How to Start an LLC

Short answer

• Forming a limited liability company, or LLC, is a state process. You choose a formation state, pick a name that meets that state's rules, appoint a registered agent in that state, and file articles of organization with the state filing office, usually the Secretary of State.
• After filing, sign an operating agreement, apply for a free Employer Identification Number, or EIN, from the Internal Revenue Service, or IRS, and complete any state tax registrations, licenses, and permits your business needs.
• Costs, forms, deadlines, and ongoing duties vary by state, so check the filing office in your formation state before you file. This guide is general information only. It is not legal advice or tax advice, and it does not guarantee any filing result.

Before You File: Confirm That an LLC Fits Your Plan

An LLC is a business structure created under state law. In general terms, it separates the business as a legal entity from its owners, who are called members. That separation is the reason many small business owners consider an LLC: business debts and obligations are, in general, the LLC’s rather than the members’ personal debts. The protection is not absolute. It can be weakened by a personal guarantee, by mixing personal and business money, by fraud or unlawful conduct, or by failing to follow state requirements. State law controls the details, so a rule that applies in one state may not apply in another.

An LLC also differs from simply choosing a business name or registering a trade name. A trade name, often called a doing business as name or DBA, lets a business operate under a name other than its legal name. It does not by itself create a separate legal entity. Filing articles of organization is the step that creates the LLC, once the state accepts the filing.

Before you start, settle ownership and management early, because that makes the operating agreement much easier to write. Also check what licenses, permits, and tax registrations apply to what you sell or do. This article is a formation how to guide, not a comparison of every business structure, and it does not replace advice from a licensed attorney or tax professional for a complex question.

Step 1: Choose Your Formation State

Most small businesses form in the state where they are based. The U.S. Small Business Administration, or SBA, notes that an LLC, corporation, partnership, or nonprofit corporation will probably need to register with any state where it conducts business activities. It lists physical presence, frequent in-person meetings with clients, a significant share of revenue from the state, and employees working in the state as factors that can point to conducting business in a state. Forming in one state and operating mainly in another can therefore add a second registration, extra fees, and extra annual duties, rather than saving money.

Some founders consider forming in a different state because they have heard its fees are lower or its rules are simpler. That choice should be checked carefully. If you form elsewhere but operate at home, you may need to file for foreign qualification in your home state, which the SBA describes as filing a Certificate of Authority so the second state knows a foreign business is active there. Foreign qualified businesses typically need to pay taxes and annual report fees in both the formation state and the states where they are foreign qualified. The filing fee for foreign qualification also varies by state and business structure. In short, the cheapest filing fee on its own is a poor way to choose a state.

A practical approach is to start with your home state unless you have a specific, checked reason to form elsewhere, such as a genuine base of operations in another state. Write down why you chose the state, and revisit the choice if you move operations.

Step 2: Choose a Name That Meets Your State’s Rules

Your LLC name must satisfy your formation state’s naming rules, and it must be available in that state’s records. Most states require the name to include a designator such as LLC, L.L.C., or Limited Liability Company. The exact forms accepted, and the punctuation allowed, vary by state, so use the state’s own guidance rather than copying a name format from another state.

Availability is checked through the state filing office, usually the Secretary of State’s business search. A name that is already in use, or that is too similar to an existing name, can lead to rejection of your filing. Do not rely only on a general web search or a domain name search. A matching domain name does not prove that the legal name is available, and an available domain name does not prove that the name is free for state registration.

Think about the name from three angles at once. First, is it legally available and compliant in your formation state? Second, is it clear to customers, without promising a qualification, license, or affiliation you do not have? Some words are restricted in some states, for example words that suggest banking, insurance, or a licensed profession, and may need extra approval. Third, is it usable in practice: easy to spell, say, and remember, and available as a domain name if that matters to you? Many states also allow you to reserve a name for a limited period if you are not ready to file. Reservation rules, periods, and fees vary by state, and a reservation does not form the LLC. Keep a short list of two or three acceptable names before you file, and record the exact spelling, including the designator, exactly as it will appear on the articles of organization.

Step 3: Appoint a Registered Agent

Before you file, you will need a registered agent in your formation state. The SBA states this plainly: if your business is an LLC, corporation, partnership, or nonprofit corporation, you will need a registered agent in your state before you file. A registered agent receives official papers and legal documents on behalf of your company. The agent must be located in the state where you register.

A registered agent can be an individual or a business, depending on state rules. Common options include a member of the LLC, another individual who meets the state’s requirements, or a registered agent service. Whoever you choose must have a physical address in the formation state, not only a mail forwarding address, and must be available at that address during normal business hours to receive documents. Using a home address is possible in some states, but it also means that address may become part of the public record, so weigh privacy against cost before you decide.

Choose the agent before you prepare the filing, because the articles of organization typically ask for the agent’s name and address. Plan for continuity too: if the agent moves or resigns, most states require you to update the record promptly, since a missed legal notice can create serious problems.

Step 4: File Articles of Organization

Articles of organization are the document that creates the LLC. The SBA describes them as a simple document that describes the basics of your LLC, including business information like the company name, address, member names, and the registered agent. Some states use a different name for the same kind of document, such as a certificate of organization or certificate of formation. Use your state’s form and terminology, and file with the office your state designates, most often the Secretary of State.

The information you will typically need includes the business name, the business location, ownership and management structure, and registered agent information. Your state may ask for more, such as the LLC’s purpose, its duration if it is not perpetual, the names and addresses of organizers, or whether the LLC will be member managed or manager managed. Member managed means the members run the business directly. Manager managed means designated managers run it, which can suit an LLC with passive investors or many members. Do not guess at this choice: it affects who can act for the LLC, and it should match your operating agreement.

Filing is usually possible online in many states, while some states still require paper filing in person or by mail. Check your state’s current filing method, fee, and processing time before you submit, because all three vary. The SBA notes that, in most cases, the total cost to register a business will be less than 300 dollars, but fees vary depending on state and business structure. That general statement is not a substitute for your state’s current fee schedule, and it does not include later costs such as annual reports, licenses, taxes, or registered agent charges. After filing, keep the state’s acceptance or certificate safely, and record the filing date and any state file number, because later forms may ask for both.

Step 5: Write an Operating Agreement

An operating agreement is the LLC’s internal rulebook. The SBA describes it as a document that describes the structure of the company’s financial and functional decisions, defines how key business decisions are made, and sets out each member’s duties, powers, and responsibilities. It is widely recommended to create one to protect yourself and your business, even if your state does not mandate it. That recommendation matters most for multi-member LLCs, where disagreements about money, control, or exit are common, but a single-member LLC also benefits from a written record of how the business is run and how its finances are kept separate.

A useful operating agreement covers, at a minimum, who the members are and what share each owns, how much capital each member contributes and when, how profits and losses are shared, how decisions are made and what votes are needed for major decisions, who manages the business day to day, how a member can leave, sell, or transfer an interest, what happens if a member dies or becomes unable to participate, and how the LLC can be dissolved. It should also state how records are kept, how bank accounts are handled, and how conflicts are resolved. Keep the agreement consistent with the articles of organization, especially on management structure and member details, because inconsistencies can cause confusion later.

Unlike the articles of organization, the operating agreement is normally an internal document and is not filed with the state. That does not make it informal. Every member should read it, sign it, and keep a copy, and it should be updated when members, shares, or managers change. For a single-member LLC, a signed agreement still helps show that the business is run as a separate entity. Templates can be a starting point, but read every clause and fill in actual names and numbers rather than leaving blanks. If ownership or management is unusual, consider having an attorney in your formation state review the agreement before everyone signs.

Step 6: Get an EIN and Complete Tax Registrations

Once the LLC is formed, apply for an Employer Identification Number, or EIN, from the IRS. The IRS describes an EIN as a federal tax ID number for businesses and other entities, and states that you can get an EIN for free directly from the IRS in minutes by applying online. The SBA gives the same advice in practical terms: it is free to apply for an EIN, and you should do it right after you register your business. You need an EIN to pay federal taxes, hire employees, open a bank account, and apply for business licenses and permits, according to the SBA. The IRS also notes that you should register the legal entity with your state before you apply for an EIN, which is why this step follows filing rather than preceding it.

When you apply, enter the business name exactly as it appears on your formation documents. The IRS application asks for a responsible party, the person in charge of the entity and its assets, along with identifying details and a signature. Apply only through the IRS itself. Third party sites that charge a fee for an EIN are charging for a service on top of a free federal application, so a payment request before you receive a number is a sign that you are not on the official IRS application. Keep the EIN confirmation notice safely, because banks and agencies may ask for it, and a replacement can take time.

An EIN is federal. It does not by itself satisfy state tax duties. The SBA notes that the need for a state tax ID number ties directly to whether your business must pay state taxes, and that you will need to check with your state’s websites for the specific steps. Depending on your state and activities, you may need state income tax, employment tax, or sales tax registration. Do not assume that a federal EIN covers state taxes, or that no state registration is needed because you operate online.

Tax classification is a separate question from formation. By default, tax treatment depends on factors such as whether the LLC has one member or more than one, but an LLC may also be able to elect a different tax treatment in some cases. Those elections have deadlines and consequences, so check current IRS guidance and consider tax advice before electing.

Step 7: Open a Business Bank Account and Get Licenses and Permits

Once the LLC exists and has an EIN, open a bank account in the LLC’s legal name and keep business money separate from personal money. Banks commonly ask for the formation documents, the EIN confirmation, the operating agreement, and identification for the people who will control the account. Use the business account for business income and expenses only, and pay yourself through a documented method that matches your operating agreement and tax treatment.

Licenses and permits are separate from formation. Forming an LLC does not by itself license your activity. The SBA notes that you might need to file for licenses and permits from the county or city, and that local governments determine those requirements. The exact set depends on your industry, location, and activities. Check federal, state, county, and city requirements for your activity, and note renewal dates alongside your formation records.

Also check whether your business needs any federal registration beyond the EIN. The SBA’s registration guidance mentions beneficial ownership information reporting to the Financial Crimes Enforcement Network, or FinCEN, for companies that are required to comply. Because reporting requirements and exemptions in this area have changed over time, check FinCEN’s current guidance for your LLC rather than relying on an older summary.

Step 8: If You Operate in More Than One State, Qualify There Too

If your LLC will conduct business activities in a state other than its formation state, check whether that state requires foreign qualification. The SBA explains that the state where you form your business considers the business domestic, while every other state views it as foreign, and that foreign qualification notifies the state that a foreign business is active there. To foreign qualify, you typically file a Certificate of Authority with the state, and many states also require a Certificate of Good Standing from your formation state. Each state charges a filing fee, and the amount varies by state and business structure.

The trigger for foreign qualification is not always obvious. A physical office, employees, or regular in-person business in another state will often point toward registration, while occasional, isolated activity may not. Online sales alone do not settle the question. Check each state where you have a real presence or regular activity, and keep a list of every state where the LLC is registered and the annual duties for each.

Staying Compliant After Formation

Formation is the start of compliance, not the end of it. Many states require ongoing filings, most commonly an annual report or a periodic statement of information, along with a fee that varies by state. Some states also require initial reports soon after registration, which the SBA notes typically need to be filed within 30 to 90 days after registration. Missed reports can lead to penalties, loss of good standing, or administrative dissolution in some states, so put every deadline on a calendar with a reminder well before the due date.

Good record keeping supports both compliance and the separation between the LLC and its members. Keep the articles of organization and any amendments, the operating agreement and any amendments, the EIN confirmation, licenses and permits, tax filings, bank statements, and contracts signed in the LLC’s name. Sign contracts in the LLC’s name, not in your personal name, unless you intend to be personally bound, and keep personal expenses out of the business account. If the LLC changes its name, address, registered agent, members, or managers, check what amendment your state requires and file it promptly. If the business stops operating, check the state’s dissolution process rather than simply abandoning the filing, because an abandoned LLC can keep generating annual fees and tax duties.

Common Mistakes to Avoid

The most common mistakes are avoidable, and most come from treating formation as a single form rather than a sequence. Filing with a name that conflicts with an existing business wastes the filing fee and the waiting time. Appointing a registered agent who is not reliably available at a physical address in the formation state risks missed notices. Skipping the operating agreement leaves ownership, profit sharing, and exit rules to default state rules and to memory, which is a poor substitute for a signed agreement. Mixing personal and business money undermines the separation that formation was meant to create. Assuming that formation alone covers licenses, state tax registration, or business in another state leaves gaps that surface later, often at the worst moment, such as a bank application or a licensing inspection.

Another common mistake is copying steps from another state. Forms, fees, document names, and annual report rules all vary, so your formation state’s filing office is the authority for your filing. Do not rely on a single national fee figure or timeline for budgeting: check your state’s current fee and processing time, and allow extra time for corrections, bank account setup, and licensing. Finally, be cautious about paid help. You may file yourself through your state office, or pay an attorney, accountant, or filing helper. No specific formation service is recommended in this guide. If you do pay for help, check exactly what is included, since the state fee, registered agent service, operating agreement, EIN application, and annual compliance service are often separate items. Never pay a fee for an EIN itself, since the IRS issues EINs for free, and keep copies of everything filed on your behalf.

Formation Checklist

Use this checklist in order, and tick each item only when you have the document or confirmation in hand.

• Confirm that an LLC fits your ownership, liability, and tax plans, and note any question that needs professional advice.
• Choose a formation state, with a recorded reason if it is not your home state.
• Choose two or three compliant names, and check availability with the state filing office.
• Appoint a registered agent with a physical address in the formation state.
• Prepare and file articles of organization, or your state’s equivalent document, and keep the acceptance and receipt.
• Sign an operating agreement that matches the articles of organization, and give every member a copy.
• Apply for a free EIN from the IRS, and keep the confirmation notice.
• Complete state and local tax registrations that apply to your activities.
• Open a business bank account in the LLC’s legal name, and keep business money separate.
• Obtain the licenses and permits your activity and location require, and note their renewal dates.
• Check beneficial ownership reporting duties with FinCEN’s current guidance, and record the result.
• If operating in another state, check foreign qualification in that state.
• Set calendar reminders for annual reports, tax filings, license renewals, and registered agent renewal.

Frequently Asked Questions

Do I need a lawyer to start an LLC?

No general rule in this guide requires a lawyer to file articles of organization, and many founders file through their state office themselves. A lawyer or tax professional becomes more valuable when ownership is complex, when outside investors are involved, or when tax or liability questions are unclear.

How long does it take to form an LLC?

Processing time varies by state, filing method, and workload at the filing office. Some states process online filings quickly, while paper filings or filings that need correction take longer. Allow extra time for the steps after filing, such as the EIN application, bank account setup, and licensing.

How much does it cost to start an LLC?

Cost varies by state and business structure, and it includes more than the filing fee. The SBA notes that, in most cases, the total cost to register a business will be less than 300 dollars, but that general statement does not replace your state’s current fee schedule. Add any name reservation fee, registered agent charge, license fees, and annual report fees that apply in your state. The EIN itself is free from the IRS.

Can I form an LLC on my own, or do I need partners?

An LLC can have one member or more than one, depending on state rules, and most states permit a single-member LLC. A single member still benefits from articles of organization, an operating agreement, a separate bank account, and separate records. A multi-member LLC needs extra care in the operating agreement, because ownership shares, decision rights, profit sharing, and exit rules must be written down and agreed before money and work are committed.

Does an LLC protect my personal assets in every situation?

No. An LLC generally separates business and personal liabilities, but protection has limits that depend on state law and your conduct. Personal guarantees, fraud or unlawful conduct, and failure to keep business and personal affairs separate can all create personal exposure. Specific liability questions should be put to a licensed attorney in your formation state.

What is the difference between articles of organization and an operating agreement?

Articles of organization are filed with the state and create the LLC. They contain basic information such as the company name, address, member names, and registered agent. An operating agreement is normally an internal document that sets out how the LLC is run, how decisions are made, and how profits, losses, and ownership changes are handled. You need the first to exist as an LLC, and you are strongly advised to have the second to run it well.

Do I need an EIN if my LLC has no employees?

You may still need an EIN, and it is often useful even when it is not strictly required. The SBA notes that you need an EIN to pay federal taxes, hire employees, open a bank account, and apply for business licenses and permits. Banks commonly require an EIN for a business account. Since the EIN is free from the IRS, many single-member LLCs obtain one at formation.

What happens if I move my business to another state?

Check both states. Your existing formation does not automatically authorize business in the new state, and you may need foreign qualification there, or in some cases a new formation, depending on your plans and state rules. Review registered agent coverage, licenses, tax registrations, and annual report duties in each state.

Do I have to file anything every year after forming an LLC?

In many states, yes. Annual reports or periodic statements, state tax filings, license renewals, and registered agent renewals are common ongoing duties, and their frequency and fees vary by state. Keep a compliance calendar, and check your formation state’s current requirements each year.

Sources & references

• U.S. Small Business Administration, Register your business. Opened 28 October 2026. Formation, registered agent, foreign qualification, state documents, and ongoing report guidance used in this article.
• U.S. Small Business Administration, Get federal and state tax ID numbers. Opened 28 October 2026. EIN timing, cost, and state tax ID guidance used in this article.
• Internal Revenue Service, Employer identification number. Opened 28 October 2026. EIN definition, free online application, requirement to form the entity first, and responsible party guidance used in this article.