The term ‘legal entity’ often strikes fear into the hearts of soon-to-be business owners. You might even be sitting here asking yourself “what is an LLC?” and you’d be in good company.
If that sounds like you, don’t sweat it. Forming an LLC looks complicated at first, but it comes down to six steps. Follow them and you’ll be up and running in no time.
In short, to form an LLC, choose your state, pick an available name, appoint a registered agent, file Articles of Organization with the state, create an operating agreement and get a free EIN from the IRS. In most states, the filing fee is between $35 and $500, and many states approve online filings within a few business days.
What is an LLC, and is it right for you?
A limited liability company (LLC) is a business structure that keeps your personal assets separate from your business’s debts and legal claims.
You don’t need an LLC to start a business, but forming one can help protect your personal assets, and it signals to customers, partners and investors that you’re a legitimate business.
Both corporations and LLCs can protect owners from liability. LLCs have one or more members and fewer formalities, while corporations have shareholders and stricter reporting requirements. Learn more about the types of LLCs.
How much does an LLC cost, and how long does it take?
| Item | Cost |
|---|---|
| State filing fee (Articles of Organization) | $35–$500 in most states |
| Annual or biennial report | $0–$500 a year, depending on the state |
| Registered agent service | $50–$300 a year |
| EIN from the IRS | Free |
Processing times vary by state. Many states approve online filings within a few business days, mailed filings can take several weeks, and most states offer expedited processing for an extra fee. For the details, see our breakdown of LLC costs by state and our LLC formation timeline.
How to start your LLC in 6 steps
- Choose your state
- Name your LLC
- Appoint a registered agent
- File Articles of Organization
- Create an operating agreement
- Apply for an EIN
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Step 1. Choose your state
You can form your LLC in any U.S. state, regardless of where you live, but your home state is the best choice in most circumstances. You’ll deal with one set of rules and fees, and local lawyers and accountants already know them well. That’s especially true for a local business that operates in one state, such as a shop, a contractor or a consultant.
Forming out of state usually makes sense for startups planning to raise venture capital, holding companies that own property or other businesses, and owners who live outside the U.S. and have no home state.
If you form your LLC in one state but do business in another, you’ll usually need to register there too, as a foreign LLC. That means a second filing fee and, in most states, a second annual report.
Popular states for out-of-state LLCs
Delaware is the most popular choice. Its specialized business court and flexible LLC law appeal to investor-backed startups, but its LLCs pay a $300 annual tax ($400 from the 2026 tax year).
Wyoming is the other common pick, with a $100 filing fee, a $60 minimum annual report and no state income tax. Nevada also has no state income tax, but it costs more: $425 to form and $350 a year after that. New Mexico is cheap to start ($50) and has no annual report.
Step 2. Name your LLC
LLCs are legal entities, so rules apply when naming one.
- Your name must be distinguishable from names already registered in your state.
- It must include “limited liability company” or an abbreviation such as LLC. Some words, such as bank, trust or insurance, need approval from another agency, and you can’t use corporate endings like Inc.
Rules vary from state to state, as they do with every step of starting a limited liability company. Run a business entity search on your state’s website to make sure your name is available.
Your LLC’s name is its legal name, used on tax returns, bank accounts and contracts. If you want to trade under a different brand name, you can register a DBA (“doing business as”) name with your state or county, usually after your LLC is formed.
Reserve your LLC name
Found the perfect name but aren’t ready to file? Most states let you reserve it with the secretary of state’s office. Reservations usually last 60 to 180 days, depending on the state, and most states charge a small fee.
Don’t stop with your state
Registering your name in one state doesn’t mean it will be available in another, nor does it stop another business in a neighboring state from using it.
If you might expand in the future, you can protect your brand nationwide by registering a federal trademark with our trademark registration service.
Step 3. Appoint a registered agent
A registered agent is a person or business that receives legal papers and official notices for your LLC, such as lawsuits, state notices and tax correspondence. Some states call it a statutory agent or resident agent.
Almost every state requires an LLC to name one in its Articles of Organization, so you’ll need to choose yours before you file. The agent needs a street address in the state (not just a P.O. box), and someone has to be available there to accept legal papers.
A question most potential LLC owners ask is, “Can I be my own registered agent?” Usually yes, as long as you have a street address in the state. Keep in mind that the address becomes public, and you’ll need to be there to receive papers.
If you want to reduce your paperwork and keep your home address off the public record, you can hire a registered agent for your LLC. Services typically cost $50 to $300 a year
Step 4. File Articles of Organization
Filing Articles of Organization with your state is what creates your LLC. Some states use different names, such as certificate of formation or certificate of organization.
Most states let you file online, and you can usually download the form for free from your state’s website. Filing fees depend on the state, from $35 to $500 in most states. Compare costs per state in our LLC cost guide.
LLC formation times vary by state, but once your filing is approved, you’ll have official proof that your LLC exists as a legal entity. And that’s great news, because you can then do business!
A few states add an extra step. New York, Arizona and Nebraska require new LLCs to publish a notice of formation in a newspaper (Arizona exempts LLCs in Maricopa and Pima counties), and in parts of New York this can cost more than $1,000.
Step 5. Create an LLC operating agreement
An LLC operating agreement records your LLC’s ownership, organizational structure, daily duties and general rules.
Most states don’t require a written operating agreement, but a few do, such as New York. Even where it’s optional, it’s worth having one: banks and investors often ask for it, and it helps settle disagreements between members (it happens). You keep it with your records; it isn’t filed with the state.
An operating agreement covers essential points, such as each member’s responsibilities, how profits and losses are allocated, and what happens when a member wants to leave or sell their share.
Step 6. Apply for an EIN
An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a 9-digit number the IRS uses to identify your business. You’ll need one to hire employees or if your LLC has more than one member, and most banks ask for one to open a business account.
EINs are free from the IRS. The fastest way to get one is online, where you’ll get your EIN as soon as you finish the application. You’ll need a Social Security number or ITIN to apply online. The online application is available Monday to Friday, 6 a.m. to 1 a.m.; Saturday, 6 a.m. to 9 p.m.; and Sunday, 6 p.m. to midnight (Eastern time).
You can also fax or mail Form SS-4. You’ll get your EIN within about 4 business days by fax, or about 4 weeks by mail. International applicants can also apply by phone.
Steps after forming an LLC
File annual reports
Most states require LLCs to file an annual or biennial report to keep their records up to date, usually around the anniversary of formation. Fees range from $0 to $500 a year, and a few states have no report at all. Learn more about the LLC annual report.
Reports usually include your LLC’s name, principal address, registered agent and the names of members or managers.
While it may seem a formality, filing your annual report on time is essential. Miss it and your state may charge late fees and, eventually, dissolve or revoke your LLC.
A good piece of advice is to start a system that records all your business’s dealings. This way you won’t have to spend days or weeks looking for necessary paperwork with a deadline looming ever closer.
Since March 2025, LLCs formed in the U.S. no longer need to file beneficial ownership information (BOI) reports with FinCEN.
Get the licenses and permits you need
In most states, you can form an LLC without a business license. Still, depending on what you do and where you do it, you may need licenses and permits from your state, county or city.
Common examples include:
- General business license (from your city or county)
- Sales tax registration
- Professional/occupational licenses
- Health permits
- Employer registrations, such as unemployment insurance and payroll tax withholding
Requirements vary, and the SBA’s licenses and permits guide is a good place to start. In most cases, you can apply online.
Open a business bank account
As an LLC owner, neither state nor federal law requires you to have a separate business account. However, there are several reasons why you should:
- Keeping your personal and business money separate helps protect your limited liability; mixing funds can put it at risk.
- A separate bank account for your LLC provides your business with an air of credibility and professionalism.
- It’s far easier to get a clear picture of your finances, and it helps your accountant tell business expenses from personal ones at tax time.
Understand your taxes
From Alabama to Wyoming and the 48 states in between, LLC tax rules differ.
By default, the IRS taxes a single-member LLC like a sole proprietorship and a multi-member LLC like a partnership, so profits pass through to the owners’ personal tax returns. You can also elect to have your LLC taxed as an S corporation or a C corporation.
Depending on your state, you may also owe state income tax, a franchise tax or an annual LLC fee, plus sales tax if you sell taxable goods or services. Read our guide to LLC taxes.
One of the best investments you’ll make when starting an LLC is an experienced accountant, who can help you file on time and claim the deductions and credits you’re entitled to.
Get business insurance
Business insurance can help protect you against unforeseen mishaps, like fire and water damage, a client data breach or a customer slipping and getting hurt on your premises.
General liability insurance is a common starting point. If you have employees, most states require workers’ compensation insurance, and a few also require disability insurance. Check your state’s rules for your type of business, or read our business insurance guides.
State Specific LLC Formation Pages
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Why form your LLC with Tailor Brands
At Tailor Brands, we love nothing more than helping people start their business. We take care of the LLC filing and offer additional services so you can focus on launching and growing your business, while staying informed and compliant with state regulations.
Here’s why people choose to form their LLC with us:
Easy and intuitive
Our products are user-friendly, all you need to do is answer a few questions about your business and let us take care of all the rest.
Friendly dashboard
Our platform is easy to use and is optimally designed to guide you through your LLC formation process and business journey.
Additional services
We offer more products to help you set and manage your business like registered agent, business licenses, and annual report.
Ready to form an LLC?
If you were feeling anxious about forming an LLC before reading this, that’s normal. After all, it can seem like a giant leap into the legal unknown. Now that you know how to start an LLC, there’s nothing stopping you. Follow the steps one at a time, and if you get stuck, our LLC resources and support team are here to help.
Easily form your LLC with Tailor Brands
LLC Formation FAQ
No. You can start as a sole proprietor, but forming an LLC can help protect your personal assets, and it signals to customers, partners and investors that you’re a legitimate business. It also makes it easier to open a business bank account.
You file Articles of Organization with your state, usually online. Or let us take care of it: choose a plan, fill out our online form, and we’ll file your LLC and help you get your EIN.
State filing fees range from $35 to $500 in most states, and most states also charge an annual or biennial report fee of up to $500. A registered agent service typically costs $50 to $300 a year, and an EIN is free from the IRS.
It depends on the state. Many states approve online filings within a few business days, while mailed filings can take several weeks. Most states offer expedited processing for an extra fee.
Yes. You can file the Articles of Organization with your state yourself. A formation service saves time and helps you avoid mistakes that can delay your filing.
A registered agent is a person or business that receives legal papers and official notices for your LLC. Almost every state requires one, and the agent needs a street address in the state. You can be your own agent, name someone you trust or hire a service like Tailor Brands.
Most states don’t require a written operating agreement, but a few do, such as New York. It’s still a good idea to have one, because it sets out ownership and how decisions are made, and banks often ask for it.
You need an EIN if your LLC has employees or more than one member, and most banks ask for one to open a business account. EINs are free from the IRS.
Both corporations and LLCs can protect business owners from liability. LLCs have one or more members and are less formally maintained, while corporations have shareholders and stricter reporting requirements.
Yes. You don’t need to be a U.S. citizen or resident to own an LLC. You’ll need a registered agent with an address in the state, and if you don’t have an SSN or ITIN, you’ll apply for your EIN by fax, mail or phone instead of online.
LLC formation resources
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