Quick answer: To start up an LLC, (1) choose your state, (2) pick and check a compliant name, (3) appoint a registered agent, (4) file Articles of Organization with the state, (5) write an operating agreement, (6) get an EIN from the IRS, and (7) open a business bank account, then secure any licenses and stay current on annual reports. State filing fees typically run from about $35 to $500, and approval usually takes 1 to 10 business days when you file online. The right order matters, and the sections below walk through each step with costs, timelines, and deadlines.
How to Start Up an LLC at a Glance
- Choose a state: Usually the state where you operate.
- Name your LLC: Must include “LLC” or an approved variant, and be distinguishable from existing names.
- Appoint a registered agent: Yourself, or a commercial service at roughly $100 to $300 per year.
- File Articles of Organization: Online if possible. Most states process in 1 to 10 business days.
- Create an operating agreement: Required in a few states, wise in all of them.
- Get an EIN: Free from the IRS, instant online.
- Open a business bank account: Keeps your personal assets protected.
- Handle taxes, licenses, and permits: Federal tax election, local licenses, seller’s permit.
- Stay compliant: Annual reports, franchise taxes, registered agent upkeep.
What Is an LLC, and Is It Right for You?
A limited liability company (LLC) is a business structure registered with a state that separates your personal assets from the company’s debts and legal obligations. It combines the liability protection of a corporation with the simpler tax treatment and lighter paperwork of a sole proprietorship or partnership. By default, LLC profits pass through to the owners’ personal tax returns, so the LLC itself does not pay federal income tax.
An LLC is usually a good fit if you want personal liability protection, expect to bring on partners, or want flexibility in how you are taxed. A sole proprietorship costs less to set up but offers no liability separation. A corporation adds formalities (boards, bylaws, annual meetings) that most small businesses do not need. An LLC also does not shield you from your own negligence or from debts you personally guarantee, so insurance and good records still matter.
Step 1: Choose the Right State to Register Your LLC
Home State vs. Formation-Friendly States
Most new business owners should form their LLC in the state where they actually operate. Delaware and Wyoming are appealing in specific situations, but if your business is based in Texas or California and you form in Delaware, you must still register (foreign-qualify) in your home state. That means paying filing fees, registered agent costs, and annual compliance obligations in two states instead of one.
Delaware and Wyoming make financial sense for LLCs that plan to raise outside investment, hold real estate across multiple states, or need stronger privacy protections. For the average small business owner, your home state is the right answer.
What It Costs to Form an LLC by State
First-year costs vary dramatically. Here is what to expect in five common formation states:
| State | Typical first-year cost | What drives the cost |
|---|---|---|
| California | $870 to $1,190+ | The $800 minimum annual franchise tax applies from year one |
| Florida | About $125 | Lowest-cost DIY filing of the five |
| New York | $700 to $2,500+ | $200 filing fee plus a mandatory newspaper publication requirement |
| Texas | $300+ | $300 state filing fee |
| Illinois | $150+ | State filing fee plus annual report |
Florida is the cheapest of these states for a DIY formation, New York is the most expensive upfront, and California carries the heaviest ongoing burden. Fees change, so confirm current amounts on your Secretary of State’s website before you file.
Beyond the state fee, plan for a registered agent if you do not serve as your own ($100 to $300 per year for a commercial service). Operating agreement drafting and name reservation are optional in most states, though a few states require an operating agreement, so check your state’s rules.
Should You Use a Registered Agent Service?
A registered agent receives legal and government correspondence on behalf of your LLC. You can serve as your own in most states, but a commercial service makes sense if you want privacy (the agent’s address appears in public records instead of yours), operate in multiple states, or want automated compliance reminders so deadlines do not slip.
Step 2: Name Your LLC and Reserve It
LLC Naming Rules
States require your name to include “LLC,” “L.L.C.,” or “Limited Liability Company” (some also accept variants such as “Limited Liability Co.”). Your name must be distinguishable from other registered entities in the state, and you generally cannot use words that imply a bank, insurance company, or government agency without extra approval. Check your state’s restricted-word list before you get attached to a name.
Check Availability and Reserve Your Name
- Search your state’s Secretary of State business entity database for the exact name, the name without “LLC,” partial keywords, and common abbreviations. States can reject names that are too similar, not only identical ones.
- If the name is available but you are not ready to file, most states offer a name reservation for roughly $25 to $40 that holds it for 60 to 120 days. Fees and periods vary by state.
- Search the USPTO trademark database separately. State approval does not give you trademark protection.
- Check domain and social handle availability so your brand is consistent.
What Makes a Name Work
Avoid names that are too generic to trademark, already used in your industry, or unrelated to what you do. A name that clears the state database but closely mirrors an established competitor is still a legal and commercial risk.
Step 3: File Your Articles of Organization
What the Articles Must Include
The Articles of Organization (called a Certificate of Formation in some states, such as Texas and Delaware) is the document that officially creates your LLC. Most states ask for:
- Your LLC’s legal name
- Principal office address
- Registered agent name and address
- Organizer’s name and signature
- In some states, the management structure: member-managed (owners run the business) or manager-managed (a designated manager handles daily operations)
Read your state’s form instructions carefully, because requirements differ.
Online vs. Mail Filing and Processing Times
File online whenever your state offers it. Online filings process in 1 to 10 business days in most states. Colorado, Delaware, Florida, and Nevada are among the fastest, often same day to two business days, while Texas can take 10 to 15 business days online. Mail filings typically add 2 to 6 weeks. Processing times shift with state backlogs, so check your Secretary of State’s current estimate.
Once approved, the state sends stamped Articles, a certificate of formation, or electronic approval. You will need that document to open your business bank account.
New York’s Publication Requirement
After filing Articles ($200), New York LLCs must publish a formation notice in two local newspapers for six consecutive weeks. Depending on the county, that adds roughly $500 to $2,000+ (New York City and Nassau County cost the most). You then file a Certificate of Publication with the state for $50. Budget for it before you file, because it is a legal requirement.
Step 4: Create Your LLC Operating Agreement
An operating agreement is the internal contract that governs how your LLC runs. Even where it is not legally required, every LLC should have a written, signed one. It should cover:
- Ownership percentages
- Profit and loss distribution
- Voting rights
- Management structure
- Rules for adding or removing members
- Dissolution procedures
Single-member LLCs benefit too, particularly for banking and to reinforce the separation between you and the business. The Business Guru offers an attorney-reviewed operating agreement template for premium members, covering single-member and multi-member structures.
Step 5: Get Your EIN
An Employer Identification Number (EIN) is your LLC’s federal tax ID. Apply after the state approves your formation, using the IRS online application, which is free and issues the number immediately during business hours. Multi-member LLCs always need an EIN. Single-member LLCs can technically use the owner’s Social Security number for federal tax purposes, but most banks require an EIN to open a business account, so get one regardless. Only use the IRS website: third-party sites that charge for EINs are unnecessary.
Step 6: Open a Business Bank Account
Banks commonly require certified Articles of Organization, your EIN confirmation letter, your operating agreement, and government-issued ID. Requirements vary, so ask your bank for its list. Keeping business and personal money completely separate is what maintains your liability protection. Mixing them gives creditors grounds to “pierce the corporate veil” and pursue your personal assets.
Step 7: Choose Your Tax Treatment, Licenses, and Permits
Federal Tax Classification
| LLC type | Default tax treatment | Reporting |
|---|---|---|
| Single-member | Disregarded entity | Schedule C on your personal return |
| Multi-member | Partnership | Form 1065 |
| Either (by election) | C-corporation | Form 8832 |
| Either (by election) | S-corporation | Form 2553 |
The S-corp election can reduce self-employment tax by splitting profit between a W-2 salary and distributions, but it generally makes sense only when net profit consistently reaches about $60,000 to $80,000 per year, after payroll costs, added accounting fees, and state requirements. Your breakeven depends on reasonable-salary rules for your role and industry, so run the numbers before electing in year one.
Business Licenses and Permits
Filing your Articles does not give you permission to operate. Most businesses need a local business license, a state seller’s permit if selling taxable goods or services, and a professional license for regulated fields such as law, medicine, accounting, or construction. Federally regulated industries, including aviation, firearms, and alcohol production, require federal permits. Start with the SBA’s license and permit resource and your state’s business portal.
Estimated Taxes
Pass-through LLC income has no withholding, so you must make quarterly estimated tax payments to the IRS. Missing them triggers underpayment penalties. Estimate your annual net income, divide it into four payments, and pay by the IRS deadlines. Your state may require its own estimated payments.
Beneficial Ownership (BOI) Reporting
The federal Corporate Transparency Act originally required LLCs to report their owners to FinCEN. In 2025, FinCEN removed that requirement for U.S.-formed domestic companies. [Verify current status with FinCEN before publishing, as this area has changed repeatedly.]
Step 8: Stay Compliant After You Form Your LLC
Annual Reports and Franchise Taxes
| State | Requirement | Deadline |
|---|---|---|
| Florida | Annual report, $138.75 (steep late fee) | May 1 |
| California | Statement of Information every two years, plus $800 franchise tax | Annual tax; biennial statement |
| Texas | Franchise Tax report and Public Information Report | May 15 |
| Delaware | $300 minimum LLC franchise tax | June 1 |
Missing deadlines leads to late fees, loss of good standing, and eventually administrative dissolution, meaning the state revokes your LLC’s legal status.
Other Ongoing Obligations
Keep your registered agent’s address current with the state. Report changes in members, managers, or principal office address through your state’s amendment process. If you are registered as a foreign LLC in additional states, each carries its own annual report, fee, and registered agent requirement. Business licenses typically renew on a different schedule than state reports, so track both.
Common LLC Formation Mistakes
- Forming out of state when you operate elsewhere, which can substantially raise compliance and foreign-registration costs.
- Skipping the operating agreement or mixing personal and business finances, which weakens your ability to show legal separation and raises veil-piercing risk.
- Missing the first annual report because you did not know it existed.
- Assuming state approval equals trademark rights.
- Electing S-corp status too early without running the numbers.
The Business Guru’s downloadable LLC formation checklist (printable PDF for members) covers every step from name reservation through year-one compliance.
Frequently Asked Questions About Starting an LLC
How do I start an LLC step by step?
Choose your state, select and check an available name, appoint a registered agent, file Articles of Organization, create an operating agreement, get an EIN, and open a business bank account. Then obtain required licenses and permits and calendar your annual report deadlines.
How much does it cost to start an LLC?
State filing fees typically range from about $35 to $500, depending on the state. Add $100 to $300 per year if you use a commercial registered agent. Some states add costs: California charges an $800 minimum annual franchise tax, and New York requires newspaper publication that can cost $500 to $2,000 or more.
How long does it take to start an LLC?
Online filings usually process in 1 to 10 business days, and mail filings can take several weeks. Delaware, Florida, Colorado, and Nevada are often fastest. Getting an EIN takes minutes online, so the full setup commonly takes one to three weeks.
Can I start an LLC myself without a lawyer?
Yes. Most states let you file Articles of Organization yourself, and you can serve as your own registered agent in most. Consider an attorney if you have multiple owners, plan to raise investment, hold real estate, or work in a regulated industry.
Do I need an operating agreement?
Most states do not legally require one, but you should have one. It defines ownership and decision-making, helps banks and investors take you seriously, and supports the legal separation between you and your LLC. A few states do require it.
Which state is best for starting an LLC?
For most small businesses, the state where you live and operate is best, because forming elsewhere usually means paying to register in your home state too. Delaware or Wyoming can make sense if you are raising capital, holding property in several states, or need added privacy.
Do I need an EIN for my LLC?
Multi-member LLCs and any LLC with employees need one. Single-member LLCs without employees can technically use the owner’s Social Security number for federal taxes, but most banks require an EIN to open an account. The IRS issues it free online.
Do I need a registered agent?
Yes. Every LLC must have a registered agent with a physical address in the state of formation to receive legal and government mail. You can act as your own in most states or hire a commercial service.
Can I use my home address for my LLC?
Yes, in most states, but your address becomes public record on the Articles and annual reports. If privacy matters, use a commercial registered agent address, and check whether your state requires a separate principal office address.
What is the difference between an LLC and a sole proprietorship?
An LLC is a registered legal entity that separates your personal assets from business liabilities. A sole proprietorship is not a separate entity, so you are personally liable for business debts. An LLC costs more to set up and maintain but offers stronger protection.
When should an LLC elect S-corp status?
Generally when net profit consistently reaches roughly $60,000 to $80,000 per year, since the self-employment tax savings must outweigh added payroll and accounting costs. The right threshold depends on a reasonable salary for your role, so consult a tax professional.
Do I have to file annual reports for my LLC?
Most states require periodic reports and fees, due annually or every two years. Missing them can lead to late fees, loss of good standing, and administrative dissolution. Examples include Florida (May 1), Texas (May 15), and Delaware (June 1).
What happens if I do not form my LLC correctly?
You risk losing liability protection, rejected filings, penalties, or administrative dissolution. The most common causes are skipping the operating agreement, mixing finances, choosing the wrong state, and missing annual deadlines.
Your Next Step: Check Your LLC Name Today
The sequence matters as much as the steps: pick your state, lock in your name, file your Articles, draft your operating agreement, get your EIN, sort out licenses and taxes, then stay on top of compliance. Most problems come from rushing the early steps or ignoring obligations after the paperwork is filed.
Start with your state’s Secretary of State business entity search. It is usually free, takes a few minutes, and is the only way to know whether your chosen name is available. The Business Guru’s operating agreement template and formation checklist are available to premium members as practical starting points for standard structures. If your situation involves complex ownership or state-specific provisions, consult an attorney.
This guide is general information, not legal or tax advice.
