Getting an LLC requires filing a short formation document with your state, paying a filing fee, and handling a few supporting steps like choosing a name and appointing a registered agent. Most people can complete the process in a single afternoon, and in many states your LLC takes effect immediately after you submit payment. Here’s everything you need to do, in order.
Choose a Name for Your LLC
Your LLC name must be distinguishable from other businesses already registered in your state. Most secretary of state websites have a free business name search tool where you can check availability in a few seconds. If the name you want is taken, you’ll need to pick something different or modify it enough to be distinguishable.
Every state requires your LLC name to include a designator that signals the business type. Acceptable versions typically include “Limited Liability Company,” “LLC,” or “L.L.C.” Some states also accept abbreviations like “Ltd. Liability Co.” Capitalization usually doesn’t matter, but punctuation can, so pay attention to periods and spacing when you file.
If you plan to operate under a different public-facing name (a “doing business as” or DBA name), you can register that separately after formation. The legal name on your articles of organization is what appears in state records and on contracts.
Appoint a Registered Agent
Every LLC needs a registered agent, which is simply a person or company designated to receive legal documents and official government mail on behalf of your business. The registered agent must have a physical street address in the state where you’re forming, not just a P.O. box. If you’re naming an individual, that person must be at least 18 years old and must consent to the role.
You can serve as your own registered agent, name another member of the LLC, or hire a commercial registered agent service. Commercial services typically charge $50 to $300 per year. The main advantage of using a service is that someone is always available at a consistent address during business hours, and your personal address stays off public records.
File Articles of Organization
The articles of organization (called a “certificate of formation” or “certificate of organization” in some states) is the document that officially creates your LLC. You file it with your state’s secretary of state office, and in most states you can do this online.
The form itself is short. You’ll typically provide:
- LLC name with the required designator
- Registered agent name and address
- Principal office address
- Names of organizers or members (requirements vary by state)
- Management structure, meaning whether the LLC is managed by its members or by designated managers
Review everything carefully before submitting. The information in your articles becomes part of the public record. If you don’t want your home address visible to anyone who searches your business, consider using a registered agent’s address or a separate business address.
Filing fees vary widely. Some states charge as little as $35, while others go up to $500. Many states process online filings the same day, and your LLC takes effect immediately after payment. A few states take a week or longer, and some offer expedited processing for an additional fee.
Draft an Operating Agreement
An operating agreement is an internal document that spells out how your LLC will be run: who owns what percentage, how profits and losses are divided, what happens if a member leaves, and how major decisions get made. Most states don’t legally require one, but skipping it creates real problems.
Without an operating agreement, your LLC defaults to your state’s generic rules for how LLCs operate. Those defaults may not match what you and your co-owners actually agreed to. Even verbal agreements between members can lead to disputes when there’s nothing in writing to reference. The SBA warns that operating without one can also weaken the liability protection that makes an LLC valuable in the first place, since the absence of formal governance can make your business look more like a sole proprietorship or general partnership in the eyes of a court.
If you’re a single-member LLC, an operating agreement is still worth having. It reinforces that the business is a separate entity from you personally, which matters if your liability protection is ever challenged. Templates are widely available online, but if your LLC has multiple members or a complex ownership structure, having an attorney draft or review the agreement is a worthwhile investment.
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 your LLC. You need one if you plan to hire employees, open a business bank account, or file certain tax returns. Even single-member LLCs without employees often get one because most banks require it to open a business account.
The IRS lets you apply online for free at irs.gov, and you’ll receive your EIN immediately at the end of the application. One important detail: form your LLC with your state before applying. The IRS notes that applying before your entity is officially created can delay the process.
To use the online application, your principal place of business must be in the United States, and you’ll need the Social Security number or individual taxpayer ID number of the “responsible party,” which is the person who controls the LLC. The application can’t be saved partway through and expires after 15 minutes of inactivity, so have your information ready before you start. You’re limited to one EIN application per responsible party per day.
Open a Business Bank Account
Once you have your articles of organization and EIN, open a dedicated bank account for your LLC. Keeping business and personal finances in separate accounts is one of the most important things you can do to preserve your liability protection. If you mix personal and business funds (often called “commingling”), a court could decide your LLC isn’t truly a separate entity and hold you personally responsible for business debts.
Most banks will ask for your filed articles of organization, your EIN confirmation letter, a government-issued ID, and your operating agreement if you have one. Shop around, since business checking account fees and minimum balance requirements vary significantly between banks and credit unions.
Handle State Licenses and Ongoing Requirements
Forming your LLC is just the creation step. Depending on your industry and location, you may also need business licenses or permits at the state, county, or city level. Check with your state’s business licensing portal and your local government to find out what applies to your specific type of work.
Most states also require LLCs to file periodic reports, sometimes called annual reports or biennial reports. These are simple updates confirming your business address, registered agent, and other basic details, but they come with filing fees and firm deadlines. Several states impose substantial late fees, and some will administratively dissolve your LLC if you miss the deadline, meaning your business loses its legal status until you fix it.
Some states also impose annual taxes or fees on LLCs beyond the report filing fee. These costs vary widely, so check your specific state’s requirements so you’re not caught off guard.
How LLCs Are Taxed
By default, the IRS treats a single-member LLC as a “disregarded entity,” which means the business itself doesn’t file a separate tax return. Instead, you report your business income and expenses on your personal tax return, typically on Schedule C. A multi-member LLC is taxed as a partnership by default, filing an informational return (Form 1065) while each member reports their share of income on their personal return.
LLCs also have the option to elect different tax treatment. You can file IRS Form 8832 to be taxed as a corporation, or file Form 2553 to be taxed as an S corporation. S corp taxation can reduce self-employment taxes for owners who pay themselves a reasonable salary, but it adds payroll requirements and more complex filing. The right choice depends on your income level, number of members, and how you pay yourself.
What It Costs Overall
At a minimum, you’ll pay your state’s filing fee for the articles of organization, which ranges from about $35 to $500 depending on the state. Beyond that, your costs depend on the choices you make:
- Registered agent service: $0 if you serve as your own, or $50 to $300 per year for a commercial service
- Operating agreement: Free with a template, or $500 to $2,000 if drafted by an attorney
- EIN: Free from the IRS
- Annual report fees: Vary by state, typically $0 to $300 per year
- Business licenses: Vary by industry and location
Online LLC formation services that handle the filing for you generally charge $0 to $300 on top of state fees. They can save time, but the process is straightforward enough that most people can do it themselves directly through their state’s secretary of state website.