Key Takeaways

  • Understanding the steps to start an LLC ensures you meet all legal and administrative requirements.
  • Selecting the right state and business name affects taxation, filing fees, and compliance obligations.
  • Filing your Articles of Organization, obtaining an EIN, and drafting an Operating Agreement are core formation steps.
  • Ongoing compliance such as annual reports, tax filings, and maintaining a registered agent keeps your LLC in good standing.
  • Professional assistance from UpCounsel attorneys can simplify the process and ensure legal accuracy.

Learning how to start LLCs can be intimidating because there are multiple steps involved. However, this is the first step in your business journey, and you should feel excited. With UpCounsel’s short and easy-to-read guide, you will be equipped with all the necessary information on how to start an LLC. 

Starting an LLC

Starting an LLC (limited liability company) is a major professional step. To explain, an LLC is a business entity defined as its own legal organization. There are two types of LLCs: single-member LLCs (owned by one person) and multi-member LLCs (owned by multiple people).

Business owners choose to make their entity an LLC because it is the easiest way to ensure personal liability protection while operating their business. The benefits of forming your business as an LLC inc include reduced paperwork, prevention of your business getting taxed more than once, more credibility added to your business, and protection from lawsuits.

Need to know how to start LLCs? The good news is that there are only five simple steps to starting LLC:

  1. Select a state
  2. Determine your LLC’s name
  3. Register an agent
  4. File the articles of organization
  5. Craft an operating agreement

If it’s pertinent, you should also consider cost by looking at the cheapest ways to start an LLC.

Select a State

When you learn how to start LLCs, the first important piece of information is that you must register it with a state. Consider the following options:

  • If you primarily live and conduct business in one state, then it may be the best option also to register your LLC in that state.
  • If you register your LLC in a different state than you conduct your primary business activities, then you may be obligated to register it as a foreign LLC.
  • If you are not physically present in the state where your LLC is registered, you may have to pay for a registered agent to accept legal documents on your behalf. 

Please note: Even if your LLC is registered in a different state than your business, you may still have to pay taxes where your physical business is located.

Consider State-Specific LLC Requirements

While any state can serve as the home for your LLC, be aware that each has its own requirements, fees, and ongoing obligations. For example:

  • Formation fees vary widely—some states charge under $100, while others exceed $500.
  • Annual report requirements differ; some states require yearly filings, others biennially.
  • Publication requirements exist in states like New York and Nebraska, where you must publish notice of your LLC in a local newspaper.
  • Franchise taxes or business privilege taxes apply in certain states regardless of income.
  • Industry-specific licensing might be necessary depending on your business type and location.

Researching these before forming your LLC ensures you avoid unexpected costs and compliance issues later.

Determine Your LLC’s Name

When choosing the name of your LLC, first check to see if the company name is available. Then, consider the following:

  • Make it legal. There are state-specific requirements for choosing a name for your LLC. For example, you may need an LLC label, such as “limited liability company”, “limited liability”, or “LLC”. Furthermore, verify that you are not using any restricted or prohibited words.
  • Make it brandable. Branding is a key component of gaining clients today. Perform market research on what name would be most attractive for your audience. This will keep your business top of mind in the heads of potential clients.
  • Make it original. There is a lot of competition. In order to stand out to your potential clients, it is best practice to choose an original name that will stand out among your competitors.
  • Make it domain name ready. Choose a name that fits nicely into a domain. For example, shorter domains are more memorable and easy to use than longer ones.
  • Make it fit for social media. Similar to being domain ready, choose an LLC name that can be made into a username for social media. Social media is a key component for businesses, and you don’t want to miss out on this potentially profitable way to connect to your potential clients. 

Check for Domain and Social Media Availability

Once you’ve confirmed your desired name is legally available, secure its digital presence. Search for matching domain names using popular domain registrars and check availability on key social media platforms (Facebook, Instagram, LinkedIn, X). Consistent branding across platforms makes it easier for customers to find and trust your business. Purchasing your domain early—even before launch—can prevent competitors from claiming it.

Performing a Business Name Search Online

Perform a free business name search online by typing in the name you would like to use for your LLC in a web browser. You can also search the federal trademark database of the United States Patent and Trademark Office (USPTO) to determine if your name has already been registered at the federal level. State-specific search tools are also available. 

Alternatively, you can also pay for a service to complete a formal business name search online. 

Reserve Your LLC Name (If Needed)

Some states allow or require you to reserve your chosen LLC name before officially filing. This process holds the name for a set period (often 30–120 days) while you prepare your Articles of Organization. To reserve a name:

  1. File a name reservation form with the Secretary of State or equivalent agency.
  2. Pay the reservation fee (commonly $10–$50).
  3. Receive written confirmation that your name is reserved.

Reserving is especially useful if you’re still finalizing your LLC setup but want to ensure the name remains available.

Registering a Trademark

A trademark can include words or a logo that’s considered distinctive and distinguishes your products or services from competitors. You’ll want to conduct a trademark search before deciding on elements of your company to avoid overlapping with another business in the same industry.

When searching for trademarked names, you’ll note that industries are organized by a certain code, from 1 to 45. If you’re unsure what industry your business would be considered to be operating in, it helps to look up major competitors and check which industries they’ve registered their trademarks in.

Furthermore, once you have determined that there is no trademark on the name you would like to use for your LLC, you can trademark your LLC’s name at a state and federal level.

Registering a DBA Name for Your LLC

You must submit an application through a state, county, or local entity in order to register a DBA. 

Register an Agent for Your LLC

The person that you appoint to be the official receiver and sender of the paperwork is your registered agent. 

Without a registered agent, you will not be able to form your LLC. When you form a domestic LLC, you can be the registered agent. Otherwise, the registered agent you choose must be someone who lives in the state where you are forming the LLC.

The registered agent for LLC must abide by the following set of legal obligations:

  • Registering a physical address. The registered agent’s name and physical address must be registered with the Secretary of State and be located in the same state as the LLC. They are not permitted to use a P.O. Box.
  • Who can be a registered agent? Anyone over the age of 18 who can receive mail during regular business hours is eligible to be a registered agent.
  • State-specific laws. Make sure to check any state-specific laws.

Why Use a Registered Agent Service?

  1. Flexibility. If you decide to operate a business that isn’t open during the traditional 9-5 hours throughout the week, you can hire a registered agent to be open during those hours and accept documents on your behalf.
  2. When you have a registered agent, you will be able to develop an LLC in any state, regardless of whether or not you live in that state. This means that if you live in New York but wish to benefit from the tax laws of a different state, you could pick a registered agent in that other state and set up your LLC.
  3. If you plan to operate your business in more than one state, you can appoint a registered agent who is in multiple states.
  4. If your business address is your home address, appointing a registered agent will give you more privacy. Your registered agent’s address is a public record, and that address will be used instead of your address.
  5. You can use your registered agent’s office address as the official headquarters for your business. If for some reason, your business is ever sued, lawsuits will be served to the registered agent’s office instead of at your place of business where your employees and customers can see.
  6. Having a registered agent service will also help you stay on time with state filing and in compliance with the law. A registered agent service will also be able to help you find accountants and other legal experts that you might need.

File the Articles of Organization

Follow these steps to file articles of organization for your LLC:

  1. Get in touch with your state’s secretary of state, who will provide you with the required information on how to file, the cost of filing, and any necessary follow-up steps.
  2. File your articles of organization by mail or online. Each state may differ in its process.
  3. Pay the filing fee. There is a state-specific fee for filing your article of organization.
  4. Receive a certificate of formation. The state will retain an original copy, and provide you with a certificate of formation, along with a copy of your articles of organization. 

Note: Some states may require you to publish your certificate of formation. 

What Are Articles of Organization?

During the process of forming your LLC, you submit this legal document to the state. The Articles of Organization include information regarding the name and purpose of your LLC as well as the name and address of the registered agent for the LLC.

Requirements for Filing Documents

The following information is required to file articles of organization when forming an LLC:

  • LLC’s name and address
  • The nature of the LLC’s business
  • The name and address of the LLC’s registered agent
  • The names and contact information of the members, managers, and directors of the LLC

How Much Does It Cost to Start an LLC?

The cost to start an LLC varies significantly by state and can include several required and optional fees. Filing fees typically range between $50 and $500, depending on where you register your business. Some states charge additional franchise or annual report fees, while others require publication fees—such as in New York or Nebraska—adding to the total cost.

Other potential expenses include:

  • Name reservation fee (if you reserve before filing): $10–$50
  • Registered agent service: $100–$300 per year
  • Operating agreement drafting or legal review: $100–$1,000 if done professionally
  • EIN application: Free through the IRS

Understanding these costs upfront helps you budget effectively and avoid compliance issues.

Foreign Qualification for Out-of-State Business

If your LLC will operate in multiple states, you may need to file a foreign qualification in each additional state where you do business. This process allows your LLC to legally operate beyond its home state.To complete foreign qualification:

  • Submit a Certificate of Authority to the state’s Secretary of State.
  • Provide a Certificate of Good Standing from your home state.
  • Appoint a registered agent in the new state.
  • Pay the applicable filing fee, which varies by state (often $100–$300).
    Failing to register as a foreign LLC can result in fines or the inability to enforce contracts in that state.

Obtain an EIN (Employer Identification Number)

An EIN, issued by the IRS, is a unique tax ID for your LLC. You’ll need it to:

  • Open a business bank account
  • Hire employees
  • File federal and state taxes
  • Apply for certain licenses and permits

You can apply online via the IRS website for free. Even single-member LLCs without employees often benefit from having an EIN for separating business and personal finances.

Open a Business Bank Account

Once you have your EIN, open a dedicated business bank account to separate personal and business finances. This helps preserve your LLC’s liability protection and simplifies tax preparation.Most banks require the following documents:

  • EIN confirmation letter from the IRS
  • Articles of Organization
  • Operating Agreement
  • Business license or proof of address
    Consider comparing bank options for features like low fees, business credit cards, and integration with accounting software

Craft an LLC Operating Agreement

An Operating Agreement is a document that provides pertinent details on LLC ownership and operating procedures. With this legal agreement, you can specify the financial and operational relationships among the LLC member (owners).

Follow these steps on how to create an LLC Operating Agreement:

Business information

  • LLC name and address
  • Industry of your business
  • Description of services
  • The purpose and goals of your business

Membership information

  • Member name and address
  • Capital contributions
  • Membership class
  • Percentage of ownership

Management details

  • Management name and address
  • When meetings are held
  • The details of each member’s vote
  • Rules around unanimous consent

Administration processes

  • Business tax classification
  • Fiscal year
  • Tax audit rules
  • How to distribute profits and losses
  • Annual report inclusions 

Opening a Business Bank Account

Once your LLC is approved and you have an EIN, open a business bank account to separate business and personal finances. This step is crucial for maintaining your limited liability protection. To open an account, most banks will ask for:

  • A copy of your Articles of Organization
  • Your EIN confirmation letter
  • Your Operating Agreement (if multi-member)

A dedicated account also simplifies tax filing and builds your LLC’s financial credibility with lenders and clients.

Obtain Business Licenses and Permits

Before conducting business, verify whether your LLC requires local, state, or federal licenses or permits. Common examples include:

  • Health permits (for food or medical businesses)
  • Professional licenses (for contractors, accountants, or lawyers)
  • Zoning or occupancy permits (for physical offices or retail spaces)
    You can check your state’s licensing portal or the U.S. Small Business Administration (SBA) website for guidance. Operating without proper licensing may lead to fines or business suspension.

Understand Your LLC’s Tax Classification Options

By default, LLCs are taxed as pass-through entities—profits and losses flow to members’ personal tax returns. However, LLCs can elect to be taxed as an S Corporation or C Corporation by filing with the IRS. Choosing the right classification can:

  • Reduce self-employment taxes (S Corp election for qualifying businesses)
  • Allow retained earnings to be taxed at corporate rates (C Corp)
  • Maintain pass-through simplicity (default classification)

Consult with a tax professional to determine the most advantageous structure for your situation.

LLC Tax Filing and Recordkeeping Responsibilities

After your LLC is established, it’s essential to understand your ongoing tax and recordkeeping obligations.

  • Federal taxes: Most LLCs are taxed as pass-through entities. Members report income and expenses on their personal tax returns.
  • State taxes: Depending on your state, you may owe franchise or excise taxes even if your LLC had no profits.
  • Employment taxes: If you have employees, you’ll need to withhold and remit payroll taxes.
  • Recordkeeping: Keep all income, expense, and transaction records organized for at least seven years. Many states require financial records to be available upon request during audits or reviews.

Proper tax compliance helps prevent penalties and ensures you maintain your LLC’s good standing.

Understanding LLC Fees and Costs

When you register an LLC, costs vary depending on your state’s filing fees and ongoing maintenance charges. Typical expenses include:

  • Formation filing fee: $50–$500 depending on the state
  • Annual report or franchise tax: $25–$800 annually
  • Name reservation fee: Optional, typically $10–$50
  • Registered agent service: $100–$300 per year (if using a service)
    Budgeting for these fees in advance ensures continued compliance and prevents administrative dissolution

Why Form an LLC?

An LLC is just one type of business structure. An LLC can have multiple owners or be owned by a separate business. When your business is in an LLC, you don’t need to have annual meetings, and owners of the LLC can include their profits and losses on their personal tax returns. There are multiple examples of various business structures:

  • An S-corporation: The life span of the business can be ongoing, and owners can issue shares of stock, report profit and losses on their personal tax returns, and have limited liability for business debts.
  • A C-corporation: A C-corporation can be owned by a separate legal entity and can have more than one owner. Those owners are allowed to offer a share of stocks, split profit and losses, and have limited liability of company debts.
  • A general partnership: This structure allows partners of the business to have foreign offers, have multiple owners, and report profit and losses on personal tax returns.
  • A sole proprietorship: A sole proprietorship allows owners to have foreign offers and report profit and losses on their tax returns. They do not need to hold annual meetings.

An LLC is a more appealing option for small businesses because LLCs provide limited liability, whereas sole proprietorships do not. And LLCs are far easier to create and operate than corporations. They also can also avoid double taxation. 

When learning how to open an LLC, consult with an LLC lawyer to ensure you are not missing any requirements. 

Pros of Starting an LLC

Below are the advantages of starting an LLC. 

  • LLC owners have no responsibility for any lawsuits or debts that affect the LLC, so long as they have not engaged in any fraudulent or illegal activity.
  • Any profit the LLC generates goes straight to the owners. From there, the owners report their profits on their personal tax returns.
  • LLCs are not subject to double taxation. Because they are taxed only once, it is called “pass-through taxation.”
  • Forming an LLC is straightforward, and minimal paperwork is required. No official officer roles, records of company minutes, resolutions, or annual meetings are required of LLCs. If you plan to form an LLC with more than one member, it is strongly encouraged that you create an operating agreement that would protect your members from any legal disputes.
  • An LLC is considered to be more formal than a partnership or sole proprietorship and therefore makes the business more credible.
  • Forming an LLC also allows you to create a credit history for your business, and this presents opportunities to obtain lines of credit and loans.

Cons of Starting an LLC

When your business is formed as an LLC, you are unable to list it on the stock market. This makes it trickier to secure venture capital and eventually go from an LLC to a corporation (if that was one of your goals).

You just learned the steps to create an LLC and can now begin your own business journey. While the steps to create an LLC may be a little nerve-wracking, you are now that much closer and are now much more prepared to take the first few steps in creating an LLC. 

Post-Formation Requirements to Maintain Your LLC

Forming your LLC is just the start. To remain in good standing, you’ll typically need to:

  • File annual or biennial reports with your state
  • Pay ongoing state fees or franchise taxes
  • Maintain a registered agent
  • Renew business licenses or permits
  • Keep accurate financial and operational records

Failing to meet these obligations can result in penalties, loss of good standing, or administrative dissolution of your LLC.

Expanding or Changing Your LLC Later

As your business grows, you might need to add new members, amend your operating agreement, or convert to a corporation for better financing opportunities. To make changes:

  1. File an Amendment to your Articles of Organization with your Secretary of State.
  2. Update your EIN details with the IRS if ownership or structure changes.
  3. Revise internal records, including member percentages and profit distributions.
  4. Notify licensing and tax authorities of any updates to your business structure or address.

Taking these administrative steps ensures your LLC remains compliant as it evolves.

Common Mistakes to Avoid When Starting an LLC

Many new business owners make errors that can delay their filings or jeopardize their legal protections. Avoid the following pitfalls:

  • Using a name too similar to an existing business (risking trademark disputes).
  • Failing to file an Operating Agreement, which may cause internal disputes later.
  • Mixing personal and business funds, which can “pierce the corporate veil.”
  • Not registering as a foreign LLC when doing business in other states.
  • Ignoring annual reports or taxes, which can lead to administrative dissolution.

Carefully following the steps to start an LLC and maintaining compliance from the start prevents unnecessary legal and financial problems.

How to Register an LLC Online

Most states now allow you to register an LLC online through their Secretary of State’s website. Online registration typically involves:

  1. Creating an account with the state business filing system.
  2. Completing an electronic Articles of Organization form.
  3. Paying filing fees by credit card.
  4. Receiving an email confirmation and digital certificate of formation.
    Online filings are often processed faster than mail submissions—sometimes within 1–2 business days—making it the preferred method for entrepreneurs seeking quick approval.

Common Mistakes to Avoid When Registering an LLC

When learning how to register an LLC, new entrepreneurs frequently make avoidable mistakes that delay approval or affect legal protection:

  • Using an unavailable name: Always complete a full name search before filing.
  • Forgetting to file an Operating Agreement: Even if not required by law, it strengthens liability protection.
  • Failing to maintain separate finances: Mixing personal and business funds can pierce the LLC veil.
  • Ignoring annual report deadlines: Missing state filings can result in penalties or administrative dissolution.
  • Choosing the wrong tax classification: Review options carefully with a tax professional to maximize savings.

Frequently Asked Questions

  1. How long does it take to start an LLC?
    Processing times vary by state. Some approve online filings within a few days, while mail-in filings can take several weeks. Expedited processing may be available for an additional fee.
  2. Do I need an attorney to form an LLC?
    You can file on your own, but consulting an attorney through UpCounsel helps ensure compliance with state-specific regulations and accurate document preparation.
  3. What’s the difference between an LLC and a corporation?
    An LLC provides flexibility and pass-through taxation, while corporations require more formalities but allow for stock issuance and easier fundraising.
  4. Can a foreign citizen start an LLC in the U.S.?
    Yes. Non-U.S. residents can own and operate an LLC, though additional tax and reporting rules apply depending on the state.
  5. What happens if I don’t file annual reports?
    Failure to file annual or biennial reports may result in penalties or administrative dissolution, meaning your LLC loses its legal standing.

If you need help to register an llc, you can post your legal needs on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.