How to Form an LLC

Learn how to form an LLC step by step: choose a state, check your name, file formation documents, get an EIN, and open a bank account. DIY or use a service.

The formation process at a glance

Learning how to form an LLC is simpler than most people expect. The core process has seven steps, from choosing a state to opening a bank account. This guide walks through each one and shows where you can do it yourself and where a service helps. Most owners finish the paperwork in a few days, even without a lawyer.

Step 1: Choose your state

Most small businesses form their LLC in the state where they operate. That keeps you under one set of rules and avoids registering as a foreign LLC elsewhere. If you run a purely online business, you still usually form in your home state. Only consider another state if you have a specific reason, like a lower tax bill, and get advice first. The state you choose sets your filing fee, annual costs, and compliance duties.

Step 2: Pick and check your name

Your LLC name must be unique in the state where you file, and it must include a designator like LLC or Limited Liability Company. Search the state's business database to check availability before you pay any fees. If you are not ready to file, many states let you reserve a name for a small fee. Avoid names that sound like a bank or insurance company unless you hold the right licenses.

Step 3: Appoint a registered agent

Every LLC needs a registered agent with a physical street address in the state of formation. The agent receives legal documents and official mail. You can name yourself, a friend, or a professional service. A professional agent keeps your home address off public records and tracks filing deadlines. Our registered agent guide covers the choice in detail.

Step 4: File your formation document

The formation document goes by different names in different states. It might be called Articles of Organization, a Certificate of Formation, or a Certificate of Organization. You file it with the state agency that handles business registrations, usually the Secretary of State. Filing fees range from about $40 to $500 depending on the state. You can file online in most states, and approval often takes just a few business days.

Step 5: Write an operating agreement

An operating agreement is the internal rulebook for your LLC. It covers ownership percentages, management, profit sharing, and what happens if a member leaves. Most states do not require one, but you should write one anyway. It protects your liability shield and prevents disputes. See our guide on starting an LLC and the operating agreement explainer for more.

Step 6: Get an EIN and open a bank account

After your LLC exists, apply for an Employer Identification Number from the IRS. It is free and takes about 10 minutes online. You need it to open a business bank account, file taxes, and hire employees. Our EIN guide walks through the application. Then open a separate business checking account so your personal and business money never mix.

Step 7: Check licenses and permits

Depending on your industry, you may need licenses or permits before you start operating. Check with your city, county, and state for requirements. Common examples include sales tax permits, health permits, and professional licenses. Your state's business portal usually lists what applies to your type of business.

DIY vs formation service

You can form an LLC yourself in every state, and the DIY route saves the most money. A formation service handles the paperwork, checks your name, and files the documents for you, usually for $50 to $300 plus state fees. Services are worth it if you want speed, convenience, or help avoiding mistakes. Either way, the LLC you end up with is the same.

Frequently Asked Questions

How long does it take to form an LLC?

Most states process online filings within a few business days. Mail filings can take one to three weeks. Some states offer expedited processing for an extra fee if you need your LLC approved faster.

Do I need a lawyer to form an LLC?

No. The filing process is simple enough for most owners to handle themselves. A lawyer is useful for complex situations, like multiple owners or unusual ownership structures.

Do I need an EIN for my LLC?

Yes, in almost every case. You need an Employer Identification Number to open a business bank account and file taxes. It is free from the IRS and takes about 10 minutes online.

Can I form an LLC myself?

Yes. Every state allows you to file the formation documents yourself. The DIY route costs the least, while a formation service handles the paperwork for a fee.

What is the cheapest state to form an LLC in?

Filing fees range from about $40 to $500 depending on the state. The cheapest states are not always the best choice, because you usually want to form in the state where you operate.