How to Start an LLC in 7 Easy Steps (2024)

Learn how to start an L L C.

To start an LLC, you need to choose a unique business name, file your state’s formation documents, and comply with any additional requirements such as appointing a registered agent and obtaining an EIN.

Ready to begin? Follow these 7 simple steps:

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

Or, start your LLC now with a professional service:

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Forming an LLC Is Easy

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Starting a limited liability company (LLC) is the best way to gain personal asset protection and add credibility to your small business.

Whether you choose to follow our free, step-by-step guide on how to start an LLC below, or hire an online formation service to do the footwork for you, it’s really simple to begin.

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Step 1: Select Your State

Online filing is available in all states except Maine. The best state to form an LLC is almost always the state you live in. If your company will have a physical presence in other states, you’ll need to file as a foreign LLC in those states.

Step 2: Name Your LLC

You need the right business name in order to register your company with the state. Naming your new venture 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 a limited liability company successfully, you also have to be sure no one else in your state is using your LLC name and that it meets state guidelines.

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

If you need help coming up with a catchy brand name, try our business name generator. You can use this tool to generate both business names and domain names. Then, design a logo with our free logo maker.

You can also search GoDaddy for available domain names:

Domain Name Search

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 small businesses. 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, a 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

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Step 4: File Your Articles of Organization

You’ll have to file your LLC paperwork 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 filing fee to process LLC applications.

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

Now is also the time to decide whether your company 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 agreementis 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 operating agreement isn’t filed with the state — it’s stored in your company records. LLC 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.

Step 7: File a Beneficial Ownership Information Report

When forming an LLC, one of the important steps is to complete the Beneficial Ownership Information (BOI) Report with the Financial Crimes Enforcement Network (FinCEN).

This report — also known as the FinCEN BOI report — is designed to combat money laundering, terrorist financing, and other illicit activities by requiring LLCs to disclose information about their beneficial owners.

This is free to file through the FinCEN website

New LLCs must complete this filing within 90 days of formation. Existing LLCs must file before January 1, 2025. 

Failure to complete this filing requirement will result in a $500 per day fine.

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

Research Business Licenses and Permits

You’ll need to research whether or not your company 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 also 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 Annual Report

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

Visit our LLC annual report guide to learn more.

Know Your 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 company thousands of dollars per year. 

It’s a good idea to start a relationship with a business accountant as soon as you start your venture to help set your company up for success.

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 about the advantages of this business entity in our LLC Benefits guide.

Should I get an LLC for my small business?

A limited liability company is the most common business entity; it’s easy to set up, flexible, and straightforward. Additionally, this structure 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 LLC owners without being taxed first. 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 company.

How much does it cost to start an LLC?

LLC cost varies by state filing fees and depends on if you complete the process yourself or hire a professional service. Limited liability companies can cost anywhere from $50 to $500. A third-party formation company handles business filings for you and provides additional services, which could add another fee between $40 and $350 if you choose that route.

What are the advantages and disadvantages of an LLC?

LLCs protect their owners’ personal assets. They are also fairly simple to form and maintain. An LLC is also an ideal business structure for tax purposes.

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 create an LLC online by completing a series of questions.

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

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