How to Start an LLC

L L C members happy after starting an L L C

Starting a limited liability company (LLC) is the best way to protect your personal assets and add credibility to your small business. It's easy to start an LLC in any state; you can save money on legal fees by following our free, step-by-step guide.

Or, save time by using a professional online LLC service:

four point eight out of five stars Northwest Registered Agent ($29 + State Filing Fee)

three point four out of five stars LegalZoom ($79 + State Filing Fee)

Forming an LLC Is Easy

Whether you choose to follow our free guide or hire an online LLC service to do the footwork for you, it's really simple to start an LLC.

To set up an LLC yourself, just follow these 6 steps:

  1. Select Your State
  2. Name Your LLC
  3. Choose a Registered Agent
  4. File LLC Formation Documents
  5. Create an LLC Operating Agreement
  6. Get an EIN

Step 1: Select Your State

Step 2: Name Your LLC

You need the right business name in order to register your LLC with the state. Naming your new business goes beyond creative branding—you could have the catchiest business name in your state, but if it isn’t unique and legal, you can’t use it.

Here are a few common LLC naming rules:

  • Includes the words “Limited Liability Company," "Limited Company" or Initials “LLC” or "L.L.C."
  • Name cannot include indicators of other business entities
  • Name cannot contain restricted words or phrases (such as bank, attorney, and university) without approval

In order to form an LLC successfully, you also have to be sure no one else in your state is using your business name and that it meets state guidelines.

Learn how to search if an LLC name is available and if it meets naming guidelines in our LLC name search guide.

If you need help coming up with a catchy LLC name, try our business name generator. You can use this tool to generate both business names and domain names.

You can also search GoDaddy for available domain names:

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Once you register a domain name for your LLC, consider setting up a business phone system to establish credibility and enhance your customer service. Nextiva provides a plethora of useful features and a quick, easy setup. Try Nextiva.

Step 3: Choose A Registered Agent

When you fill out your LLC registration forms, you'll need to list your registered agent in most states.

A registered agent is responsible for receiving important legal documents on behalf of a limited liability company. A registered agent’s most important job is to accept service of process (legal summons).

Oftentimes, LLC owners choose to hire a registered agent service to help with this part of their business. You can also appoint a friend, colleague, or yourself. Although you can be your own registered agent, we recommend hiring professional registered agent services to receive official documents; this protects your privacy and provides peace of mind.

In most states, an LLC's registered agent must meet these requirements:

  • is 18 years or older
  • has a physical address in the state where business is conducted
  • is available (in person) during normal business hours

Recommended: Northwest Registered Agent offers a free year of registered agent service when you form your LLC ($29 plus state fees).

Step 4: File Your Articles of Organization

To form an LLC, you'll have to file your LLC documents with the Secretary of State. These formation documents are called the Articles of Organization; in some states, they are known as the Certificate of Formation or Certificate of Organization.

Most states offer online filing. Each state charges a fee to process LLC applications.

To learn exactly how to file the Articles of Organization for your LLC, just select your state.

Now is also the time to decide whether your LLC will be member-managed or manager-managed. Before choosing a management structure, read our full guide on Member-Managed vs. Manager-Managed LLCs.

Step 5: Create an LLC Operating Agreement

Creating an operating agreement is the only way for you and your members to legally define your roles and lock down your LLC’s management and ownership structure. Having this document in place will also give you something to return to if there’s a dispute.

An LLC operating agreement isn’t filed with the state — it’s stored in your company records. Operating agreements should outline:

To learn more, read our What is an LLC Operating Agreement guide. You can also download a template or create a custom Free LLC Operating Agreement using our online tool.

Step 6: Get an EIN

The Employer Identification Number (EIN) is basically a Social Security number (SSN) for your company. Your EIN allows the Internal Revenue Service (IRS) to keep track of your business’s tax reporting.

An EIN is also known as a Federal Employer Identification Number (FEIN), or Federal Tax ID Number (FTIN).

You can easily get an EIN for free online through the IRS website. To learn more, read our What is an EIN guide.

Need Help Forming an LLC?

We’ve reviewed and ranked the Top 8 LLC formation services.

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Steps After Forming an LLC

Open a Business Bank Account

A business bank account helps separate personal expenses and company expenses, which is required to maintain your LLC's corporate veil.

Learn more by reading our guide to small business banking. For a multi-member LLC, you'll also want to set up capital accounts for members. We also recommend checking out our review of the best business bank accounts.

Get Insured

Depending on the type of business you’re operating, your insurance requirements and needs may vary. So, what is business insurance exactly? Business Insurance protects your business’s assets from losses that can happen naturally while doing business, such as property damage or lawsuits.

To learn more about the exact type of business insurance your startup will need, visit this guide on small business insurance or chat with our friends at Tivly.

Find out the real cost of getting insurance for your business. Get a free quote or call 855-965-3168.

Research Business Licenses and Permits

You'll need to research whether or not your LLC requires licenses and permits. Business licenses and permit requirements vary by state, so be sure to conduct the proper research and plan accordingly. 

Not sure where to start? Use our business license guide.

There are professional services that can take care of the paperwork and process for you. Check out our review of the Best Business License Services.

File Your LLC Annual Report

Many states require LLCs to file an annual report, which includes updating your registered agent address and paying your annual fee or franchise tax.

Visit our LLC annual report guide to learn more.

Know Your LLC’s Federal Tax Election Options

Pass-through taxation entails a business’s profits passing through to the LLC member’s individual tax returns. Like a sole proprietorship, an LLC is taxed as a pass-through entity, also known as a disregarded entity

Once this process is completed and after any tax deductible expenses are taken out, the LLC member pays self-employment taxes and income tax on their portion of the business income. 

Alternatively, LLCs can choose to elect to be taxed as an S corporation (S corp) or C corporation (C corp). If S corporation tax status is elected, LLC members can be taxed as employees of the business; potentially reducing tax burden.

Set Up Business Accounting

Hiring a business accountant is one of the best ways to ensure you’re taking advantage of LLC tax benefits; possibly saving you and your business thousands of dollars per year. 

When forming an LLC, it’s a good idea to start a relationship with a business accountant as soon as you start your business to help set your company up for success.

LLC Frequently Asked Questions

Is forming an LLC worth it?

Most small business owners will benefit from forming an LLC. LLCs offer: 

  • Limited liability protection
  • Simplicity
  • Credibility
  • Tax options

Learn more in our LLC Benefits guide.

Should I get an LLC for my small business?

A limited liability company (LLC) is the most common business entity; it's easy to set up, flexible, and straightforward. Additionally, an LLC gives you liability protection — you won’t be held personally responsible for business debts — and pass-through taxation — the business’ profits “pass through” directly to the owners without being taxed first. Small business owners then claim the profits on their personal income tax returns.

Read our full guide on how to choose a business structure to learn about other options.

Can I file for an LLC on my own?

Yes, you can start a limited liability company on your own by following this free, step-by-step guide on How to Start an LLC. You can also hire one of these Best LLC Services to form your LLC.

How much does it cost to start an LLC?

The cost of forming an LLC varies by state and depends on if you complete the process yourself or hire a professional service. LLCs can cost anywhere from $50 to $500. Hiring a formation company could add another fee between $40 and $350.

What are the advantages and disadvantages of an LLC?

LLCs protect their owners’ personal financial assets. They are also fairly simple to form and maintain.

If you are planning to raise capital, investors typically prefer the stock structure of a C corporation.

Learn more in our LLC benefits guide.

Is an LLC easy to form?

Yes, LLCs are very easy to form. Every state, except for Maine, allows you to form your LLC online by completing a series of questions.

Our form an LLC guides will lead you through the process or you can hire an LLC service (for a very small fee) to form an LLC online for you.