Setting up an LLC requires filing a document called articles of organization with your state, then completing a handful of follow-up steps to make the business legally and financially operational. The entire process can take anywhere from a single afternoon to a few weeks, depending on your state’s processing times and how quickly you gather what you need. Here’s how to do it from start to finish.
Choose a Name for Your LLC
Your LLC name must be distinguishable from any other business entity already registered in your state. Most states let you search their business name database online through the Secretary of State website. The name typically needs to include “LLC” or “Limited Liability Company” somewhere in it.
If you’ve found a name you like but aren’t ready to file yet, many states offer a name reservation for a small fee that holds it for 60 to 120 days. This is optional but useful if you need time to finalize other details before filing.
Designate a Registered Agent
Every LLC needs a registered agent, which is simply a person or company authorized to receive legal documents (like lawsuit notices or government correspondence) on behalf of your business. The agent must have a physical street address in the state where you’re forming the LLC. You can serve as your own registered agent, name a trusted person, or hire a registered agent service, which typically costs $50 to $300 per year.
File Articles of Organization
This is the core legal step that actually creates your LLC. Articles of organization are filed with your state’s Secretary of State office, and most states let you submit them online. The form asks for basic information about your business:
- LLC name and principal business address
- Registered agent’s name and address
- Names of members, managers, or organizers
- Business purpose, which can often be stated broadly as “to engage in any lawful activity”
Filing fees vary significantly by state, ranging from around $50 to $500. Some states process filings within a few business days, while others take two to four weeks. Many offer expedited processing for an additional fee if you need it faster.
Create an Operating Agreement
An operating agreement is an internal document that spells out how your LLC will be run. It covers ownership percentages, how profits and losses are divided, voting rights, the powers and duties of members and managers, meeting procedures, and what happens if a member wants to leave or passes away (buyout and buy-sell rules).
Most states don’t legally require a written operating agreement, but you should create one regardless. Without it, your LLC defaults to your state’s generic LLC laws, which may not reflect what you and your co-owners actually agreed to. Even single-member LLCs benefit from having one, because it reinforces the legal separation between you and your business. That separation is what protects your personal assets from business liabilities.
Get an EIN From the IRS
An Employer Identification Number (EIN) is a federal tax ID for your business, similar to a Social Security number but for a company. You’ll need one if your LLC has employees or will file excise taxes. Even if neither applies, most single-member LLCs still obtain an EIN because banks require one to open a business account and some states require it for state tax purposes.
Applying is free and takes about five minutes on the IRS website (irs.gov). If you apply online, you’ll receive your EIN immediately. You can also apply by mail or fax using Form SS-4, though that takes one to two weeks.
Open a Business Bank Account
Once you have your EIN and a copy of your filed articles of organization, open a dedicated bank account for the LLC. This is not just good bookkeeping. Keeping business and personal finances separate is essential to maintaining the liability protection that makes an LLC worthwhile in the first place. If you mix personal and business funds, a court could decide the LLC is just an extension of you personally, which means your personal assets could be exposed in a lawsuit against the business.
Most banks will ask for your articles of organization, EIN confirmation letter, operating agreement, and a government-issued ID. Shop around, as account fees and minimum balance requirements vary.
Handle Licenses and Permits
Forming the LLC is a state-level registration, but it doesn’t automatically give you permission to operate your specific type of business. Depending on your industry and location, you may need a general business license, a professional license, a sales tax permit, or a home occupation permit if you’re working from home. Check with your city or county clerk’s office and your state’s business licensing portal to find out what applies to you.
Understand Your Tax Obligations
An LLC doesn’t have its own federal tax classification by default. Instead, the IRS treats a single-member LLC as a “disregarded entity,” meaning the business income flows through to your personal tax return and you pay self-employment tax on the profits. A multi-member LLC is treated as a partnership, filing an informational return (Form 1065) with each member reporting their share on their personal return.
You also have the option to elect to be taxed as an S corporation or C corporation if that structure better fits your situation. This election is separate from your state LLC filing and is done through the IRS using Form 2553 (for S corp) or Form 8832 (for C corp).
At the state level, some states charge an annual franchise tax, an annual report fee, or both to keep your LLC in good standing. These recurring fees range from under $50 to several hundred dollars depending on the state, and missing the deadline can result in steep late penalties or even administrative dissolution of your LLC.
What It Costs Overall
At a minimum, you’re looking at the state filing fee for your articles of organization, which runs $50 to $500 depending on the state. Add in a registered agent service if you use one ($50 to $300 per year), and potentially a few hundred dollars for business licenses and permits. If you handle everything yourself, total startup costs for a basic LLC typically fall in the $100 to $800 range.
Online formation services that handle the paperwork for you generally charge $0 to $300 on top of the state filing fee. They can save time but aren’t necessary. Everything they do, you can do directly through your Secretary of State’s website.
The ongoing cost to maintain your LLC each year is primarily your state’s annual report or franchise tax fee, plus registered agent fees if applicable. Budget for these recurring costs so your LLC stays in good standing.