Forming an LLC requires filing a document called articles of organization with your state, but the full process involves several steps before and after that filing. Most people can complete everything within a few days to a couple of weeks, depending on how quickly their state processes paperwork. Here’s what the process looks like from start to finish.
Choose a Name for Your LLC
Every state requires your LLC name to be distinguishable from other businesses already registered there. Before you get attached to a name, search your state’s business name database (usually on the Secretary of State website) to check availability. Most states require the name to include “LLC” or “Limited Liability Company” somewhere in it.
If you want to secure a name before you’re ready to file, many states let you reserve it for 60 to 120 days for a small fee. This isn’t required, but it can buy you time if you’re still sorting out other details.
Appoint a Registered Agent
You need a registered agent in place before you file. A registered agent is a person or company authorized to receive legal documents, tax notices, and official government correspondence on behalf of your LLC. The agent must have a physical address in the state where you’re forming the LLC.
You can serve as your own registered agent in most states, which costs nothing. The tradeoff is that your personal address becomes part of the public record, and you need to be available at that address during business hours. Professional registered agent services typically cost $100 to $300 per year and keep your home address off public filings.
File Articles of Organization
This is the core step that officially creates your LLC. Articles of organization is a short document you file with your state’s Secretary of State office (or equivalent agency). The information you’ll typically need to provide includes:
- Business name (including the LLC designation)
- Business address
- Registered agent name and address
- Ownership or management structure (whether the LLC is managed by its members or by designated managers)
Some states let you file online and get approval within a day or two. Others require paper documents submitted by mail, which can take a few weeks. Filing fees vary widely. Lower-cost states charge $40 to $100, mid-range states fall between $125 and $175, and higher-cost states can run $200 to $300 or more. A handful of states push above $400 when you factor in additional requirements like mandatory publication notices.
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 split, voting rights, the powers and duties of each member, and what happens if someone wants to leave or sell their interest. It also establishes rules for holding meetings and making major business decisions.
Only a few states legally require one, but you should create an operating agreement regardless. Without it, your LLC defaults to your state’s generic LLC rules, which may not match what you and your co-owners actually agreed to. More importantly, an operating agreement reinforces the legal separation between you and your business. Without that formality, your LLC can start to resemble a sole proprietorship or general partnership, which weakens the personal liability protection that’s the whole point of forming an LLC.
If you’re the sole owner, an operating agreement still matters. It documents that the LLC operates as a distinct entity, not just an extension of your personal finances.
Get an Employer Identification Number
An Employer Identification Number (EIN) is essentially a Social Security number for your business. The IRS issues it for free, and you’ll need one if you plan to hire employees, operate with multiple members, or open a business bank account (most banks require it). Even single-member LLCs often get one to avoid using a personal Social Security number on business documents.
Apply online through the IRS website. The application can’t be saved partway through and times out after 15 minutes of inactivity, so have your information ready before you start. You’ll need your LLC’s entity type and the Social Security number of the “responsible party,” which is the person who controls or manages the business. You’ll receive your EIN immediately upon completion.
One important detail: form your LLC with the state before applying for an EIN. If you apply before your state filing is complete, the IRS may delay processing. The online tool is available most hours but not around the clock, and you’re limited to one EIN application per responsible party per day.
Handle Post-Formation Requirements
Filing your articles of organization isn’t the last piece of paperwork. Several additional steps come right after.
Initial Reports and Tax Registrations
Some states require you to file an initial report or register with a state tax board within 30 to 90 days of formation. Check your Secretary of State website for deadlines specific to your state. Missing these can trigger late fees or even administrative dissolution of your LLC.
Annual Reports
Most states require LLCs to file periodic reports (usually annual, sometimes biennial) to keep the state updated on your business information. Filing fees range from $10 to $300 depending on the state. Some states also impose franchise taxes or minimum annual taxes on LLCs, which can add several hundred dollars to your yearly costs.
Business Licenses and Permits
Forming an LLC doesn’t automatically give you permission to operate. Depending on your industry and location, you may need federal, state, or local business licenses. Your city or county may require a general business license with renewal fees ranging from $20 to several hundred dollars.
Business Bank Account
Open a dedicated bank account for your LLC as soon as you have your EIN. Mixing personal and business funds undermines the liability protection your LLC provides. If a court sees that you treat the LLC’s money as your own, it can “pierce the corporate veil” and hold you personally responsible for business debts. A separate account creates a clean paper trail showing the LLC operates independently.
Doing Business in Multiple States
If your LLC will operate in states beyond where it was formed, you’ll likely need to “foreign qualify” in each additional state. This means filing a Certificate of Authority with that state’s business agency. Many states also require a Certificate of Good Standing from your home state as part of the application. Each foreign qualification comes with its own filing fee and may trigger additional annual report requirements in that state.
What the Full Process Costs
Your minimum cost to form an LLC is the state filing fee, which ranges from about $40 to over $400 depending on the state. Beyond that, budget for a few recurring expenses:
- Registered agent service: $100 to $300 per year (free if you serve as your own)
- Annual report fees: $10 to $300 per year in most states
- Business licenses: varies by location and industry
- EIN: free through the IRS
You can form an LLC yourself for under $100 in the cheapest states, or spend several hundred if your state has higher fees or you hire a professional service to handle the filings. The ongoing annual cost of maintaining an LLC in good standing typically runs a few hundred dollars when you add up report fees, registered agent costs, and any state-level taxes.