against Delaware or Texas this January.

The price is the easy part. The harder part is that Louisiana is the only U.S. state whose private law descends from the Napoleonic Code rather than the English common law, and that shows up in odd places once you start operating.

The formation mechanics

You file Articles of Organization with the Louisiana Secretary of State. Online filing goes through geauxBIZ, the state's business portal, and costs $100 for a domestic LLC. The same document filed by mail is also $100. Foreign LLCs registering to do business in Louisiana file an Application for Authority to Transact Business and pay $150.

The statutory anchor is the Louisiana Limited Liability Company Law at La. R.S. 12:1301 through 12:1370. Section 12:1304 lists what the Articles must contain: the name of the LLC (which must include some variant of "Limited Liability Company," "L.L.C.," or "LLC"), its purpose (a general-purpose clause is fine), and the name and municipal address of its registered agent in Louisiana. The agent can be an individual resident or a domestic or qualified foreign entity. Section 12:1308 requires an initial report filed with the Articles listing the registered office and the names and addresses of the managers or members.

Louisiana will also require you to obtain, separately, a Louisiana Department of Revenue account if you will have any state tax obligations, and a parish-level occupational license in most parishes. The Secretary of State's filing is the entity formation; it is not the license to operate.

Standard online turnaround through geauxBIZ is usually two to three business days. A 24-hour expedite is available for an additional $30, and a priority two-to-four-hour expedite is available for an additional $50 at the Baton Rouge office.

Maintenance: the annual report is $35

Every Louisiana LLC must file an annual report with the Secretary of State on or before the anniversary of its formation. The filing fee is $35. The form itself is short: confirm the registered agent, confirm the registered office, confirm the managers or members of record. You can file it online through geauxBIZ in a few minutes.

Miss the deadline and the LLC is flagged as delinquent. After three consecutive years of non-filing the Secretary of State will revoke the LLC's charter under La. R.S. 12:1338.1, which is the statutory mechanism for administrative termination. Reinstatement is possible but requires catching up on the missed reports and a reinstatement fee.

Compared to Delaware's flat $300 annual LLC tax due every June 1 regardless of formation month, Louisiana's $35 anniversary report is cheap enough that most operators forget how cheap it is. Over a ten-year hold, Delaware recurring costs total $3,000; Louisiana totals $350. The formation itself is $10 more in Louisiana ($100 versus Delaware's $90), so the full ten-year envelope is $450 Louisiana against $3,090 Delaware.

The franchise tax just disappeared

The largest change affecting Louisiana entities in 2023 is not in the fee schedule. It is in the tax code. House Bill 292 of the 2022 Regular Session, signed by Governor John Bel Edwards on June 15, 2022, repealed the Louisiana corporation franchise tax for taxable periods beginning on or after January 1, 2023. For tax year 2023 and forward, corporations registered in Louisiana owe no franchise tax.

HB 292 also made a second structural change. Under prior law the corporate income tax at La. R.S. 47:287.12 ran on a graduated schedule: 3.5% on the first $50,000 of net income, 5.5% on the next $100,000, and 7.5% on income above $150,000. The bill, paired with a constitutional amendment ratified at the November 2021 election, set a path toward a flat corporate income tax rate of 3.5%, with phased reductions tied to revenue triggers built into the statute. Whether the flat rate is fully in effect for a given tax year depends on whether the prior year's collections hit the trigger.

LLCs taxed as partnerships or disregarded entities were never subject to corporation franchise tax, so the repeal is a bigger story for C-corps than for most LLCs. But LLCs that elected C-corp or S-corp treatment with the IRS, which flows through to Louisiana classification, picked up a real benefit.

Louisiana has not adopted a pass-through-entity elective tax regime allowing members to work around the federal $10,000 SALT cap by paying state income tax at the entity level. A number of states have enacted such regimes since IRS Notice 2020-75 blessed the structure. Louisiana has not, as of the start of 2023. For a pass-through LLC with Louisiana members and meaningful state tax liability, this is a real gap compared to, for example, Georgia or New York.

The civil-law quirk

The rest of the country runs on common law, which is to say on judicial precedent inherited from England and refined through case decisions. Louisiana runs on the Louisiana Civil Code, a codified body of law whose structure and substance trace to the Napoleonic Code of 1804 and the Spanish law that preceded French Louisiana. The LLC statute itself, at Title 12, sits in a civil-law matrix governing property, contracts, obligations, succession, and family law.

For a Louisiana-domiciled operator doing Louisiana work with Louisiana counterparties, this is ordinary and invisible. For an out-of-state founder who forms in Louisiana to chase the cheap fees, the quirks surface later. Several examples.

The Civil Code uses the term "immovable" where common-law states use "real property," and the rules about ownership, servitudes, and mineral rights differ in substance, not just vocabulary. Contract formation doctrine (offer, acceptance, cause, object) follows civil-law categories rather than common-law consideration; a Louisiana court will analyze a contract with the same tools it would use on any other obligation. The state does not recognize common-law marriage. Succession (what other states call inheritance or probate) follows forced heirship rules under the Civil Code for descendants in certain circumstances, which matters when members die and membership interests pass.

Judgments are structured differently. Louisiana uses different procedural terminology in its trial courts and has its own appellate structure. The Louisiana Supreme Court interprets the Civil Code as a unified text rather than building doctrine case by case, which produces a different texture of precedent than Delaware Chancery output.

None of this makes Louisiana a bad place to form an LLC. It makes Louisiana a state where the operating agreement should be drafted by someone comfortable with Louisiana law, and where forum-selection and choice-of-law clauses deserve real attention if the business's counterparties or operations sit outside the state.

Who this state makes sense for

The Louisiana numbers are better than the Delaware numbers on recurring cost, by a factor of about nine on the annual side, and roughly equivalent at formation. For a business whose operations, property, and counterparties are in Louisiana, forming in Louisiana is the obvious call and the civil-law frame is a feature of where you already are.

For an operator whose business runs elsewhere, Louisiana rarely makes sense as a formation state despite the cheap fees. You will still need to foreign-qualify in the state where you actually operate, which duplicates the registered-agent cost and the annual report and exposes you to that state's taxes anyway. The home-state rule, which is true for most of the country, holds here too.

The 2023 franchise-tax repeal is interesting mostly for Louisiana-based C-corps and for LLCs that had elected corporate treatment. If you were paying the franchise tax last year, file your 2022 return and then notice, quietly, that the line item is gone.

Sources

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