LLC Formation Step-By-Step

Before you start: decisions to make

Before filing anything, you need answers to these questions:

• State of formation: Almost always your home state. See our Delaware vs home state guide for the exceptions.
• LLC name: Must be unique within the state and contain "LLC", "Limited Liability Company", or similar required designator
• Members: Who owns the LLC and in what percentages
• Manager structure: Member-managed (all members participate in operations) or manager-managed (designated managers run things)
• Registered agent: Who receives legal documents for the LLC (can be you, another member, or a service)
• Business purpose: General-purpose ("any lawful business") or specific (required in some states or industries)

Step 1: Choose and verify your LLC name

Cost: $0-$25 (name reservation if you want to hold the name before filing)

Time: 15-30 minutes

Search your state's business entity database (Secretary of State website) to verify your desired name is available. Most states require LLC names to be "distinguishable" from existing entities — meaning not identical, but also not so similar as to cause confusion.

Your name must include an LLC designator: "LLC", "L.L.C.", "Limited Liability Company", or "Ltd. Liability Co." depending on state preference. Some words are restricted (Bank, Insurance, University, etc.) and require additional approvals.

Common mistakes:

• Choosing a name with too much similarity to an existing entity (rejected)
• Forgetting the LLC designator (rejected)
• Using a restricted word without approvals
• Picking a name without checking trademark availability separately (the state doesn't check trademarks)

Trademark consideration

State business entity registration is separate from federal trademark registration. Your LLC name might be available in your state but trademark-blocked nationally. Run a basic trademark search (USPTO.gov) before committing to a name you plan to build a brand around.

Step 2: Designate your registered agent

Cost: $0 (DIY) to $125-$300/year (service)

Time: 5 minutes if DIY, 15 minutes if using a service

Every LLC must have a registered agent — someone who receives legal documents and state notices on behalf of the LLC. The registered agent must:

• Have a physical address in the state of formation (not a PO Box)
• Be available during business hours to receive documents
• Be at least 18 years old (if an individual)

You can serve as your own registered agent if you have a stable address in the formation state and can be available during business hours. Alternative: use a registered agent service (Northwest, LegalZoom, Bizee, ZenBusiness).

See our registered agent guide for a complete comparison.

Step 3: File Articles of Organization

Cost: $35-$500 (state filing fee, varies enormously by state)

Time: 15-30 minutes to complete the form; processing time varies by state

Articles of Organization (sometimes called "Certificate of Formation" or "Certificate of Organization") is the official document filed with the state to create your LLC. Information required typically includes:

• LLC name and principal business address
• Registered agent name and address
• Manager structure (member-managed or manager-managed)
• Names of members or managers (varies by state)
• Duration (usually "perpetual")
• Business purpose (usually generic)

Most states allow online filing through the Secretary of State website. Processing time ranges from instant to 4-6 weeks. Expedited processing typically costs $25-$200 extra.

Common mistakes:

• Listing wrong information that becomes public record (using residential address when registered agent service would protect privacy)
• Not including required state-specific provisions
• Filing in wrong state without considering nexus implications

Step 4: Get your EIN from the IRS

Cost: $0 (directly from IRS)

Time: 10-15 minutes online

An EIN (Employer Identification Number) is your federal tax ID. Required for:

• Hiring employees
• Opening business bank accounts (almost all banks require an EIN)
• Filing federal tax returns (required for multi-member LLCs)
• S-Corp election (if applicable)

Apply directly at IRS.gov (search "EIN online"). The application is free, takes 10-15 minutes, and you receive your EIN immediately upon completion.

Step 5: Create an Operating Agreement

Cost: $0 (DIY template) to $500-$2,000 (attorney-drafted)

Time: 1-3 hours for DIY, varies for attorney

An Operating Agreement is the internal governance document for your LLC. It specifies:

• Member ownership percentages
• Capital contributions (initial and future)
• Profit and loss allocation
• Management structure and decision-making authority
• Buy-sell provisions (what happens if a member leaves, dies, or wants to sell)
• Dispute resolution procedures
• Dissolution procedures

Most states don't require an Operating Agreement to be filed but having one is critical. For single-member LLCs, the Operating Agreement helps establish the LLC as separate from the owner (strengthening the corporate veil). For multi-member LLCs, it's the document that governs how the business actually operates and resolves disputes.

For single-member LLCs: DIY templates from reputable sources (Nolo, LegalZoom blog, your state's small business resources) are usually adequate.

For multi-member LLCs: Strongly consider attorney-drafted Operating Agreement. The cost ($500-$2,000) is small compared to the cost of dispute resolution if members later disagree about ownership, profit splits, or decision authority.

Step 6: Open a business bank account

Cost: $0-$25 (most accounts free for small balances)

Time: 30-60 minutes for the appointment, 1-3 business days for activation

Required documents typically include:

• EIN confirmation letter from IRS
• Articles of Organization (filed and stamped by the state)
• Operating Agreement (some banks require, some don't)
• Member/manager identification
• Initial deposit ($25-$100 minimum at most banks)

Why this matters: keeping business finances separate from personal finances is essential for maintaining liability protection. Mixing the two ("commingling") is the leading cause of corporate veil-piercing in small business litigation.

Step 7: Register for state and local taxes

Cost: Varies by state and tax type

Time: 30-60 minutes for each registration

Depending on your business activities, you may need:

• State income tax registration (most states)
• Sales tax permit (if selling tangible goods or some services)
• Employer registration (if hiring employees)
• Industry-specific licenses (food service, professional services, construction, etc.)
• Local business license (city or county, varies)

Your state's "starting a business" portal usually walks you through which registrations apply to your business type.

Step 8: Federal compliance (BOI reporting)

Cost: $0 (DIY filing) or vary by service

Time: 15-30 minutes

The Corporate Transparency Act introduced Beneficial Ownership Information (BOI) reporting requirements through FinCEN. As of early 2026, the requirement has been subject to legal challenges with rules in flux. Current status varies — check FinCEN.gov for current requirements before filing.

When applicable, BOI reporting requires disclosing:

• Names and addresses of beneficial owners (25%+ owners or significant control)
• Company applicant information
• Identifying document numbers

Reporting is online and free directly through FinCEN. Some formation services charge for "BOI compliance" but you can file yourself.

Ongoing compliance (annual)

After formation, ongoing annual requirements typically include:

• State annual report or biennial report (varies by state, $0-$300)
• State franchise tax (some states only)
• Registered agent renewal (if using a service)
• Federal tax return (Form 1065 for multi-member, Schedule C with personal return for single-member)
• State income tax return
• Quarterly estimated taxes (if profitable)

Use the BizFormPro LLC cost calculator to see total formation cost plus 5-year ongoing compliance cost for your specific state.