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

Starting an LLC is one of the most common ways to formalize a small business in the United States. The process is straightforward, can be done in a single day in many states, and typically costs between $35 and $500 in state filing fees.

This guide walks you through every step of forming an LLC in 2026, from choosing your state to opening a bank account and staying compliant.

Overview: The 9 Steps to Form an LLC

1. Choose your state
2. Name your LLC
3. Appoint a registered agent
4. File your Articles of Organization
5. Create an operating agreement
6. Get an EIN from the IRS
7. Open a business bank account
8. Get business licenses and permits
9. Stay compliant (annual reports, taxes)

Let’s go through each step in detail.

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Step 1: Choose Your State

Most people should form their LLC in the state where they live and do business. This is the simplest, cheapest option because you won’t need to register as a “foreign LLC” in another state.

Factors to consider when choosing a state:

• Filing fees: Range from $35 (Montana) to $500 (Massachusetts)
• Annual costs: Some states charge $0 (Missouri, New Mexico), while others charge $800+ (California)
• State income tax: Seven states have no income tax (Wyoming, Texas, Florida, Nevada, South Dakota, Washington, Alaska)
• Processing time: Ranges from instant to 10+ business days
• Privacy: Some states don’t list member names on public filings

Use our state comparison tool to compare all 50 states side by side.

Step 2: Name Your LLC

Every state has rules for LLC names. While specifics vary, these rules apply nearly everywhere:

Required Elements

Your LLC name must include “LLC,” “L.L.C.,” or “Limited Liability Company” (some states accept abbreviations like “Ltd. Liability Co.”).

Name Availability

Your LLC name must be distinguishable from other business entities registered in your state. You can check availability through your state’s Secretary of State website — most have a free name search tool.

Name Restrictions

Most states prohibit LLC names from including words that imply it’s a different type of entity (like “Corporation,” “Inc.,” or “Ltd.”). Words like “Bank,” “Insurance,” or “University” often require special licensing.

Tips for Choosing a Good Name

• Keep it simple and memorable — customers need to find you and remember you
• Check domain availability — even if you don’t need a website now, securing the domain is smart
• Avoid names too similar to existing businesses — this can cause confusion and potential legal issues
• Consider your growth — “Portland Dog Walking LLC” limits you geographically and by service

Step 3: Appoint a Registered Agent

Every state requires your LLC to have a registered agent — a person or company that receives legal documents, tax notices, and official government mail on behalf of your LLC.

Who Can Be a Registered Agent?

• You (if you have a physical address in the state — P.O. boxes don’t count)
• Any adult residing in the state
• A registered agent service (a company that provides this service)

Why Use a Registered Agent Service?

While you can be your own registered agent for free, many LLC owners use a professional service ($50–$300/year) because:

• You don’t want your home address on public records
• You need to be available at the address during business hours (missing a legal notice can result in a default judgment against you)
• You’re forming in a state where you don’t have a physical presence
• You want someone reliable handling important legal documents

How to Choose a Registered Agent Service

Look for:

• A physical address in your state (not a P.O. box)
• Same-day scanning and forwarding of documents
• A track record of reliability (read reviews)
• Transparent pricing with no hidden fees
• Compliance reminders for annual reports and other deadlines

Step 4: File Your Articles of Organization

This is the official step that creates your LLC. The formation document is called Articles of Organization in most states, though some use Certificate of Formation (Texas, Delaware, New Jersey) or Certificate of Organization (Massachusetts, Iowa, Pennsylvania).

What You’ll Need to Provide

The exact requirements vary by state, but typically include:

• LLC name (including “LLC” or equivalent)
• Principal office address
• Registered agent name and address
• Management structure: Member-managed or manager-managed
• Organizer’s name and signature (the person filing the documents)
• Effective date (usually the filing date, but you can specify a future date)

How to File

Online (recommended): Most states offer online filing through their Secretary of State website. This is fastest — some states provide instant processing. Fees are typically the same or cheaper than mail filing.

By mail: Download the forms from your state’s website, fill them out, and mail with a check. Processing takes 1–4 weeks in most states.

Through a filing service: Companies like LegalZoom, ZenBusiness, and Northwest Registered Agent will file for you for an additional fee ($50–$300+). This is convenient but not necessary — the state filing process is straightforward.

Publication Requirements

Three states require you to publish a notice of your LLC formation in local newspapers after filing:

• New York: Publish in 2 newspapers for 6 weeks. Cost: $200–$1,600+ depending on county.
• Nebraska: Publish in 1 newspaper for 3 weeks. Cost: $100–$200.
• Arizona: Publish in 1 newspaper for 3 weeks. Cost: $80–$120. (Maricopa and Pima County LLCs are exempt.)

Step 5: Create an Operating Agreement

An operating agreement is an internal document that defines how your LLC operates. It covers:

• Ownership percentages — who owns what share
• Voting rights — how decisions are made
• Profit distribution — how profits (and losses) are split
• Management structure — who manages day-to-day operations
• Member changes — what happens if a member leaves, dies, or wants to sell
• Dissolution procedures — how to close the LLC

Do You Need One?

While only a few states legally require an operating agreement, every LLC should have one. Here’s why:

1. Without one, your state’s default LLC laws govern your business — and those defaults may not match your intentions
2. Banks may require it to open a business bank account
3. It proves you’re operating properly — strengthening your liability protection
4. It prevents disputes — especially important for multi-member LLCs

For single-member LLCs, an operating agreement can be a simple 1–3 page document. For multi-member LLCs, it should be more detailed and ideally reviewed by an attorney.

Step 6: Get an EIN from the IRS

An EIN (Employer Identification Number) is essentially a Social Security number for your business. It’s a 9-digit number issued by the IRS.

Why You Need an EIN

• Required to open a business bank account
• Required if you have employees
• Avoids using your personal SSN on business forms
• Required for federal tax filings
• Needed for many business licenses and permits

How to Get One (Free)

1. Go to irs.gov/ein
2. Complete the online application (takes about 5 minutes)
3. Receive your EIN immediately

The online application is available Monday–Friday, 7 AM–10 PM Eastern. If you apply outside those hours, you can file Form SS-4 by mail or fax.

Step 7: Open a Business Bank Account

Keeping your business and personal finances separate is essential for maintaining your LLC’s liability protection. Commingling funds is one of the most common reasons courts “pierce the corporate veil” — meaning they ignore your LLC and hold you personally liable.

What You’ll Need to Open an Account

• Your EIN (from Step 6)
• Your Articles of Organization (from Step 4)
• Your operating agreement (from Step 5)
• A government-issued photo ID
• Your LLC’s address

Tips for Choosing a Business Bank

• Look for no monthly fees — many banks offer free business checking for small businesses
• Consider online banks — they often have lower fees and better technology
• Check for integrations — compatibility with accounting software like QuickBooks
• Ask about credit — some banks offer business credit cards or lines of credit to new LLCs

Once your account is open, use it for all business transactions. Don’t deposit business income into your personal account or pay personal expenses from the business account.

Step 8: Get Business Licenses and Permits

LLC formation registers your business with the state, but it doesn’t give you permission to operate. Depending on your business type and location, you may need:

Common Licenses and Permits

• General business license — Required by most cities and counties. Cost: $25–$100.
• Professional licenses — Required for regulated professions (accounting, real estate, healthcare, legal services, etc.)
• Sales tax permit — Required in most states if you sell taxable goods or services
• Home occupation permit — Required in some areas if you operate from home
• Industry-specific permits — Food service, construction, transportation, childcare, etc.

How to Find What You Need

1. Check your city/county website for local business license requirements
2. Check your state’s business portal for state-level licenses
3. The SBA’s business license finder can help identify federal requirements

Step 9: Stay Compliant (Ongoing Requirements)

Forming the LLC is just the beginning. To maintain your LLC in good standing and keep your liability protection intact, you need to handle these ongoing requirements:

Annual Reports

Most states require an annual (or biennial) report to confirm your LLC’s information is current. Fees range from $0 to $800 depending on the state. Missing the deadline can result in penalties ($25–$400) or even administrative dissolution of your LLC.

Taxes

As an LLC, you’ll need to handle:

• Federal income tax — File Schedule C (single-member) or Form 1065 (multi-member) with your personal return
• Self-employment tax — 15.3% on LLC profits (covers Social Security and Medicare)
• State income tax — Varies by state (seven states have no income tax)
• Quarterly estimated taxes — If you expect to owe $1,000+ in taxes, you must make quarterly payments to avoid penalties
• Sales tax — If applicable, collect and remit sales tax on taxable transactions

Registered Agent Maintenance

Keep your registered agent information current. If your registered agent changes, update it with the state immediately.

Separate Finances

Continue keeping business and personal finances completely separate. This is critical for maintaining your liability protection.

Operating Agreement Updates

Update your operating agreement whenever ownership or management changes, or when you want to modify how the LLC operates.

What Does It All Cost? A Realistic Budget

Here’s what a typical LLC costs to set up and run in its first year:

Expense	Cost Range
State filing fee	$35–$500
Registered agent (if using a service)	$0–$300/year
Operating agreement (DIY template)	$0
Operating agreement (attorney)	$500–$2,000
EIN from IRS	$0 (free)
Business bank account	$0 (many free options)
Business license	$25–$100
Annual report fee (first year)	$0–$800
Typical first-year total (DIY)	$100–$1,000

The wide range depends almost entirely on your state. In Montana ($35 filing + $20 annual report), you can form an LLC for under $100. In California ($70 filing + $800 franchise tax), it’s $870 minimum.

Common Mistakes to Avoid

1. Commingling Personal and Business Funds

This is the #1 mistake that can destroy your liability protection. Always use separate bank accounts and credit cards for business and personal expenses.

2. Not Getting an Operating Agreement

Even for single-member LLCs, an operating agreement strengthens your legal protections and may be required to open a bank account.

3. Missing Annual Report Deadlines

Set calendar reminders. Many states charge steep penalties ($25–$400) for late filings, and some will dissolve your LLC entirely if you miss deadlines.

4. Paying for Things That Are Free

The EIN is free from the IRS. Many states have simple online filing. Don’t pay $300+ to a formation service for something you can do yourself in 15 minutes.

5. Forming in the Wrong State

Unless you have a specific reason to form elsewhere, form in your home state. “Delaware LLC” sounds impressive, but for a local business, it just means paying double fees.

6. Forgetting About Local Licenses

State LLC formation doesn’t give you a local business license. Check your city and county requirements — operating without one can result in fines.

Timeline: How Long Does It Take?

Step	Time Required
Choose state and name	1–3 days
File Articles of Organization	15–30 minutes online
Processing time	Instant to 10 business days
Publication (if required)	3–6 weeks
Operating agreement	1–3 hours (DIY)
Get EIN	5 minutes (instant online)
Open bank account	1–3 days
Business licenses	1–14 days
Total (no publication)	1–3 days to 2 weeks
Total (with publication)	4–8 weeks

In states with instant online processing (like Colorado, Wyoming, or Nevada), you can have a fully formed LLC with an EIN and bank account within 48 hours.

Next Steps

Ready to get started? Here’s what to do:

1. Pick your state — Use our state comparison tool to compare fees and requirements
2. Choose your LLC name — Search your state’s business registry to check availability
3. Follow the state-specific guide — Each of our 50 state guides includes tailored steps, fee breakdowns, and downloadable PDF checklists

Good luck with your new LLC!