How to start an LLC in 8 steps

Every state lets you form an LLC yourself, online, for the price of the filing fee. The paperwork is shorter than most people expect. What trips founders up is the order of operations: the name has to clear before you file, the filing has to finish before the IRS will issue a tax ID for the entity, and the tax ID has to exist before a bank will open an account in the LLC's name. Do the steps out of sequence and you end up redoing paperwork you already paid for.

This guide walks the eight steps in order, with what each one costs, how long it takes, and where the common mistakes hide. It covers the filing itself. If you are still deciding whether an LLC is the right structure, start with our comparison of an LLC vs. a sole proprietorship, and if you want the fees broken down state by state, see what it costs to start an LLC. Forming the entity is also step 4 of our full guide to how to start a business.

What you need before you start

Four decisions and a few documents cover almost everything the filing will ask for, and settling them first turns the actual filing into a twenty-minute task.

• A state. Usually the one where you live and operate. Step 1 covers when that answer changes.
• A name. It has to be available in your state's registry and follow your state's naming rules. Step 2 covers the searches worth running.
• A registered agent. A person or service with a physical address in the state who can receive legal documents during business hours. This can be you.
• A management structure. Member-managed means the owners run the company day to day, and it is the default for most small LLCs. Manager-managed means the owners appoint one or more managers, which suits LLCs with passive investors.

You will also want the names and addresses of every member, since most states list them in the formation document or in the first annual report. If any of that information is still unsettled, resolve it before you file. Amending a formation document later means another form and another fee.

The 8 steps to start an LLC

Step 1: choose your state

For most businesses the answer is simple. Form the LLC in the state where you live and do the work.

The advice you may have read about forming in Delaware, Wyoming, or Nevada mostly applies to corporations raising venture capital, where investors expect Delaware law. A small LLC that forms in Delaware but operates in Ohio still has to register in Ohio as a foreign LLC, which means two filings, two annual reports, two sets of fees, and a registered agent in each state. The savings the out-of-state formation promised usually disappear right there.

There are narrow exceptions. If you own rental property in another state, an LLC formed where the property sits is common. If your business genuinely operates in several states, you form in one and register as a foreign LLC in the others. For a single-state service business or online store, your home state wins on cost and simplicity almost every time.

Step 2: choose and clear your name

Your LLC's name has to be distinguishable from every other business name already registered in your state, and it has to include a designator such as "LLC," "L.L.C.," or "Limited Liability Company." Most states also restrict words like "bank," "insurance," and "university" without additional approval.

Run three searches before you fall in love with a name:

• Your state's business registry. Every Secretary of State runs a free search tool. If the name is taken or too similar to an existing one, your filing will be rejected and you will wait out the processing time twice.
• The federal trademark database. State clearance says nothing about trademarks. A name that clears the registry can still infringe a registered mark, so search the USPTO database before you print anything; rebranding after launch costs far more than checking now.
• The domain and social handles. Availability here has no legal weight, and it still matters for a business that plans to be found online.

If you are weeks away from filing, most states will reserve a name for a small fee, typically for 60 to 120 days. If you are ready to file now, skip the reservation and let the filing itself claim the name.

One more distinction worth knowing: the name on your Articles of Organization is your legal name. Want to trade under a different brand? You can file a DBA later, though that is a separate registration and does none of the work an LLC does.

Step 3: appoint a registered agent

Every state requires an LLC to name a registered agent: a person or company with a physical street address in the state, available during business hours, who can accept service of process and official mail on the company's behalf.

You can serve as your own registered agent in most states if you have an address there, and plenty of single-member LLCs do exactly that.

The trade-offs are practical. Your address becomes part of the public record, you have to be reachable at that address during business hours, and if you move, you owe the state a change-of-agent filing.

Commercial registered agent services commonly charge $100 to $300 a year. The fee buys three things. Privacy, a consistent address that survives your next move, and a company whose whole job is to never miss a delivery. A missed service of process can mean a default judgment you never knew was coming, which is why home-based owners who travel often decide the fee is cheap.

Whichever route you choose, the agent's name and address go on the formation document in the next step, so decide before you file.

Step 4: file Articles of Organization

This is the filing that creates the LLC. Depending on the state it may be called Articles of Organization, a Certificate of Formation, or a Certificate of Organization, and it goes to the Secretary of State or the state's equivalent business agency, almost always through an online portal.

The form itself is short, asking for the LLC's name, its principal address, the registered agent's name and address, the management structure, and an organizer's signature. Some states ask for member names, a business purpose, or a duration, and "perpetual" is the standard answer for duration.

State filing fees range from $40 to $500 depending on the state. Including all fees and services, the upfront cost of forming an LLC generally runs between $300 and $1,000. Our state-by-state cost guide breaks down what your state charges.

Processing time varies. Expect anywhere from one business day to several weeks, and note that many states sell expedited processing for an added fee.

When the state approves the filing, you receive a stamped copy of the Articles and, in many states, a certificate. Save both as PDFs somewhere you can find them, because banks and lenders will ask for them for years.

A few states add their own wrinkles. New York, for example, requires new LLCs to publish a formation notice in local newspapers and file proof of publication, which adds real cost in some counties. Check your own state's post-formation requirements once the approval arrives.

Step 5: draft an operating agreement

The operating agreement is the contract among the members that says who owns what percentage, how profits and losses are split, how decisions get made, what happens when a member wants out, and how the company winds down if it comes to that. It stays internal. States do not ask you to file it, though a handful, including California and New York, require you to have one.

Skipping it is tempting for a single-member LLC and still a mistake worth avoiding. Without an agreement, your state's default LLC statute decides every question the document would have answered, and those defaults were written for nobody's business in particular. Banks also ask to see an operating agreement when you open an account, and a signed agreement is one of the pieces of evidence that the LLC is a real, separate entity, which is the entire point of forming one.

For a multi-member LLC, this document matters more than any other in the stack. Ownership splits, capital contributions, what happens when one member does most of the work, buyout terms when someone leaves: every expensive dispute between business partners traces back to a question the operating agreement should have settled while everyone was still friendly. This is the one step where paying a lawyer for a few hours is money well spent.

Step 6: get an EIN

An Employer Identification Number is the federal tax ID for your LLC. The IRS issues it free, the online application takes about fifteen minutes, and the number arrives at the end of the session. You will use it to file business taxes, hire employees, and open a business bank account.

Two sequencing traps live in this step.

First, form the LLC before you apply, because the application asks for the entity's legal name and formation details, and an EIN issued to you as a sole proprietor generally cannot follow you into the LLC. Founders who grab an EIN early usually end up applying again after formation and updating the number everywhere they already used it.

Second, apply directly through the IRS. Third-party sites charge for what the IRS provides at no cost, and the application is short enough that there is nothing to outsource. When it is done, download the confirmation letter, called a CP 575, and file it with your Articles. Banks ask for it, and the IRS issues the original only once.

Single-member LLCs with no employees can technically use the owner's Social Security number for federal taxes. Getting an EIN anyway keeps your personal number off W-9s and vendor paperwork, and you will want one the moment you open a business account or hire. Our full guide to getting an EIN covers the application step by step, including what to do if you have no Social Security number.

Step 7: open a business bank account

Once the state has approved your Articles and the IRS has issued your EIN, open a bank account in the LLC's name before the first dollar of revenue arrives.

The reason is the liability protection you just paid for. Courts respect the separation between you and your LLC when you respect it yourself, and running business money through a personal account is the most common way owners undermine it. A dedicated account also keeps your books clean from day one, and clean books are what lenders read when you apply for financing later.

Banks generally ask for your stamped Articles of Organization, your EIN confirmation letter, your operating agreement if you have one, and personal identification for each owner with significant ownership. With those documents in hand, Bluevine Business Checking can be opened online. For a walkthrough of the documents and the application itself, see our guide to opening a checking account for your LLC.

Step 8: meet the ongoing requirements

Forming the LLC is a one-time event. Keeping it in good standing is an annual habit, and the states that make it cheap to form are often the ones that catch owners off guard later.

• Annual or biennial reports. Most states require a short report confirming your address, agent, and ownership, with a filing fee attached. Miss enough of them and the state administratively dissolves the LLC, which unwinds the liability protection until you pay to reinstate it.
• Annual fees and franchise taxes. Ongoing state charges range from $0 to $800 a year. California sits at the top of that range with an $800 annual franchise tax that applies regardless of income. Eight states charge no annual fee or franchise tax at all: Arizona, Idaho, Minnesota, Mississippi, Missouri, New Mexico, Ohio, and South Carolina.
• Registered agent upkeep. If you used a service, the subscription renews annually. If you are your own agent and you move, file the change of address promptly, because official mail sent to a stale address counts as delivered in most states.
• Licenses and taxes. Business licenses renew on their own schedules, and the LLC's tax obligations, including quarterly estimated payments for most owners, run continuously. Our guide to getting a business license covers what applies at each level of government.

Put every recurring date in a calendar the week you form. The most common way a healthy small business loses good standing is a forgotten $25 report.

How long each step takes

Timelines assume the previous step is finished, since most of these cannot start until the one before them is done.

The realistic total from name search to open bank account is one to four weeks, with your state's processing queue as the main variable.

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