How to Start an LLC (Step-by-Step Guide)

Starting an LLC protects your personal assets, gives your business credibility, and takes less than an hour in most states. This guide walks you through every step — from naming your LLC to getting your EIN — with state-specific costs and timelines.

Why Form an LLC?

An LLC (limited liability company) is the most popular business structure in the United States, and for good reason. Here’s what you get:

• Personal asset protection — Your home, savings, and personal property are shielded from business debts and lawsuits
• Tax flexibility — An LLC can be taxed as a sole proprietorship, partnership, S-Corp, or C-Corp depending on what saves you the most money
• Credibility — “LLC” in your business name signals legitimacy to clients, vendors, and banks
• Simplicity — Unlike a corporation, there are no boards of directors, shareholder meetings, or corporate minutes required
• Flexibility — No limits on the number of members, and you define the rules in your operating agreement

The cost is low (under $300 in most states), the process is simple, and the protection is significant. If you’re running any business with real income or liability risk, an LLC is almost always worth it. For a deeper comparison, see LLC vs sole proprietorship.

How to Start an LLC in 6 Steps

1. Choose your state
2. Name your LLC
3. Pick a registered agent
4. File your Articles of Organization
5. Create an operating agreement
6. Get an EIN

Step 1: Choose Your State

Most people should form their LLC in the state where they live and do business. Forming in another state (like Wyoming or Delaware) sounds appealing, but it usually means registering as a “foreign LLC” in your home state anyway — doubling your fees and paperwork.

The exception: if you have no physical presence in any state (such as an online-only business run by a non-US resident), forming in a business-friendly state like Wyoming or Delaware can make sense. See our Wyoming vs Delaware comparison for details.

Select your state for specific instructions:

Step 2: Name Your LLC

Your LLC name must meet three requirements in every state:

1. Include “LLC” or “Limited Liability Company” in the name (abbreviations like “L.L.C.” are usually accepted too)
2. Be distinguishable from other businesses registered in your state
3. Not include restricted words like “Bank,” “Insurance,” or “University” without special approval

Use our business name search tool to check availability in your state. If your desired name is taken, most states let you reserve a name for 60–120 days for a small fee ($10–$50) while you prepare your filing.

Tip: Check domain name availability at the same time. Having a matching .com helps with credibility and marketing.

Step 3: Pick a Registered Agent

Every LLC needs a registered agent — a person or service with a physical address in your state of formation who can accept legal documents (like lawsuits or state notices) on behalf of your LLC.

You have three options:

• Be your own registered agent — Free, but your name and address become public record, and you must be available at that address during business hours
• Ask a friend or family member — Free, but they must have a physical address in the state and be available during business hours
• Hire a registered agent service — $100–$300/year. Keeps your address private, handles all legal mail, and sends you digital scans. See our Northwest Registered Agent review (from $39/year)

Most business owners choose a registered agent service for the privacy and convenience. It’s one of the few ongoing costs of an LLC, and it’s well worth it.

Step 4: File Your Articles of Organization

This is the official step that creates your LLC. You’ll file a document called Articles of Organization (or “Certificate of Formation” in some states) with your state’s Secretary of State office.

The form is usually one or two pages and asks for:

• LLC name
• Registered agent name and address
• Principal office address
• LLC organizer name (the person filing)
• Management structure (member-managed or manager-managed)

Most states let you file online, and processing takes anywhere from same-day to 2–4 weeks depending on the state.

Member-managed vs manager-managed: In a member-managed LLC (the default and most common), all owners participate in running the business. In a manager-managed LLC, one or more designated managers handle operations while other members are passive investors. Choose member-managed unless you have silent partners.

How Much Does It Cost to Start an LLC?

For a complete breakdown of all 50 states, see our LLC cost guide.

Step 5: Create an Operating Agreement

An LLC operating agreement is an internal document that defines how your LLC is run. It covers:

• Ownership percentages and member contributions
• How profits and losses are distributed
• Voting rights and decision-making procedures
• What happens if a member leaves or the LLC dissolves
• Management structure (who makes day-to-day decisions)

Some states legally require an operating agreement (New York, California, Missouri, Maine, and Delaware). But even where it’s not required, you should have one. Without it, your LLC defaults to your state’s generic LLC rules — which may not reflect what you actually want.

For single-member LLCs, the operating agreement is simple — usually a 2-3 page document. Multi-member LLCs need more detail, especially around profit sharing, voting, and buyout provisions.

Step 6: Get an EIN

An EIN (Employer Identification Number) is a federal tax ID for your business — think of it as a Social Security number for your LLC. You need one to:

• Open a business bank account
• File business taxes
• Hire employees
• Apply for business credit

Getting an EIN is free and takes about 5 minutes on the IRS website. You’ll receive your EIN immediately after completing the online application.

What to Do After Forming Your LLC

Once your LLC is approved, take these steps to set it up properly:

Open a Business Bank Account

This is critical. Using a separate business account keeps your personal and business finances separate, which protects your limited liability status. You’ll need your Articles of Organization, EIN, and operating agreement to open the account.

Get Business Licenses and Permits

Depending on your industry and location, you may need federal, state, or local business licenses. Common examples include sales tax permits, professional licenses, and home occupation permits.

Understand Your Tax Obligations

By default, a single-member LLC is taxed as a sole proprietorship (Schedule C) and a multi-member LLC is taxed as a partnership (Form 1065). Both are pass-through — the LLC doesn’t pay federal income tax. Instead, profits pass through to each member’s personal return.

You will pay self-employment tax (15.3%) on net earnings. If your profits exceed $50,000–$60,000 per year, consider electing S-Corp taxation to reduce this. See our LLC vs sole proprietorship comparison for tax details.

File Annual Reports

Most states require LLCs to file an annual (or biennial) report and pay a fee to stay in good standing. Miss this deadline and your state may dissolve your LLC. Fees range from $0 (in some states) to $800 (California’s franchise tax). Mark the due date on your calendar.

How Long Does It Take to Form an LLC?

In most states, you can form an LLC in one day to two weeks. The actual filing takes 15–30 minutes — the wait is for state processing.

• Fastest states: Wyoming, Colorado, and Delaware often process same-day
• Average states: Most process within 3–7 business days
• Slowest states: Some states (like New York, which requires publication) can take 4–6 weeks total

Many states offer expedited processing for an additional fee ($50–$200).

LLC Formation Cost Summary

Total first-year cost: $50–$1,500 depending on your state and choices. Most LLCs cost under $300 to set up. See the full breakdown in our LLC cost guide.

Pros and Cons of an LLC

For most small business owners, the pros far outweigh the cons. The liability protection alone is worth the modest cost.

Should You Use an LLC Formation Service?

You don’t need one — filing on your own is simple and costs only the state fee. But an LLC formation service can save you time and ensure nothing is missed, especially if paperwork isn’t your thing.

Most formation services charge $0–$150 on top of the state filing fee and handle:

• Name availability search
• Preparing and filing Articles of Organization
• Registered agent service (often included for the first year)
• Operating agreement template
• EIN application

We’ve reviewed the top services. Here’s a quick comparison:

See our full best LLC services comparison for detailed reviews.

Frequently Asked Questions

Can I start an LLC by myself?

Yes. Most people form their LLC without a lawyer. The filing process is straightforward — you fill out a form, pay a fee, and submit it to the state. If you want help, LLC formation services can handle the paperwork for you, typically for $0–$150 plus the state fee.

Can I form an LLC online?

Yes. Nearly every state accepts online filings through the Secretary of State website. Online filing is usually faster than mail and some states process it the same day.

Do I need an LLC for a side hustle?

It depends on the risk. If your side hustle has any liability exposure (clients, products, physical services), an LLC is worth the small investment. If it’s truly low-risk and low-income, a sole proprietorship may be fine to start. You can always form an LLC later.

What’s the difference between an LLC and a corporation?

An LLC is simpler and more flexible. It offers the same liability protection as a corporation but with fewer formalities — no board of directors, no shareholder meetings, no corporate minutes required. Most small businesses prefer LLCs. See our LLC vs corporation comparison.

Can a non-US citizen form an LLC?

Yes. There are no citizenship or residency requirements for forming an LLC in the United States. Non-US citizens commonly form LLCs in Wyoming or Delaware. See our guide for non-US citizens.

Can I form an LLC in a different state?

You can, but think carefully before doing so. If you form in a state where you don’t live or do business, you’ll typically need to register as a “foreign LLC” in your home state too — paying fees in both states. Most people should form in their home state.

How is an LLC taxed?

By default, a single-member LLC is taxed like a sole proprietorship and a multi-member LLC is taxed like a partnership. In both cases, profits pass through to the members’ personal tax returns. An LLC can also elect to be taxed as an S-Corp or C-Corp if it’s advantageous.

What happens if I don’t form an LLC?

If you operate a business without forming an LLC, you’re automatically a sole proprietor (or a general partnership if there are two or more owners). This means you have no liability protection — your personal assets can be seized to pay business debts or legal judgments.

Can an LLC have employees?

Yes. An LLC can hire employees. You’ll need an EIN, workers’ compensation insurance, and to register with your state for payroll taxes. Many small LLCs start with just the owner(s) and hire employees as the business grows.

How do I dissolve an LLC?

If you no longer need your LLC, you can dissolve it by filing dissolution paperwork with your state, settling debts, distributing remaining assets, and closing business accounts. Don’t just stop paying fees — that can result in penalties.

What is an LLC operating agreement and do I need one?

An operating agreement is an internal document that outlines ownership, profit sharing, and management rules. While not every state requires one, banks often ask for it when you open a business account, and it helps prevent disputes between members. Every LLC should have one.

How much does it cost to maintain an LLC each year?

Annual costs vary by state but typically include an annual report fee ($0–$300), registered agent fee ($100–$300 if using a service), and any applicable state franchise tax ($0–$800). Most LLC owners spend $100–$500 per year to maintain their LLC. See our complete LLC cost breakdown.

Can I convert my sole proprietorship to an LLC?

Yes. File Articles of Organization with your state, get a new EIN, open a business bank account, and transfer your business operations to the LLC. The process usually takes a few days. Read more in our LLC vs sole proprietorship guide.

Where should I form my LLC?

In most cases, form your LLC in the state where you live and do business. Forming in Delaware or Wyoming only makes sense if you’re a non-resident or have specific legal reasons. Forming out of state typically means paying fees in two states instead of one.