Get Started: Form Your LLC
Follow a clear, step-by-step process to form your LLC quickly and affordably. Choose your state, prepare your name and filings, then get an EIN and open a bank account.
1. Who is an LLC Suitable For?
A Limited Liability Company (LLC) combines personal liability protection with flexibility. By forming an LLC, you create a separate legal entity for your business, helping protect your personal assets from business liabilities. If your business faces legal trouble or debt, your personal assets—such as your home, car, and savings—are typically shielded from being used to settle business debts.
Who Should Consider an LLC?
- Small Business Owners: Limit personal liability while keeping operational flexibility.
- Freelancers and Consultants: Independent workers who need liability protection.
- Entrepreneurs: Formalize the business and potentially attract investors or partners.
Understanding LLCs: State-Level Registration and Requirements
1.1 LLCs are State-Specific
LLCs are registered and governed at the state level in the U.S., not by a single federal rule. Each state has its own process and requirements; what's straightforward in one state may differ significantly in another.
1.2 Cost Variations
Costs vary widely by state: filing fees can range from around $30 to over $300. Always verify fees with the state where you plan to register.
Time Required to Form an LLC
- Online Filing: Most states support online filing; approval typically takes minutes up to 2 weeks.
- Mail Filing: Slower; processing often ranges from a few business days to several weeks.
- Expedited Service: Many states offer expedited processing for an extra fee, often reducing timelines to a few business days.
Always check the state's Secretary of State for current timelines. Beyond state processing, getting an EIN, drafting an Operating Agreement, and opening a bank account also take additional time.
1.3 Rules and Regulations
States differ on naming rules, whether an Operating Agreement is expected, annual report obligations, and registered agent requirements. Some states require annual filings; others do not.
1.4 Choosing the Right State
While states like Delaware and Nevada are business-friendly, prioritize where you operate. Forming in a state where you don't do business often requires registering as a foreign LLC in your home state, adding cost and complexity.
- Business Location: If you primarily operate in one state, forming there is usually best.
- State Laws and Regulations: Compare formation requirements, annual fees, and compliance burdens.
- Tax Implications: Evaluate state tax rates and potential benefits.
- Privacy Protections: States like Wyoming and Nevada offer stronger privacy.
Want a deeper comparison? Read our comprehensive guide: Best State to Form an LLC
1.5 State Resources
For detailed state-specific requirements and fees, refer to the state's Secretary of State (or equivalent agency) website.
2. How to Set up an LLC: A Step-by-Step Guide
- Choose your state.
- Choose your LLC name.
- Select a registered agent.
- File Articles of Organization.
- Create an Operating Agreement.
- Obtain an EIN (Employer Identification Number).
2.1 Choose Your State
Choose the state that aligns with your business needs. If you primarily operate in one state, forming there is simplest and avoids foreign registration in your home state.
- Business Location: Forming where you operate reduces extra costs.
- State Laws and Regulations: Compare requirements, annual fees, and compliance.
- Tax Implications: Evaluate tax rates and benefits.
- Privacy Protections: Consider privacy-friendly states like Wyoming if needed.
We provide step-by-step guides for each state. After reading the best state article, use the grid below to access any state's detailed guide.
Quick Summary
- Choose your state — Typically, forming in your home state is simplest and most cost‑effective. Online/privacy‑focused businesses may consider Wyoming; venture‑backed companies often choose Delaware.
- Pick an LLC name — Ensure name availability and compliance with state rules. (Use generator)
- File Articles of Organization — Submit formation documents to the state and pay filing fees; many states support online filing.
- Appoint a Registered Agent — Required to receive legal documents. You can self‑appoint in your home state or use a professional service.
- Draft an Operating Agreement — Defines ownership and management rules; often required by banks for account opening.
- Apply for an EIN — Get an EIN from the IRS (free). Needed for taxes and banking.
- Open a business bank account — Use Articles, Operating Agreement, and EIN.
- Stay compliant — File annual reports, pay fees, and maintain good standing per state requirements.
Tip: If operating across multiple states, form in your home state and register as a foreign LLC where required.
LLC by State
Choose your state to see costs, timelines, and steps.
Registered Agent vs. Organizer
A Registered Agent receives legal documents; an Organizer prepares and files formation documents. They can be the same person or a service provider.
Operating Agreement
- Defines member rights, profit distribution, and voting rules.
- Banks and investors often require it.
- Recommended even for single‑member LLCs, shows proper governance.
EIN & Bank Account
- Apply for EIN at the IRS for free; used for taxes and banking.
- Prepare Articles, Operating Agreement, and EIN letter.
- Choose banks with transparent fees and online account support.
Address & Privacy
Use agent address and a professional email to protect privacy. For anonymity, consider privacy‑friendly states and appointing managers.
Common Mistakes
- Forming out‑of‑state unnecessarily, causing double annual fees and filings.
- Skipping Operating Agreement and compliance requirements.
- Not checking name availability or using restricted words.
2.2 Choose Your LLC Name
- Check Availability: Ensure your desired LLC name is unique in your state. Most states provide an online name search tool.
- Meet State Requirements: The name must comply with rules, typically including 'LLC' or 'Limited Liability Company'.
2.3 Select a Registered Agent
Role: A Registered Agent is the official point of contact for receiving legal documents and government notices on behalf of your LLC.
Options: You can serve as your own agent, appoint a trusted individual, or hire a professional service. Using a service protects privacy, as the agent's address appears in public records instead of yours.
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2.4 File Articles of Organization
Purpose: This document formally establishes your LLC with the state's business registry.
Details: Include your LLC name, principal address, Registered Agent details, and whether the LLC is member‑managed or manager‑managed.
Submission: File with the Secretary of State (or equivalent). Many states allow online filing for faster processing.
How Long Does It Take to Start an LLC?
Timelines vary by state. Many states complete online filings almost immediately, but it can also take days to weeks. Mail filings add postal time. Many states offer expedited processing for an extra fee.
Cost: How Much Does It Cost to File Articles?
Costs vary by state, typically $50–$150, some exceed $200; average around $132. Always check the state's official fee schedule.
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2.5 Create an Operating Agreement
Importance: Not always mandatory, but it outlines management, responsibilities, and financial arrangements—helps prevent misunderstandings; banks often require it to open accounts.
- Define roles of members or managers
- Profit‑sharing ratios and voting rules
- Procedures for resolving disputes or adding/removing members
2.6 Obtain an EIN (Employer Identification Number)
Purpose: Needed for tax purposes, hiring employees, and opening a business bank account.
Application: Apply online via the IRS website. Non‑U.S. residents can apply by fax or mail.
3. Additional Considerations
- Cost of Formation: Typically $30–$350 depending on state; Articles average around $132. Consider annual reports, taxes, and licenses.
- Time to Form: Many states process within weeks; online is usually faster; expedited options available.
- Ongoing Requirements: File annual reports, pay taxes, and keep licenses up‑to‑date.
4. Recommend
Forming an LLC protects personal assets and builds a solid business foundation. Follow the steps above to set up correctly and stay compliant. For convenience, consider professional services like Northwest Registered Agent or LegalZoom.
If you have specific questions or need personalized guidance, consult an attorney or accountant to tailor your setup.
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FAQ
What's the Difference Between an LLC and a Corporation?
When choosing a business structure, it's important to understand the distinctions between an LLC and a Corporation. Both are legal entities but serve different purposes and have unique characteristics.
What is an LLC?
An LLC (Limited Liability Company) is a versatile structure for running a business or holding assets (e.g., real estate, vehicles). It protects your personal assets from business debts and liabilities. The owners are called 'members.' An LLC can be a Single‑Member LLC or a Multi‑Member LLC.
What is a Corporation?
A Corporation is typically used for larger businesses with multiple shareholders and investors; it's not ideal for most real estate ventures. Owners are called 'shareholders.' Corporations are required to have a Board of Directors and Corporate Officers to manage operations.
LLC vs. Corporation: Which is Better?
It depends on your goals. Corporations are ideal for raising significant capital but have stricter requirements (annual meetings, records, issuing shares) and often face double taxation. LLCs are preferred for smaller businesses or asset holding; they don't issue shares, are simpler and cheaper to maintain, and benefit from pass‑through taxation.
Can an LLC Be an S‑Corp?
An LLC cannot be an S‑Corp itself, but it can elect to be taxed as an S‑Corp by filing IRS Form 2553. Consider this typically when the business earns at least ~$75,000 annually or there are clear tax savings; consult a tax professional first.
What's the Difference Between a Sole Proprietorship and an LLC?
A Sole Proprietorship is run by one person and isn't a formal separate legal entity; many home‑based businesses operate this way without realizing it. An LLC is a formal entity created by filing Articles of Organization with the state, offering stronger protections and obligations such as annual reports and specific tax filings.
Can a Sole Proprietorship Become an LLC?
Yes. File Articles of Organization with your state's Secretary of State to convert; you don't need to close the Sole Proprietorship—simply begin operating under the new LLC.
How is an LLC different from a sole proprietorship?
An LLC provides limited liability and flexible taxation (pass‑through by default); a sole proprietorship is not a separate legal entity.
Do I need a Registered Agent?
Most states require a registered agent; self‑appointment is possible in your home state, consider professional agents for out‑of‑state.
Which state is cheapest to form an LLC?
Fees vary by state; considering total cost and administration, your home state is usually best.