Checklist for Starting an LLC

A limited liability company (LLC) is usually the best business structure for a small business.

Luckily, starting a limited liability company (LLC) is easy and offers the benefits of limited liability protection and tax options.

We created this Checklist for Starting an LLC so you don’t miss any of the important steps when launching your LLC. 

Recommended: Start your LLC with Northwest for $29 (plus state fees).

An LLC checklist.

LLC Formation Checklist

Step 1: Name Your LLC

Your business’s name is one of the first — and arguably most important — decisions you’ll make when forming an LLC. When selecting the name for your LLC, there are a few things to keep in mind: 

  • Your state’s naming requirements 
  • Whether the name you’ve chosen is available
  • Whether there is a matching domain name (URL) available

Naming Requirements

Each state has different requirements for naming an LLC. It is important to check your state’s requirements for naming a business entity before choosing a name for your business. However, there are a few general guidelines for naming an LLC you can expect to follow regardless of the state you’re located in. 

Common LLC Naming Rules:

  • Your name must include the phrase “limited liability company” or one of its abbreviations (e.g., LLC, L.L.C., etc.).
  • Your name cannot include words that could confuse your LLC with a government agency.
  • Restricted words (e.g., Bank, Attorney, University) may require additional paperwork.

To learn more about specific rules for your state, visit our How to Name a Business guide and select your state.

Name Availability

The first step in naming your LLC is to make sure it is available. No matter what state you’re located in, your LLC’s name must be distinguishable. In other words, your business name must be unique for you to use it. 

Use our LLC Name Search guide and select your state to check name availability.

Domain Name Availability

Before you decide on a business name, it is important that you make sure the matching web domain is available.

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Fortunately, choosing a business name for an LLC is super easy with the help of our free business name generator. Simply include a keyword and industry to explore potential business names with available domain names at no cost to you.

Step 2: Choose a Registered Agent

A registered agent is responsible for accepting legal and tax documents on behalf of your business. This role can be filled by an individual or a business entity (such as a professional service). You can also be your own registered agent in almost every state.  

If you’re not sure about serving as your own registered agent, you might consider hiring a registered agent service. Using a registered agent service ensures that your business never misses important mail or falls behind in legal obligations while also maintaining your privacy.

Form an LLC and get free registered agent services for the first year with Northwest.

Step 3: File the Articles of Organization

To officially form your LLC, you’ll need to file your state’s formation documents. This is typically known as the Articles of Organization or a Certificate of Formation, depending on the state you’re filing in. 

Before you file formation documents or create an operating agreement, you need to decide whether your LLC will be member-managed or manager-managed. Read more about the ins and outs of LLC management by referring to our guide on member-managed vs. manager-managed LLCs.

How to File Formation Documents

The process of filing formation documents will vary depending on the state you’re filing in. However, you can generally expect to submit your formation documents to the Secretary of State (or an equivalent government agency). 

Be sure to follow the instructions carefully when filing your documents and include any additional attachments to avoid having your filing rejected.

Recommended: Check out our Best LLC Services review to learn more about choosing the right service to form your LLC.

Step 4: Draft an LLC Operating Agreement

Now that you’ve officially formed your LLC, the next step is to draft an LLC operating agreement. While it is only required for LLCs to have an operating agreement in California, Delaware, Maine, Missouri, Nebraska, and New York, all LLCs should have an operating agreement.

What is an LLC Operating Agreement?

An LLC operating agreement outlines the ownership and membership duties of your LLC. In its essence, this document allows you to clearly define both the financial and working relationships between each business owner or “members” as well as the members and managers. 

This makes managing your business not only easier but also more streamlined, thanks to a solidified set of rules that explain voting rights, ownership stakes, and more.

How to Draft an LLC Operating Agreement

Here’s the good news, drafting an LLC operating agreement is easy and free using our free operating agreement tool or by downloading a free operating agreement template. If you’d prefer to create your own operating agreement instead, here are the six articles you can generally expect to cover: 

  • Organization 
  • Management and voting
  • Capital contributions
  • Distributions
  • Changes to the membership structure
  • Dissolution

Step 5: Get an EIN

An Employer Identification Number (EIN) is like a Social Security number for your LLC. Besides allowing the IRS to identify your business for tax reporting, an EIN allows you to get a bank account for your LLC. If you’re not sure if you need an EIN for your business, here are some circumstances that require LLCs to obtain an EIN. 

Your LLC is required to get an EIN if: 

  • Your LLC has or plans to have employees 
  • Your LLC files excise tax 
  • Your LLC withholds taxes for nonwage income paid to a nonresident alien

The benefits of having an EIN for your LLC far outweigh the disadvantages. Not to mention, it is free and easy to file for an EIN using the IRS website.

After You've Formed Your LLC

Your LLC is official, and you’ve completed the checklist; now what? There are plenty of important tasks you need to complete even after forming your LLC, from obtaining the right permits to developing a strong web presence.

Important Things to Do After Forming an LLC

There are quite a few things you need to do after forming your LLC; however, these are the most important things you need to check off your list first: 

To learn more, visit our guide on the important things you need to do after forming an LLC.

Frequently Asked Questions

What must be filed to form an LLC?

The requirements to form an LLC vary depending on the state you’re located in. However, you can expect to file formation documents such as the Articles of Organization with the Secretary of State. Be sure to check your state’s requirements to form your LLC. Common requirements include filing a name reservation or attaching a cover letter. 

Learn more about the business formation requirements in your state by reading our guides on How to Form an LLC in every state.

Can I set up an LLC on my own?

You can absolutely form an LLC on your own by filing formation documents with the Secretary of State. If you choose to form an LLC on your own, it is important to make sure you have fulfilled all the requirements to ensure your filing is accepted. Learn how to complete and file your LLC formation documents by using our free guide on How to Form an LLC in your state.

Is an S corp better than an LLC?

An S corporation (S corp) is an elected tax status for either a limited liability company or corporation. There are a few circumstances where electing to be taxed as an S corp can benefit your LLC, such as if your business generates enough net profit to pay owners a reasonable salary and has at least $10,000 in annual distributions. 

For LLCs that don’t meet these specifications, the S corp tax classification won’t be beneficial. Read our LLC vs. S corp guide to learn about the differences between the default LLC tax status and S corp tax status.

How do you strucutue an LLC?

There are two types of LLC-managed structures: member-managed and manager-managed. can be either managed by its members (owners) making it member-managed or by an appointed manager which would make it manager-managed. Determining the management structure of your LLC comes down to the needs and wants of its members. For example, members that prefer a more hands-on approach to managing their business tend to opt for a member-managed model.

How can I lower my LLC Taxes?

There are a few ways you can legally reduce your LLC’s tax liability: 

  • Know your tax-deductible business expenses and write them off  
  • Elect S corp status
  • Contribute to a 401k and health insurance under the S corp tax status as an LLC

For more information about taxes and your LLC, read our LLC tax guide here.

How do owners of LLC get paid?

The way you pay yourself from an LLC depends on how your business is taxed. If your business is a single-member or multi-member LLC, you can pay yourself in one of two ways: through a reasonable salary and distribution as an S corporation, or through a distribution that passes through your individual tax return. 

Though it is most common for LLC owners to pay themselves through a distribution that passes through their individual tax return, LLCs with higher profits (enough to pay members a reasonable salary plus at least $10,000 in annual distributions) may elect to be taxed as an S corp.

Can you pay yourself a salary in an LLC?

In a single-member or multi-member LLC, you can pay yourself one of two ways; either by a distribution that passes through to your individual tax return or by a reasonable salary and distribution as an S corp.

Should I hire a lawyer to form an LLC?

You don’t need to hire a lawyer to form an LLC. To start an LLC, you can either file formation documents yourself or hire an LLC formation service such as ZenBusiness to form your LLC for you.

Do I need a separate bank account for my LLC?

The short answer, yes. Utilizing a personal bank account for your LLC’s banking can invalidate your limited liability protection. Keeping your business and personal banking separate protects your corporate veil and, in turn, your personal assets such as your home, car, or other valuables in the event of your LLC being sued.

Which bank is best for LLC?

The bank or type of bank account that’s right for your LLC depends on your business type and needs. For example, an online business may be best suited for a BlueVine checking account, while a brick and mortar business may find Wells Fargo is more beneficial and convenient for them. To determine the bank that best suits your business needs, we recommend a look at our guide to the 7 best business accounts for startups and entrepreneurs.

What documents does an LLC need to open a bank account?

To open a bank account for your LLC, you’ll need the following documents: approved Articles of Organization (or your state’s equivalent), EIN confirmation or verification letter, and two forms of identification such as a driver's license and a passport. 

Depending on the bank, you may also need to bring your operating agreement as well as additional documents. Be sure to check in with the bank you plan on opening an account with prior to visiting to ensure you’ve got the necessary documents.

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