How to Start an LLC: Complete Step-by-Step Guide for 2026

Forming an LLC protects your personal assets, gives you tax flexibility, and makes your business look professional. The process is simpler than most people think. You can do it yourself in a few hours without paying a lawyer $1,000.

This guide walks you through every step.

Why Form an LLC?

Personal Asset Protection

The primary reason to form an LLC is liability protection. If your business is sued or accumulates debt, your personal assets (home, car, savings) are protected. Without an LLC, you and your business are the same legal entity. A business lawsuit can take your personal savings.

Tax Flexibility

An LLC can be taxed as:

• Sole proprietorship (single-member): Business income passes through to your personal tax return. Simplest option
• Partnership (multi-member): Income passes through to each member's personal return
• S Corporation: Can save self-employment taxes if your business earns $60K+
• C Corporation: Rare for small businesses but useful for certain situations

You can change your tax classification as your business grows.

Credibility

"Acme LLC" looks more professional than "John Smith doing business as Acme." Banks, vendors, and customers take LLCs more seriously.

Brand Protection

Registering your LLC name prevents other businesses in your state from using the same name.

Step 1: Choose Your State

You can form an LLC in any state, but most small businesses should form in their home state.

Forming in Your Home State (Recommended)

• Pros: Simpler, no registered agent fees, no foreign qualification needed
• Cons: None for most small businesses
• Best for: Businesses operating in one state

Forming in Delaware or Wyoming

• Delaware pros: Strong corporate law precedent, privacy (names not public), no state corporate income tax for non-residents
• Wyoming pros: Low fees ($100 filing), no state income tax, strong asset protection
• Cons: If you operate in another state, you must "foreign qualify" in that state too (extra fees and paperwork)
• Best for: Businesses planning to raise venture capital or operate in multiple states

For 90% of small businesses, forming in your home state is the right choice. The Delaware/Wyoming benefits mostly apply to large companies and startups raising capital. If your business has a physical component, like a retail store or a storage facility, forming in your home state is even more important since your operations are tied to that location.

Step 2: Choose a Name

Naming Requirements

• Must include "LLC" or "Limited Liability Company" in the name
• Cannot include restricted words like "Bank," "Insurance," "University" without special approval
• Must be distinguishable from other registered business names in your state

How to Check Name Availability

1. Search your state's Secretary of State business database (search "[your state] business entity search")
2. Check the USPTO trademark database at uspto.gov
3. Check domain availability at Namecheap or GoDaddy
4. Check social media handles

Reserve Your Name

If you are not ready to file yet, most states allow you to reserve a name for 60-120 days for a small fee ($10-$50).

Step 3: Appoint a Registered Agent

A registered agent is a person or company that receives legal documents on behalf of your LLC. Every state requires one.

Who Can Be a Registered Agent?

• You: If you have a physical address in the state (not a PO box) and are available during business hours
• A trusted person: Anyone with a physical address in the state who agrees
• A registered agent service: $50-$300/year. Professional, reliable, and keeps your name off public records

Best Registered Agent Services

• Northwest Registered Agent: $125/year. Best privacy and customer service
• ZenBusiness: $199/year (includes LLC formation)
• LegalZoom: $299/year. Most expensive but well-known
• Incfile: $119/year (free if you use their LLC formation service)

Why Use a Service Instead of Yourself?

• Your name and address stay off public records
• They are always available during business hours
• They forward documents promptly and keep digital copies
• If you move, you do not need to update your registered agent address with the state

Step 4: File Articles of Organization

This is the official document that creates your LLC. It goes by different names in different states (Articles of Organization, Certificate of Formation, Certificate of Organization).

What You Need to Include

• LLC name: Exactly as you want it registered
• Registered agent name and address: Must be in the state of formation
• Management structure: Member-managed or manager-managed
• Business purpose: General statement ("to engage in any lawful business activity")
• Duration: Most LLCs are perpetual (no end date)
• Organizer: The person filing the paperwork (can be you or a service)

Filing Methods

• Online: Most states have online filing. Fastest option (1-7 days approval)
• Mail: Slower (2-4 weeks). Some states still require mail
• Service: Companies like ZenBusiness or Incfile file for you ($49-$299 + state fee)

Filing Fees by State

• California: $70
• Texas: $300
• New York: $200 (+ publication requirement, see below)
• Florida: $125
• Delaware: $90
• Wyoming: $100
• Illinois: $150
• Most states: $50-$300

Step 5: Create an Operating Agreement

An operating agreement is an internal document that defines how your LLC operates. Most states do not require it, but you should have one anyway.

Single-Member LLC Operating Agreement

Even with one member, an operating agreement:

• Proves your LLC is a separate entity (strengthens liability protection)
• Defines how the business is managed
• Outlines what happens if you die or become incapacitated

Multi-Member LLC Operating Agreement

Essential for multiple members. Include:

• Ownership percentages: Who owns what share
• Profit distribution: How and when profits are distributed
• Management roles: Who makes decisions and how
• Voting rights: What decisions require a vote and what percentage
• Buy-sell provisions: What happens if a member wants to leave, dies, or gets divorced
• Dispute resolution: How disagreements are handled

How to Create One

• Template: Search "free LLC operating agreement template [your state]"
• LegalZoom: $99 for a customized operating agreement
• Attorney: $300-$800 for a custom agreement (recommended for multi-member LLCs)
• Northwest Registered Agent: Includes free templates with formation

Step 6: Get an EIN

An Employer Identification Number (EIN) is like a Social Security Number for your business. It is free and takes 10 minutes.

How to Get an EIN

1. Go to irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
2. Click "Apply Online Now"
3. Answer the questions about your business
4. Receive your EIN immediately at the end of the session
5. Download and save the EIN confirmation letter

You Need an EIN If:

• You have employees (even one)
• You have a multi-member LLC
• You want to open a business bank account
• You want to apply for business credit
• You file certain tax returns (excise, alcohol, tobacco, firearms)

Even if you are a single-member LLC without employees, get an EIN. It helps separate your personal and business identity.

Step 7: Open a Business Bank Account

Commingling personal and business finances is the #1 reason LLCs lose liability protection. If you mix funds, a court can "pierce the corporate veil" and hold you personally liable.

What You Need to Open an Account

• EIN confirmation letter
• Articles of Organization (approved copy)
• Operating agreement (some banks require it)
• Personal ID (driver's license or passport)
• Business address proof (lease or utility bill)

Best Business Bank Accounts

• Mercury: Free, no minimum balance. Best for tech and online businesses
• Chase Business Complete Banking: $15/month (waivable). Best for in-person banking
• BlueVine: Free, no minimum. 2% APY on checking. Best for small balances
• Novo: Free, no minimum. Best for freelancers and solopreneurs
• Wise Business: Free, multi-currency. Best for international businesses

Step 8: Get Business Licenses and Permits

Depending on your industry and location, you may need additional licenses.

Common Licenses

• General business license: Required by most cities. $50-$100/year
• Professional license: Required for lawyers, doctors, accountants, architects, etc.
• Health permit: Required for restaurants and food businesses
• Sales tax permit: Required if you sell physical products (check your state)
• Home occupation permit: Required if you operate from home in some cities
• Sign permit: If you put up a business sign
• Zoning clearance: Verify your location is zoned for your business type

How to Find What You Need

Search "[your city] business license requirements" or use the SBA's permit tool at sba.gov/business-guide/launch-your-business/apply-licenses-permits.

Step 9: File State-Specific Requirements

New York: Publication Requirement

New York LLCs must publish a notice of formation in two newspapers for 6 weeks. Cost: $200-$1,200 depending on county. File the certificate of publication after.

California: Statement of Information

File a Statement of Information within 90 days of formation. $20 fee. Then every 2 years.

Most States: Annual Report

Most states require an annual or biennial report. Fees range from $10-$300. Check your Secretary of State website.

Step 10: Understand Ongoing Compliance

Annual Requirements

• State annual report/biennial report: Keep your LLC active
• Franchise tax: Some states charge an annual franchise tax (California: $800/year, Delaware: $300/year)
• Registered agent renewal: Keep your registered agent active
• Business license renewal: Renew annually

Tax Obligations

• Federal income tax: File based on your tax classification (Schedule C for single-member, Form 1065 for multi-member, Form 1120-S for S Corp)
• State income tax: Varies by state
• Sales tax: If you sell physical products, collect and remit sales tax
• Payroll taxes: If you have employees (see our hiring guide)

Record-Keeping

• Keep all LLC documents (Articles, operating agreement, EIN letter) in a safe place
• Maintain separate business and personal finances
• Document major business decisions
• Hold annual member meetings (even for single-member LLCs)
• Keep minutes of meetings

DIY vs Using a Service

DIY (Cheapest)

• Cost: State filing fee only ($50-$300)
• Time: 2-4 hours
• Best for: Simple single-member LLCs, budget-conscious founders

Using a Service (Easiest)

• Incfile: $0 + state fee (they make money on registered agent upsell)
• ZenBusiness: $39 + state fee (includes registered agent for 1 year)
• Northwest Registered Agent: $225 + state fee (best privacy and support)
• LegalZoom: $79 + state fee (most expensive, good brand recognition)

Using an Attorney (Most Expensive, Most Custom)

• Cost: $500-$2,000
• Best for: Multi-member LLCs with complex ownership structures, businesses in regulated industries

Common LLC Mistakes

1. Not getting an EIN: Needed for banking, credit, and taxes
2. Commingling funds: Destroys liability protection
3. No operating agreement: Weakens your liability shield
4. Forgetting annual reports: Your LLC can be administratively dissolved
5. Choosing the wrong state: Foreign qualification adds cost and complexity
6. Not getting proper licenses: Operating without required licenses can result in fines
7. Ignoring sales tax: If you sell products, you must collect and remit sales tax
8. Not documenting decisions: Courts look for evidence that the LLC is a separate entity

LLC vs Other Business Structures

Structure	Liability Protection	Tax Flexibility	Cost	Complexity
Sole Prop	None	Limited	$0	Very low
LLC	Yes	High	$50-$300	Low
S Corp	Yes	Moderate	$100-$500	Medium
C Corp	Yes	Low	$100-$500	High

For most small businesses, an LLC is the best balance of protection, flexibility, and simplicity.

Conclusion

Forming an LLC takes a few hours and $50-$300. The liability protection alone is worth it. File in your home state, get an EIN, open a business bank account, and create an operating agreement. Keep your business and personal finances separate, file your annual reports, and maintain proper records. The process is straightforward enough to do yourself, but services like ZenBusiness or Northwest can handle it for you if you prefer convenience.