Forming an LLC (general process)

A Limited Liability Company (LLC) is the most popular business structure in the United States, combining the liability protection of a corporation with the tax flexibility and simplicity of a partnership. As of 2026, the average cost to form an LLC is $132, with total first-year costs typically ranging from $50 to $1,500 depending on state and choices.

31 steps across 7 sections

1. Choose a Business Name

  • Must be distinguishable from existing entities in your state
  • Must include "LLC," "L.L.C.," or "Limited Liability Company" (varies by state)
  • Search your state's Secretary of State database for availability
  • Consider reserving the name if not filing immediately (most states offer 60-120 day reservations for $10-$25)

2. Appoint a Registered Agent

  • You can be your own registered agent (free, but requires a physical address in the state and availability during business hours)
  • Professional registered agent services typically cost $50-$300/year

3. File Articles of Organization (Certificate of Formation)

  • Articles of Organization (most common)
  • Certificate of Formation (Texas, Delaware)
  • Certificate of Organization (some states)
  • Registered agent name and address
  • Principal office address
  • Management structure (member-managed vs. manager-managed)
  • Organizer name and signature

4. Create an Operating Agreement

  • Ownership percentages and capital contributions
  • Profit and loss distribution
  • Management structure and voting rights
  • Member addition and withdrawal procedures
  • Dissolution terms

5. Obtain an EIN (Employer Identification Number)

  • Opening a business bank account
  • Hiring employees
  • Filing business tax returns
  • Applying for business licenses

6. Post-Formation Compliance

  • Open a business bank account (keep personal and business finances separate)
  • Obtain required business licenses and permits
  • File any required state-specific publications (e.g., New York requires newspaper publication)
  • Set up accounting and record-keeping systems
  • File annual reports as required by your state

7. Annual Report Requirements

  • Average annual fee nationally: $91
  • States with no annual report: Arizona, Mississippi, Missouri, New Mexico, Ohio, South Carolina
  • Highest ongoing cost: California ($800/year franchise tax, regardless of income)
  • Failure to file annual reports will result in the state dissolving or revoking your LLC

Sources

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