How to start an LLC

Update: January 2, 2024

By: Tom Macken

Start an LLC company how-to

So, you’ve decided to take the plunge and start your own Limited Liability Company (LLC). But what to do next? And how much will it cost? Below we’ve detailed all of the steps you’ll need to take as well as pricing and documentation required. 


Steps to forming an LLC
Other considerations
Setup an LLC using a professional service or DIY?
Cost of starting an LLC

Steps to forming an LLC

One of the biggest steps in starting a business is forming a limited liability organization (LLC). The primary advantage of an LLC is commercial liability protection, as well as additional benefits like as ease of establishment.

The particular procedures for forming an LLC vary widely by state; nevertheless, here are some basic recommendations for what to anticipate during the process. For more information, see our advice on the leading LLC incorporation services that can assist you organize all of your papers.

To start an LLC, you’ll need to:

  • 1). Select the State to setup your LLC
  • 2). Name Your LLC
  • 3). Choose a Registered Agent
  • 4). File LLC Articles of Organization
  • 5). Create an LLC Operating Agreement
  • 6). Get an EIN (Employer Identification Number (EIN)

After you decide to form an LLC, Articles of Organization LLC forms must be filed, and state and initial fees must be paid. The LLC formation can be done via a professional LLC service or by submitting the documents yourself to the relevant state department. 

Select the State to setup your LLC

In most scenarios, you’ll want to form your LLC in your home state, but there are a few rare exceptions to the rule. Prospective LLC owners should also be aware of who can start an LLC prior to setup.

When you decide to start an LLC, you can choose to form your company in any state, regardless of where you are based. But in most circumstances, your home state is going to be your most-effective option.

If you were to form your business in another state, you will still likely meet the criteria for doing business in your home state. So, even if you were to form your business in Delaware, Nevada, or Wyoming, you would have to file paperwork in your home state, thus eliminating any tax or cost savings.  

Name Your LLC

As you evaluate business names, your company branding might take centre stage. While it is critical to pick the proper name for branding considerations, your corporation name must also comply with state legislation.

Brand names cannot be chosen that are similar to those currently in use by other businesses in the same state. In addition, statements that may be interpreted as indicating that you work in a certain business, such as insurance or banking, are often seen to be in violation of these laws in most jurisdictions. As a result, you’ll probably have to add L.L.C to the end of your business’s name.

You may research the availability of a potential LLC name by visiting the website of the state agency in charge of business registrations in your state. The State Secretary is responsible for this in the majority of states.

Choose a Registered Agent

Every state mandates that LLCs get a registered agent. The registered agent is an individual who accepts official or legal papers at the behest of your LLC (such as subpoenas). When these documents are obtained, the agent will forward them to your person in control of the LLC.

A registered agent may be either you or an employee who is at least 18 years old. Also, during regular business hours, a representative inside your state’s borders must be accessible.

Additionally, a registered agent might be a company rather than an individual. There will be a price, of course; annual registered agent costs might be more than $100.

File LLC Articles of Organization

To make your LLC a legal company, you must file a paperwork with the state entity in charge of company filings in your jurisdiction. This document is known as an articles of organization in most states.

For individuals attempting to incorporate an LLC, each state will include its particular criteria and processes.

You will need to supply the following details:

  • Your company’s name
  • The location of your main area of business
  • The organization’s goal
  • The method in which your business will be administered
  • Contact details for said registered agent (as well as the agent’s signature in some places)
  • The LLC’s life span

After that, one or many company owners or managers must sign the paperwork. Many states insist you post an article in the press stating your intention to form an LLC. This stage must be completed prior to submitting the articles of incorporation.

By visiting the site for your state’s office that’s authorized for company filings, you may study your state’s LLC naming regulations and determine whether the name you choose is accessible. In most states, this will mean the Secretary of State.

Before filing your articles of incorporation to your state, double-check them. You must also pay a processing charge, which differs according to the state in which you start your firm.

When your incorporation paperwork has been accepted, the state will offer you a certificate indicating that your LLC has been legally setup. You can use this for important tasks like opening a company bank account and obtaining a tax identification number.

Following the filing of your LLC documents, it is advised that your LLC convene an administrative gathering of the members/managers. This meeting will assist in the formation of the LLC by establishing an operating agreement, issuing membership interest papers to members, and completing other basic tasks such as sanctioning the creation of a bank account.

Create an LLC Operating Agreement

Although the majority of states do not require this document, many LLCs prefer not to create one. While having an operating agreement is not required, it is in the best interests of an LLC to have one.

An operating agreement specifies the financial, legal, and managerial obligations of all LLC members. It can specify how revenues will be allocated, how members will leave the LLC, and who will contribute capital to the firm. In short, it should include all pertinent information about your LLC’s operations.

Limited companies with more than just member or partner should establish one to ensure that everyone understands their rights and duties. Even sole proprietors will benefit from putting the specifics in writing.

One alternative, particularly for sole member LLCs, is to draft your own operating agreement. There are also lots of templates publicly available for free to get you going. Choosing a seasoned lawyer might be worth the cost in more complex cases, including where LLCs have several owners.

Get an EIN (Employer Identification Number (EIN)

You need to obtain an Employer Identification Number (EIN), which is a tax ID for your LLC. You do not need either a US Social Security number (SSN) or an Individual Tax Identification Number (ITIN), or a US mailing address to get an EIN. 

While these identification numbers do allow for the IRS’s online application process to get an EIN; there are other options for non-resident entrepreneurs, an application can be submitted by fax or mail.


If you would like to file for an EIN yourself, then filling out, signing, and faxing IRS Form SS-4 Application for Employer Identification Number is the fastest option, typically taking up to one week to receive a reply.

Here is a list of the fax numbers used by the IRS to file Form SS-4, which depends on if the location of your business’s principal office or agency (or your primary residence) is within or outside of the US.


Filing Form SS-4 by mail is similar to filing by fax, in that you will fill out, sign, and send the completed form to the IRS. This option, however, takes a much longer time, typically up to four to five weeks to receive the EIN.

The IRS address and attn designations for your submission will also depend on if your office, agency, or primary residence is based outside of the US.

Other considerations

Apart from the 6 steps mentioned above, small business owners will need to consider some other elements when forming their LLC. 

Get a Physical US Mailing Address

You’ll need a physical address in the state you choose; this is necessary to open a bank account and for LLC formation.

One way to get a mailing address in the US is to establish a physical office in the state you’re going to form and do business in if this is required for your business.

But, even if you do not need to open a physical office in the US, you will still need a US mailing address in your LLC’s state. Services like Earth Class Mail and Doola can provide a real US mailing address, which is required to register for a US bank account and is useful for other services.

They also receive mail on your company’s behalf to scan and deliver to you online and forward packages out of the country.

Open a US Bank Account

After you have successfully established your business in the US, you will need to setup a US business bank account for your SMB.

Opening a US business account offers several other additional financial benefits, including:

  • Increased credibility
  • Increased access to business loans
  • Increased savings
  • Stronger business credit
  • Higher liquidity

Besides the financial benefits, there are important practical and legal considerations to opening a business checking account, which is one of the reasons that it remains so highly recommended by the Internal Revenue Service (IRS). 

For example, establishing a separate business checking account can go a long way in maintaining your LLC’s corporate veil. This is an invisible “cloak” that is used to describe your legal protections as an incorporated entity — including your right to limited personal liability under the law. 

Prepare for Tax Filing

The Internal Revenue Service (IRS) creates the tax code and regulations for LLCs. Note: Foreigner-owned LLCs are taxed based on how many members the LLC has.

  • Single-member LLCs are LLCs with just a single member.
  • Multi-member LLCs are LLCs with over one member.

Setup an LLC using a professional service or DIY?

There is no legal requirement to hire an attorney to form an LLC. Most states allow LLC formation by registering the business entity on your secretary of state’s website and with the Internal Revenue Service (IRS). 

If you’re unfamiliar with the LLC formation process, or if you require an LLC or a sole proprietorship, then hiring a professional LLC service may be the best option to ensure a smooth and quick formation. 

A professional LLC service dedicated to company formations can save time and money when business owners create a new business. For between $50 and upwards of $500, they can handle the items you may not have time to consider, such as:

  • Creating an LLC operating agreement explaining your company’s who, what, when, where, why, and how (required in some states).
  • Creating articles of organization that list the registered agent, LLC management, and the date of formation.
  • Acting as your company’s registered agent.
  • Keeping detailed records in case of lawsuits or audits.
  • Filing fees and registering with the correct people.
  • Registering your business name and checking that the LLC name is available.
  • Completing and filing all legal and formation documents.
  • Closing a business you no longer require

Cost of starting an LLC?

The main cost of forming a limited liability company is the state filing fee. This fee ranges between $40 and $500, depending on your state, excluding add-ons. 


Is owning an LLC worth it?

Yes, owning an LLC is worth it for many business owners as an LLC offers major benefits for most small to medium business owners including legal protection against personal assets, credibility, pass-through federal taxation on profits, management flexibility and ease of upkeep. 

What is the downside of an LLC?

Downsides of LLC’s include the fact that if a member leaves the company, goes bankrupt or dies in many states, the LLC must be dissolved and the remaining members are responsible for all remaining legal and financial obligations necessary to terminate the business. 

How do you make money with an LLC?

LLC members are paid directly through what is known as an “owner’s draw” from the profits that your firm earns. This means you withdraw funds from your business for personal use.

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