How to Start an LLC - Step-by-Step Guide.

Starting a Limited Liability Company (LLC) is one of the best ways to protect your personal assets while running a business. Whether you're an entrepreneur, small business owner, or side hustler, this step-by-step guide will walk you through the entire LLC formation process.

Why Form an LLC? Key Benefits

• Asset protection - Separates personal and business liabilities
• Tax advantages - Flexible taxation options (pass-through or corporate)
• Business credit - Easier to secure loans and financing
• Professional credibility - Enhances your brand reputation
• Minimal paperwork - Less compliance than corporations

Step 1: Choose Your LLC Name

Your business name must comply with your state's LLC naming requirements:

• Must include "LLC" or "Limited Liability Company"
• Cannot be confused with existing businesses
• Avoid restricted words (like "Bank" or "Insurance")

Pro Tip: Use a business name generator if you're stuck, and always check trademark databases before finalizing.

Step 2: Select a Registered Agent

Every LLC needs a registered agent to receive legal documents. You can:

• Appoint yourself (if you're available during business hours)
• Hire a professional registered agent service ($50-$300/year)

Top-rated services include Northwest Registered Agent, LegalZoom, and Incfile.

Step 3: File Articles of Organization

This is the official document to create your LLC. Key details:

• File with your state's Secretary of State office
• Fees range from $40 (Kentucky) to $500 (Massachusetts)
• Processing takes 2-3 weeks (or pay for expedited service)

Consider using an LLC formation service to handle paperwork and ensure compliance.

Step 4: Create an Operating Agreement

While not always legally required, this document is crucial for:

• Defining member roles and responsibilities
• Establishing profit-sharing arrangements
• Protecting your limited liability status

Use an LLC operating agreement template or have a business attorney draft one.

Step 5: Get an EIN (Employer Identification Number)

This is like a social security number for your business, required for:

• Opening a business bank account
• Hiring employees
• Federal and state tax purposes

Get yours for free from the IRS website or through your LLC service provider.

Step 6: Comply With State Requirements

Additional steps may include:

• Business licenses and permits (varies by industry)
• Annual reports and LLC fees
• Sales tax permit if selling products

Check your state's business portal for specific requirements.

FAQs About Starting an LLC