Setting up an LLC takes as little as a single afternoon in most states. The process involves choosing a name, filing a short formation document with your state, getting a federal tax ID, and putting an operating agreement in place. Initial state filing fees range from $50 to more than $400 depending on where you form, and the IRS issues your tax ID number online for free. Here’s how to work through each step.
Choose a Name for Your LLC
Your LLC name must be distinguishable from any other business already registered in your state. Most states let you search existing business names through the secretary of state’s website before you file. The name also needs to include a designator like “LLC,” “L.L.C.,” or “Limited Liability Company” so the public knows they’re dealing with a limited liability entity.
If you want to lock in a name before you’re ready to file, many states offer a name reservation for a small fee, typically $10 to $25, that holds the name for 60 to 120 days. This is optional but useful if you’re still sorting out other details.
Appoint a Registered Agent
Every LLC needs a registered agent: a person or company authorized to receive legal documents, like lawsuits or official state notices, on behalf of your business. The agent must have a physical street address in the state where your LLC is formed (no P.O. boxes). You can serve as your own registered agent in most states, or you can name another person associated with the business.
If you’d rather not use a personal address or worry about being available during business hours, professional registered agent services typically cost $100 to $300 per year. The agent’s acceptance is part of the formation paperwork, so have this decided before you file.
File Articles of Organization
The core formation document is called articles of organization in most states (a few call it a certificate of formation or certificate of organization). You file it with your state’s secretary of state or equivalent office, usually online. The form is short. Expect to provide:
- LLC name with the required designator
- Principal business address (street address of your main office)
- Registered agent name and address
- Management structure, meaning whether the LLC will be managed by its members (owners) or by designated managers
- Organizer’s signature from the person authorized to file on behalf of the LLC
Most states do not require you to list a business purpose for a general LLC. Professional LLCs (law firms, medical practices, accounting firms) typically must state a single specific purpose.
Filing fees vary significantly by state. Budget-friendly states charge $50 to $100, while mid-range states run $125 to $175. A handful of states charge $400 or more when you factor in additional required filings. Most states process online filings within a few business days, though some offer expedited processing for an extra fee.
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 the LLC. You need one to open a business bank account, hire employees, and file taxes. The IRS issues EINs online, for free, and the number is assigned immediately upon approval.
Before you apply, make sure your LLC is already formed with your state. The IRS notes that applying before your state filing is complete can delay the process. To use the online tool, 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 must be completed in one session since it can’t be saved and expires after 15 minutes of inactivity.
The online tool is available Monday through Friday from 6:00 a.m. to 1:00 a.m. Eastern, Saturdays until 9:00 p.m., and Sundays from 6:00 p.m. to midnight. You’re limited to one EIN application per responsible party per day. One important note: you never have to pay for an EIN. Third-party websites sometimes charge fees for what the IRS provides at no cost.
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, how decisions get made, and what happens if a member wants to leave or the business needs to dissolve. A handful of states legally require one, but even where it’s optional, having a written operating agreement is one of the strongest steps you can take to protect your limited liability status. Without one, courts may look less favorably on the separation between you and your business.
For a single-member LLC, the agreement can be simple, but it still matters. It documents that the LLC is a legitimate entity operating under defined rules. For multi-member LLCs, the agreement becomes essential for preventing disputes. Key provisions to include:
- Ownership percentages for each member
- Capital contributions recording how much money, property, or services each member put in
- Profit and loss distribution, which doesn’t have to match ownership percentages
- Management structure and decision-making authority
- Voting rights and what requires a vote versus what a manager can decide alone
- Buyout and transfer rules covering what happens if a member dies, becomes disabled, or wants to sell their interest
- Dissolution procedures outlining how debts are settled and assets distributed if the LLC winds down
The operating agreement does not get filed with the state. Keep it with your business records and make sure every member has a signed copy.
Open a Business Bank Account
Once you have your articles of organization and EIN, open a dedicated bank account in the LLC’s name. This is not just a convenience. Keeping business and personal finances separate is critical to maintaining the liability protection an LLC provides. If you mix personal and business funds, a court could “pierce the corporate veil,” meaning your personal assets lose their protection.
Most banks will ask for your articles of organization, EIN confirmation letter, operating agreement, and a government-issued ID. Some banks also want a copy of any business licenses you hold. Call ahead or check the bank’s website so you bring everything in one trip.
Handle State Licenses and Permits
Forming the LLC itself does not give you permission to operate a particular type of business. Depending on your industry and location, you may need business licenses, professional permits, or local zoning approvals. Many cities and counties require a general business license regardless of what you do. Check with both your state’s licensing authority and your local government office to see what applies.
Stay Current With Ongoing Requirements
Most states require LLCs to file an annual or biennial report, which is a brief update confirming your business address, registered agent, and members or managers. Filing fees for these reports range from $10 to $300 depending on the state. Missing the deadline can trigger late fees, and some states will administratively dissolve an LLC that falls behind on its filings.
You’ll also need to handle federal and state taxes. A single-member LLC is taxed as a sole proprietorship by default, meaning business income passes through to your personal tax return. A multi-member LLC is taxed as a partnership by default. Either type can elect to be taxed as an S corporation or C corporation if that structure makes more sense financially, but the default pass-through treatment works well for most small businesses.
Keep your operating agreement updated as circumstances change, maintain your registered agent designation, and continue using that dedicated bank account for all business transactions. These ongoing habits are what keep the LLC’s liability protection intact year after year.