1. Choose Your LLC Name
Your business name must:
- Be unique and distinguishable from existing businesses in your state.
- Include “LLC” or “Limited Liability Company.”
- Avoid restricted words like “bank,” “insurance,” or “university” (unless you meet specific requirements).
💡 Tip: Use your state’s business name search tool to check availability.
2. Appoint a Registered Agent
A Registered Agent is a person or company that receives legal documents on your behalf. They must:
- Have a physical address in your state.
- Be available during business hours.
You can serve as your own agent, or hire a registered agent service for privacy and convenience.
3. File the Articles of Organization
This is the official document that forms your LLC. You’ll need to file it with your state’s Secretary of State office.
Details typically required:
- LLC name and address
- Registered agent information
- Duration of the LLC (perpetual or fixed term)
- Management structure (member-managed or manager-managed)
📄 Filing Fee: Varies by state ($50–$500)
4. Create an Operating Agreement
Though not always legally required, an Operating Agreement is highly recommended. It outlines:
- Ownership percentages
- Roles and responsibilities
- Profit-sharing rules
- Procedures for adding/removing members
- Dissolution terms
Having a written agreement helps prevent future conflicts among members.
5. Apply for an EIN (Employer Identification Number)
The EIN is like a Social Security number for your business. You need it to:
- Open a business bank account
- Hire employees
- File taxes
✅ Free to apply through the IRS website.
6. Register for State Taxes & Licenses
Depending on your business activities and location, you may need:
- A state tax ID
- Sales tax permit
- Local business licenses or permits
Check with your state’s business office or website for requirements.
7. Open a Business Bank Account
Separate your personal and business finances to:
- Simplify bookkeeping
- Protect your liability shield
- Build business credit
You’ll need:
- Your EIN
- Articles of Organization
- Operating Agreement (if applicable)
Costs of Forming an LLC
Here’s a rough breakdown:
- Filing Fees: $50–$500 (state dependent)
- Registered Agent Fees: $100–$300/year (if you hire one)
- Operating Agreement & EIN: Usually free if DIY, or $50–$200 with a service
- Annual Reports: Some states require yearly filings with fees
Common Mistakes to Avoid
Forgetting to apply for necessary permits
Using a name already taken or too similar to another
Not having a proper operating agreement
Co-mingling personal and business finances
Missing annual state filing requirements
