Starting an LLC requires a handful of specific steps: choosing a business name, filing formation paperwork with your state, designating a registered agent, and getting a federal tax ID number. The whole process can take as little as a few days in most states, and initial filing fees range from about $50 to over $400 depending on where you form your business.
Choose a Name That Meets State Rules
Your LLC’s name must include “Limited Liability Company” or an abbreviation like “LLC” or “L.L.C.” It also needs to be distinguishable from any other LLC, corporation, or limited partnership already on file with your state’s business registry. Most states let you search existing business names through the secretary of state’s website for free before you file.
If you find the name you want but aren’t ready to file yet, many states offer a name reservation for a small fee (typically $10 to $25) that holds the name for 60 to 120 days.
File Articles of Organization
The Articles of Organization is the document that officially creates your LLC. You file it with your state’s secretary of state or equivalent office, and it typically asks for basic information: your LLC’s name, its principal address, the name and address of your registered agent, and sometimes whether the LLC will be managed by its members or by designated managers.
Filing fees vary widely. States like Colorado, Kentucky, and Mississippi charge $40 to $50. Florida, Texas, Georgia, and North Carolina fall in the $125 to $175 range. Other states charge $200 or more, and a few exceed $400 when you factor in additional requirements like mandatory publication notices. Most states process online filings within a few business days, though expedited options are usually available for an extra fee.
Designate a Registered Agent
Every LLC needs a registered agent, which is a person or company authorized to receive legal documents, government notices, and tax correspondence on your behalf. The agent must have a physical street address (not a P.O. box) in the state where your LLC is formed and must be available at that address during normal business hours.
You can serve as your own registered agent, which costs nothing. The tradeoff is that you need to be physically present at the listed address during business hours, and that address becomes part of the public record. If you work from home, that means your home address is publicly visible. If you travel frequently or simply want privacy, a professional registered agent service typically costs $100 to $300 per year and handles everything for you.
Draft an Operating Agreement
An operating agreement is the 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 dissolves. It’s not filed with the state, but it’s the foundation of your LLC’s internal governance.
Even if you’re the only owner, an operating agreement is worth having. It reinforces the legal separation between you and the business, which is part of the reason you’re forming an LLC in the first place. Without one, your state’s default LLC rules will fill in the gaps, and those defaults may not match what you actually want. For a single-member LLC, the agreement can be a straightforward document of a few pages. Multi-member LLCs should be more detailed, covering voting rights, capital contributions, and dispute resolution.
Get a Federal EIN
An Employer Identification Number (EIN) is essentially a Social Security number for your business. You need one to open a business bank account, hire employees, and file business taxes. The IRS issues them for free through its online application tool, and the process takes about 10 minutes.
One important sequencing note: form your LLC with the state first, then apply for the EIN. The IRS says that if you apply before your entity is officially formed, your application may be delayed. To use the online tool, you’ll need your own Social Security number (or ITIN), your LLC’s legal name and address, and your entity type. The tool is available most days but not 24/7, and you can only apply for one EIN per responsible party per day. Complete the application in one sitting because it times out after 15 minutes of inactivity and can’t be saved.
Open a Business Bank Account
Once you have your Articles of Organization and EIN, open a dedicated business bank account. This step isn’t legally required in most states, but it’s practically essential. Mixing personal and business funds can weaken the liability protection your LLC provides. If a court determines you treated the LLC’s money as your own, it can “pierce the corporate veil” and hold you personally responsible for business debts.
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 your LLC’s formation certificate if your state issues one separately.
Handle Licenses, Permits, and Local Requirements
Forming the LLC itself is just the entity creation step. Depending on your industry and location, you may also need business licenses or permits at the federal, state, or local level. A general business license from your city or county is common and typically costs $20 to a few hundred dollars. Certain industries, like food service, construction, healthcare, and financial services, require additional professional or occupational licenses.
Check with your city or county clerk’s office and your state’s business licensing portal to find out exactly what applies to your type of business. Some licenses must be renewed annually or biannually.
Ongoing Costs to Expect
Your LLC isn’t a one-time expense. Most states require an annual or biennial report, which is a short filing that confirms your LLC’s basic information is still current. Fees for these reports range from $10 to $300 depending on the state. Miss the deadline and you risk late fees or, in some states, administrative dissolution of your LLC.
Some states also charge a franchise tax or business privilege tax, which may be a flat fee or calculated based on revenue, assets, or the number of members. If you’re using a professional registered agent, factor in that annual cost as well. And if your city or county issued a business license, expect a renewal fee on the same cycle.
All told, the cheapest states let you form and maintain an LLC for well under $100 per year, while more expensive states can cost several hundred dollars annually before you spend a dollar on actual business operations. Budget for these recurring costs so your LLC stays in good standing.