If you're looking into forming your own Limited Liability Company (LLC), you've already taken the most important step. You've watched other people work for themselves, set their own hours, and steer the direction of their own careers, and you've decided to try it for yourself.
Forming a company can feel daunting. There's paperwork, there are steps, and there's a lot of confusing advice floating around. That's where this guide comes in. Follow the steps below and you can have an LLC up and running within the week. Along the way you'll also find a couple of services that can do most of the heavy lifting for you.
We'll skip the obvious and get straight to the essentials. You already know you need to register your LLC in the state where you do business, and you already know to choose a business you understand. So let's dig into the nuts and bolts of forming your own company.
The basic steps to forming your LLC are:
- Pick your name
- Select a registered agent
- File with your state
- Write an operating agreement
- Comply and file
1. Pick Your Name
"Your LLC's name will most likely be the first impression upon potential customers, so you should take time to consider a name that will stand out from the crowd and convey the correct desired image of what your business stands for. Turn to your mission and values to find inspiration. In addition, consider how your LLC's name will perform across social media channels, and create mockups of potential names on marketing materials to help determine how visually appealing each potential name will be." — Than Merrill, CEO of FortuneBuilders
This step looks easy, but it can be trickier than it first appears. If you're inventing an entirely new category — the world's first flying dinner table — then naming your LLC is simple: "Flying Dinner Tables, LLC." But if you're entering a competitive field, there may already be a dozen registered LLCs in your state using variations of the name you had in mind.
Rather than becoming the seventeenth "A-One Roofer" in your state, aim for a name that says something meaningful and distinctive about you or your business. Some people simply use their own names, but that ties you personally to the company and costs you a measure of privacy.
Using your personal name has another downside: if you ever want to sell a successful LLC and retire to a beach somewhere, a company with your name legally attached can be harder to hand off to a buyer.
Once you've settled on a distinctive name, check whether it's already in use. There are two registered agent services we recommend (more on that shortly), and you can search business names directly on their websites. They are ZenBusiness and Northwest Registered Agent Services.
You can also look up your business name on your state's official website. Make sure the site ends in ".gov" — otherwise it likely isn't a legitimate government resource.
A few more quick tips for picking your LLC name:
- Check whether the name is already trademarked using the official U.S. government tool at the USPTO.
- Check your state's rules for restricted words. California, for example, prohibits words like "corporation" or "bank" in an LLC name.
- Avoid a name too tightly tied to one city or neighborhood; it can limit your reach into other markets.
- Run some internet searches. A name being un-trademarked and unregistered doesn't mean someone hasn't already bought the matching domain — and you'd hate to land your ideal company name only to have no way to use it as a website.
Once you've picked a name and confirmed it's available in your state, it's time to find a registered agent.
- We also have a dedicated guide for creating an LLC in New York.
Important: This is also a good moment to check whether a matching domain name is available, since that may influence your final choice. You can search availability at domain.com.
2. Select a Registered Agent
Finding a quality registered agent is essential when starting your own LLC. A registered agent — whether an individual or a registered agent service — is legally required in every state, and having one is genuine peace of mind for a new business owner.
If you'd rather use a service, we recommend ZenBusiness and Northwest Registered Agent Services. Both offer a comprehensive range of features, from checking whether your preferred company name is available to filing paperwork on your behalf.
ZenBusiness, in fact, can handle every step on this list. For a fee, it will help you choose your name, file your paperwork, and keep you current on future filings and tax compliance. Northwest, meanwhile, is a strong choice if you operate in multiple states, offering straightforward pricing for filing across several of them.
A registered agent's other key job is to receive any court documents that come your way. Owning a business opens you up to the possibility of lawsuits and other legal actions, and you don't want someone showing up at your home to serve you papers — or interrupting a conversation with a customer at your business.
With a registered agent service, all court documents are delivered to the agent's address instead of yours or your company's. That spares you the awkward or embarrassing service process entirely.
If you decide not to use a service, you must still name a registered agent in the next step. This should be someone you trust to receive legal documents on the company's behalf. Keep in mind that anytime someone runs a records disclosure on your company, the registered agent's name and address will appear.
We recommend a service such as ZenBusiness or Northwest Registered Agent Services. If you'd rather not, you're generally best off listing yourself as the registered agent.
Our recommendations:
| Agent | Details |
|---|---|
 |
Affordable entry-level pricing |
 |
Straightforward, all-inclusive pricing |
Important: Your registered agent can answer your questions and help you resolve the small issues along the way.
3. File With Your State
This process differs slightly in every state. Again, find the state website that handles LLC formation, and confirm that its URL ends in ".gov."
This is another point where a registered agent service earns its keep. A quality service can walk you through the process step by step. Decoding the various terms and requirements on a state website can be frustrating, and online forms sometimes reload or reset without warning.
Letting a service handle this part can be well worth the investment. It gives you the peace of mind that a professional is on it, and it frees you to focus on the work you actually got into business to do — delivering great customer service, lining up new clients, or sourcing equipment.
If you file the paperwork yourself, this step may take the longest and prove the most frustrating. Take your time, though: these are the legal boxes you want to be sure you tick correctly.
The website you're looking for is almost always the Secretary of State or Department of State. In most cases the address looks like sos.wa.gov, sos.texas.gov, or dos.ny.gov.
Upon filing, states require a document called the "Articles of Organization." Some states word it slightly differently — "Certificate of Organization," for instance — but it amounts to the same thing: a form capturing basic information about your LLC.
Every state has slightly different requirements for what the Articles of Organization must contain, but the basics are:
- The LLC's name
- Principal address
- Name and address of the registered agent
- Type and/or purpose of the LLC
- List of managers (whether members of the LLC or an outside management company)
- List of organizers (those involved in owning or founding the LLC)
- The date the LLC will begin doing business, and when it will stop (if you plan to dissolve it after a set period, or intend to run it in perpetuity)
- The Employer Identification Number (EIN)
A Note on the EIN
Think of the EIN as your company's own Social Security Number — not because your LLC will collect retirement benefits, but because the EIN is a nine-digit number the IRS uses to identify your company for tax purposes.
Many states require an EIN when you file your Articles of Organization, or within a set period afterward. Banks require an EIN before they'll open a business account for you, and you won't be able to secure business credit without one.
Companies like ZenBusiness and Northwest Registered Agent Services can help with EIN questions. The IRS also maintains a helpful FAQ page on online EINs.
4. Write an Operating Agreement
Not every state requires an operating agreement. But if you have partners, investors, or managers, you want one from day one.
You'll find boilerplate operating agreements online, or you can get one from your registered agent service if you've retained one. At its core, an operating agreement lists the members forming the LLC and sets out how disputes over capital will be handled.
If you're forming your LLC solo, with no partners or outside investors, the operating agreement is largely straightforward, and several free templates are available online.
If you're starting with other members who have invested capital, however, pay close attention to how the agreement is worded.
Down the road, the operating agreement determines how members are paid out, what percentage of assets each is allocated, and who bears responsibility for losses.
Other purposes of the operating agreement include:
- Assigning who can open bank accounts on behalf of the LLC
- Setting out how to handle a member's withdrawal
- Defining how property and interest are assigned
- Establishing how disputes between members are settled and how members are represented in official meetings
- Determining ahead of time how records are kept, who is responsible for them, and how each member can access the LLC's official records
Again, if you're using ZenBusiness or another full-service registered agent such as Northwest, they can provide tailored operating agreements suited to your LLC and its members.
A Note on Membership Ledgers
Alongside your operating agreement, it's worth starting a membership ledger right away. In a corporation, this would be the equivalent of tracking shares. Because you're forming an LLC, the people investing in your business are called "members" rather than "stockholders."
Maintaining a list of members and their agreed percentage of interest from the start keeps personal feelings from getting in the way of good business later. A clear ledger everyone can see can save you a lot of headache — and possibly money.
The ledger should record the exact date each member came on board; how much they contributed (in cash, property, or capital) at an agreed rate; how long they intend to be members (in perpetuity or until a set date); and what their withdrawal will look like.
If a member isn't formally entered on a properly notarized ledger, they can later claim they contributed more, that you promised them a larger payout, or even that you guaranteed them a certain dividend by a certain date.
A ledger is a must whenever multiple members are on board from the start of your LLC.
5. Comply and File, File and Comply
Step five is ongoing and unavoidable: maintaining the records and compliance that come with operating your business.
Because so much compliance is business-specific, it doesn't make sense to list exactly what you'll need. But some general guidelines are worth knowing.
Licenses: If your business requires any licenses, get them before your first sale. Common examples include Business and Occupancy (B&O) taxes, liquor or food permits, and trade licenses such as contracting.
The licenses you need can vary even by the city you operate in, so check with your state, county, and city officials. License violations can cost you dearly or even shut you down — better to look into it first than find out later.
Bonding: Some states require a bond held in your company's name. This acts like an insurance amount, held by a third party, in case of malpractice or a lawsuit. If your industry requires bonding, you were likely made aware during licensing; if not, check with local authorities. You must be bonded before you can accept work.
Taxes: As the saying goes, only two things in life are certain. Keeping your financial records up to date from day one will save you a great deal of headache later. Track every dime, because you'll be accountable for it. As an LLC you'll have certain protections, and as a small business you may also be eligible for assistance. Should you request that assistance — or should the IRS come calling — you'll want all your taxable revenue and expenditures accurately recorded and on file.
Annual filings: Always check with your state, county, and city authorities on what you need to file each year. Some states require LLCs to file an annual report; some cities require you to renew licenses annually. A registered agent service like ZenBusiness or Northwest can help keep these deadlines on your radar. Missing them can be disastrous for your business.
Complying with the statutes and regulations in your industry is essential to running a successful LLC. Run afoul of an agency with jurisdiction over your field and it becomes nearly impossible to rebuild your reputation, especially among your clientele.
Your LLC Is Formed — Now What?
Now it's time to get to work. Once you've followed these five steps, your LLC is formed and you can legally operate as a business. But there's still plenty to do.
We recommend keeping the following three tips in mind during your startup phase. You've just formed your small business; now it's time to make sure it sticks around.
Bank Account and Funding
Finding a good bank with a solid LLC account can be tricky. Shop around, ask questions, and don't simply go with the first bank that will have you.
The same goes for funding. You may find that securing credit as an LLC is easier than obtaining personal credit, which means you can afford to be choosy. Don't grab the first line of credit you see — check interest rates and read the terms twice. It's tempting to seize any available credit to build the company up quickly, but remember: credit follows a business around.
Join a Local Chamber of Commerce
Your local Chamber of Commerce can be a great place to meet mentors, get answers to common questions, and learn the ropes of compliance in your area.
Much of the appeal of owning your own business is independence, but everyone needs a little help now and then. A local Chamber of Commerce can help you navigate complicated city ordinances, renew licenses more quickly, and even choose a bank.
Ask for Help
You've already taken a big step by finding and reading this guide. No one does anything perfectly the first time, so find people you trust and pick their brains. Keep reading widely, and consider a company that can help, such as ZenBusiness or Northwest Registered Agent Services.
FAQs
Why should I form an LLC?
If you're still unsure why to choose an LLC over another type of corporation, you're not alone — it can be confusing, and the answer isn't always obvious. For us, forming an LLC offers three advantages:
- Easier and cheaper to form: In most states, an LLC is cheaper and simpler to set up, and cheaper to maintain over time.
- Liability protection: As the acronym says, it's a Limited Liability Company — emphasis on limited. If something goes wrong, it's harder for creditors or litigants to reach your personal assets.
- More tools available: Forming an LLC has become so common that an entire cottage industry now exists to help people form and maintain them.
Can I form an LLC for a set period of time?
In most states, yes. You could form a holiday-tree-cutting LLC that operates only over the winter, then dissolve it at the end of the season. That flexibility is one of the great things about an LLC: when it's done serving your purpose, you can wind it down.
How much does it cost?
This depends heavily on the state. In some states it costs only a few dozen dollars to form an LLC; in Massachusetts it can run several hundred. Check your own state's fee schedule for current figures.
Can I operate in a different state than where I file?
No. You must register as an LLC in every state where you intend to do business. This is exactly where a registered agent service like Northwest comes in handy.
Can I form an LLC before I'm ready to do business?
Absolutely. If you're certain you want to own or operate a business but don't yet have all the money in place, you can form your LLC anyway. If you have a great name or a great idea, it can pay to lock in what you can, as early as you can. Forming the LLC is the cheapest part of starting a business, so you can take care of it almost anytime your idea is ready.