How to start an LLC: every step, what it costs and how long it takes

A limited liability company is the most common way to set up a small business in the United States, and for good reason. It separates your personal assets from the business's debts, it costs little to form, and by default it doesn't change how you pay tax. Forming one is mostly paperwork, done in the right order.

Here is every step, in the order you will need them.

Decide whether an LLC is right for you

An LLC suits most new small businesses: consultants, agencies, online stores, local service businesses and side projects that are starting to earn. It is less suited to a startup that plans to raise money from venture capital investors, who usually expect a Delaware C corporation so they can buy preferred stock and grant employee options.

If you are unsure, the question comes down to how you plan to grow and how you want to be paid. Our comparison of LLCs, S corporations and C corporations works through it.

Choose your state

For most owners, the right state is the one where you live and work. If you form somewhere else, you will usually also have to register the LLC as a "foreign" LLC in your home state, which means a second set of fees and a second annual report.

Delaware and Wyoming come up in every LLC conversation. Delaware's business courts and investor familiarity matter for corporations raising money, much less for a small LLC. Wyoming has low fees and strong privacy, which helps owners who don't live in any US state. We cover the trade-offs in the best state to form an LLC.

Pick a name and check it's available

Your LLC's name must be different from every other business registered in your state, and it must include "LLC," "Limited Liability Company" or an abbreviation your state allows. Most states also restrict words like "bank," "insurance" or "university" unless you hold the matching license.

Check three places before you commit:

• Your state's business name search, on the Secretary of State's website.
• The USPTO trademark search, to make sure no one holds a trademark that your name could infringe.
• The domain and social handles you want, so customers can find you.

If you aren't ready to file yet, most states let you reserve a name for a small fee, usually for 60 to 120 days.

Appoint a registered agent

Every LLC must name a registered agent: a person or company with a physical address in the state who accepts legal papers and official mail during business hours. You can be your own registered agent if you live in the state and are reliably available at that address.

Many owners pay a service instead, for three reasons. The agent's address goes on the public record in place of your home address. Someone is always available to sign for a lawsuit, so nothing is missed. And if you form in a state where you don't live, you need an agent there anyway. Expect to pay roughly $100 to $300 a year. Our guide to registered agents covers when it is worth it.

File your articles of organization

This is the step that creates the LLC. You file a short form, called the articles of organization or certificate of formation depending on the state, with the Secretary of State. It asks for the LLC's name, its registered agent, an address, and whether members or managers run it. Most states accept it online.

Here is what it costs to form an LLC in the largest states and in the two states people most often ask about, and what each charges every year after.

State	To form	Every year after	Watch out for
California	$70	$800 franchise tax every year, plus a $20 Statement of Information every two years	The $800 is due every year, even in a year with no income, until the LLC is canceled.
Texas	$300	No franchise tax below $2.65 million in revenue (2026 reports), but a Public Information Report every year	Nothing unusual
Florida	$125	$138.75 annual report, filed between January 1 and May 1	A $400 late fee is added after May 1.
New York	$200	$9 biennial statement every two years	A notice must run in two newspapers for six weeks, then a $50 certificate of publication is filed. Newspaper costs vary widely by county.
Pennsylvania	$125	$7 annual report, due by September 30	Nothing unusual
Delaware	$110	$400 annual LLC tax, due June 1	Paying late adds a $200 penalty and 1.5% interest a month.
Wyoming	$100	$60 minimum annual report license tax, due in the month the LLC was formed	Nothing unusual

Two costs in that table catch people out. California charges its $800 franchise tax every year whether or not the LLC earns anything, until you formally cancel it. New York requires you to publish a notice of the LLC's formation in two newspapers for six weeks, and in some counties those newspapers charge hundreds of dollars or more.

Write an operating agreement

An operating agreement sets out who owns the LLC, how profits are shared, who makes decisions, and what happens if a member leaves or dies. Few states require you to file it, and some require you to have one, but every LLC should have one regardless.

For a single-member LLC, it shows a bank or a court that the company is a real business separate from you, which protects the liability shield. For a multi-member LLC, it is the document that settles arguments before they start. Our guide to the LLC operating agreement covers what it should say.

Get an EIN from the IRS

An employer identification number is your LLC's federal tax ID. You need one to open a business bank account, hire employees, or file certain tax returns, and most banks ask for it even for a single-member LLC.

The IRS issues EINs for free, online, and you get the number immediately. The online application is open Monday to Friday from 6 a.m. to 1 a.m. the next day, Saturday from 6 a.m. to 9 p.m., and Sunday from 6 p.m. to midnight, Eastern time. You need the responsible party's Social Security number or ITIN, and you can get only one EIN per responsible party per day.

Open a business bank account

Keeping the LLC's money separate from yours is not optional. Mixing them is the most common reason courts set aside an LLC's liability protection, a process called "piercing the veil." Open a business checking account as soon as you have the EIN.

Banks typically ask for the articles of organization, the EIN, the operating agreement and an ID for each owner. Online business banks open accounts in a few days and often charge no monthly fee. We compare the options in how to open a business bank account.

Get the licenses and permits you need

An LLC is not a license to operate. Depending on what you do and where, you may need a general business license from your city or county, a state sales tax permit if you sell taxable goods, and a professional or industry license. The SBA's licensing guide is a good starting point, and our guide to business licenses walks through how to find yours.

Understand how your LLC is taxed

By default, the IRS doesn't tax an LLC as its own entity. A single-member LLC is "disregarded," so its profit goes on your personal return. An LLC with two or more members is taxed as a partnership, which files an information return and passes the profit through to each member.

Either way, the profit is subject to self-employment tax as well as income tax. Once an LLC earns a steady profit, many owners elect to have it taxed as an S corporation, which can lower that self-employment tax. The election is optional and has its own costs, which we cover in when to elect S corporation status.

After you form it: staying in good standing

Most states require a yearly or every-other-year report and fee, shown in the table above. Miss it and the state can add penalties or dissolve the LLC administratively, which strips its liability protection until you fix it. Put the due date in your calendar the day the LLC is approved.

One filing you can cross off: beneficial ownership information reports. Under FinCEN's final rule, effective August 14, 2026, companies formed in the United States no longer have to report their owners to FinCEN.

Do it yourself, or use a formation service?

Every step above can be done yourself, and the state filing usually takes under half an hour. A formation service fills in the forms for you, acts as your registered agent, and sends reminders for annual reports. What you pay depends mostly on the add-ons.

• Bizee's Basic plan forms the LLC for $0 plus the state fee and includes a year of registered agent service. Its Standard and Premium plans cost $199 and $299 plus the state fee.
• ZenBusiness starts at $0 plus the state fee. Its registered agent service is $199 a year, and add-ons such as an operating agreement, an EIN or annual report filing cost about $99 to $100 each.
• Northwest Registered Agent charges $39 plus the state fee, includes a year of registered agent service, and then charges $125 a year.

Skip the paid EIN add-on, since the IRS issues one for free. An operating agreement template is worth paying for only if you don't want to adapt a free one, and a multi-member LLC is better off with an attorney's draft. We compare the main services on their total year-one cost in ZenBusiness vs Northwest vs LegalZoom.

How long it all takes

• Name search and choosing a registered agent: an hour or two.
• State approval of the articles: a few business days online in most states, a few weeks by mail. Many states sell expedited processing.
• EIN: minutes, once the LLC is approved.
• Bank account: a few days at an online bank, sometimes longer at a branch.
• Licenses: anywhere from a day to several weeks, depending on the license.
• New York's publication: six weeks of newspaper notices, within 120 days of formation.

Your checklist

1. Confirm an LLC fits your plans.
2. Choose your state, usually your home state.
3. Check the name in your state's database and the USPTO.
4. Appoint a registered agent.
5. File the articles of organization and pay the state fee.
6. Sign an operating agreement.
7. Get a free EIN from the IRS.
8. Open a business bank account.
9. Apply for the licenses and permits you need.
10. Put your state's annual report and any yearly tax on your calendar.

Once the LLC exists, the next questions are about money: how to pay yourself, how to keep the books, and when an S corporation election starts to save more than it costs. Those are covered in our guides to paying yourself from an LLC and small business bookkeeping.