Forming an LLC is one of the most important steps you’ll take as a business owner. An LLC separates your personal assets from your business liabilities, establishes your business as a legitimate legal entity, and in many cases, offers tax advantages over operating as a sole proprietor.

The good news is that the process is more straightforward than it looks. Most LLCs can be formed in a matter of days, sometimes less, and you don’t need a lawyer to do it.

This guide walks you through every step, from choosing your business name to staying compliant after your LLC is approved, so you know exactly what to do and what to expect at each stage.

How to start your LLC in 7 steps:

1. Name your LLC
2. Select your state
3. File articles of organization
4. Choose a registered agent
5. Create an operating agreement
6. Apply for EIN
7. Get Your Licenses, Permits, and State Tax Registrations

Step 1. Name your LLC

LLCs are legal entities, so rules apply when naming one.

• Your name has to be unique to avoid confusion with an existing registered company.
• It must contain the words like LLC, L.L.C. or limited liability company in the name, and you can’t use financial or government agency words such as insurance, trust, bank, and FBI.

Rules vary from state to state, as they do with every step of starting a limited liability company. You’ll will generally find your state’s laws on the Secretary of State website or we provide all the necessary information in our state specific formation guides.

Once you decide on a name you will need to do a business entity search to ensure your name is unique in your state. Every state maintains a public business entity database through the Secretary of State’s office, where you can search registered business names.

Keep in mind that name availability is state-specific. A name that’s clear in one state may already be registered in another. It’s also worth doing a broader trademark search to make sure the name isn’t federally protected, even if it’s available at the state level. You can search federal trademarks through the USPTO’s trademark database. You may also want to protect your business name with a trademark

LLC name vs. business name

When you form an LLC, the name you register with the state becomes your official legal name. That’s the name that appears on tax filings, bank accounts, contracts, and legal documents.

But your legal name and the name you do business under don’t have to be the same. If your registered name doesn’t work well for branding, or you want to operate multiple businesses under one LLC, you can register a separate business name, commonly known as a DBA (doing business as), or in some states referred to as a fictitious name or trade name.

A great example of a DBA name is Google, which is legally registered as Alphabet inc.

A DBA isn’t a separate legal entity. It’s simply a name your LLC is authorized to use publicly. Your LLC remains the underlying legal structure; the DBA is the name your customers see.

How to register a DBA

DBA registration is handled at the state or county level depending on where you operate, and requirements vary. You will also need to do a business entity search in order to make sure the exact business name has not been registered. You will usually file with the Secretary of State or at your county clerk’s office.

DBA registration often comes with a fee ranging from $10 to $100 and usually needs renewed every few years. Some states also require you to publish the name in a local newspaper.

Reserve your LLC name

When you find the perfect business name but aren’t yet ready to make an LLC, you can reserve it by filing with your secretary of state’s office. Reservation requirements and duration vary by state, ranging anywhere from 30 to 120 days and will incur a small fee.

Step 2. Select your state

Forming in your home state

Start with your home state. It’s almost always the right call.

If you live and run your business in the same state, register your LLC there. It’s simpler, cheaper, and avoids a compliance trap that catches many first-time LLC owners off guard (more on that below).

Forming out of state

Some LLC owners choose to register in a different state to take advantage of lower filing fees, more favorable privacy laws, or a business-friendly legal environment. This is most relevant if you’re:

• Seeking outside investment (investors often prefer Delaware entities)
• Prioritizing owner privacy (Wyoming doesn’t publicly list member names)
• Running an online business with no physical location tied to a specific state

Here’s what most guides don’t tell you clearly: if you form your LLC in another state but operate your business in your home state, you’ll almost certainly need to register there too. That means paying filing fees and annual fees in two states, not one. For most small businesses, this erases any cost advantage of forming out of state.

Before choosing a state other than your own, ask yourself: Where will I actually be doing business? That’s usually where you should form.

Popular out-of-state options

We have a guide on the best state to form an LLC but here is the TLDR:

Delaware is the most established choice, particularly for startups seeking venture capital or planning to scale. Delaware has a well-developed body of corporate law, business-friendly courts, and doesn’t tax out-of-state income. However, it charges annual franchise taxes and report fees that can add up for simple LLCs.

Wyoming has become the go-to for small business owners and solopreneurs. It offers strong privacy protections (no public member list), low annual fees, and no state income tax.

Nevada is another option with no corporate income tax and strong liability protections, though its fees tend to be higher than Wyoming’s.

Step 3. File articles of organization

The actual formation of an LLC comes when you file an articles of organization form with your state. Some states use different terminology, such as a certificate of formation or a certificate of organization. 

You can download the articles of organization form for free from your state website. Filing fees are state-dependent, ranging anywhere from $50 to $800. LLC costs differ by state and you can check them out in our LLC cost post.

LLC formation times vary by state but, once approved, you’ll receive a state certificate of organization proving your LLC’s existence as a legal entity within your state. And that’s great news because you can then do business! You business will also appear in the Secretary of States’ website and you can perform an LLC lookup to verify your LLC is active.

Once you begin doing business, you’re usually be required to pay yearly fees to your state, normally by filing an Annual Report. This is also known in some states as Annual Registration Fees, Annual Certificates, or Franchise Tax Reports.  We discuss this in more detail below in the steps after your form your LLC.

Fees are unavoidable and required to keep your business compliant with your state, regardless of your LLC’s activity or profit.  

Step 4. Choose a registered agent

A question most potential LLC owners ask is, “Can I set up an LLC on my own?” Yes, but regardless of your LLC’s location, you need a registered agent and/or a registered office because of due process. 

A registered agent is an individual who will receive legal and other documents on behalf of your business, such as subpoenas, regulatory and tax notices, and correspondence.  

In most states, if someone wants to sue you, the court cannot proceed until it has served you. And for that, you need a registered address and be open during regular business hours and available to the public.

Depending on your state laws, you could nominate yourself or another individual to act as your registered agent. It is important to keep in mind that failing to be present to accept documents may put the following at risk:

• Your ability to respond to a lawsuit – if service of process is delivered and you miss it, a court can issue a default judgment against your business
• Your LLC’s good standing – states can administratively dissolve an LLC that fails to maintain a proper registered agent
• Legal deadlines – missing a served document means missing response windows you may not be able to recover

If you want to hire a registered agent for your LLC and reduce your paperwork, finding one isn’t difficult. (We do it!) Still, sourcing a legitimate one at a reasonable price can be. 

Check with your secretary of state’s office and ask for a recommendation, or, if you want to go the simpler route, register your LLC here at Tailor Brands using our LLC maker!

Step 5. Create an LLC operating agreement

An LLC operating agreement defines how your LLC will be run. Unlike your Articles of Organization, it’s never filed with the state. It stays in your own records, but that doesn’t make it any less important.

Most states don’t legally require an LLC to create an operating agreement. The five states that do require LLCs to have an operating agreement are California, Delaware, Maine, Missouri, and New York.

An operating agreement covers essential points, such as the list of members and each member’s responsibilities, voting rights, profit distributions, as well as proceedings when a member wants to leave or sell their share, and more.

Even if your state isn’t on this list, treating an operating agreement as optional is a mistake most LLC owners come to regret.

Why you should have one regardless

It protects your liability shield. One of the main reasons to form an LLC is to separate your personal assets from your business. Without an operating agreement, a court has less evidence that your LLC is a genuine, independent entity, which can make it easier for someone to argue that separation doesn’t exist.

It prevents disputes. If you have business partners, an operating agreement locks in each person’s ownership percentage, role, voting rights, and share of profits before there’s ever a reason to disagree. Handshake arrangements fall apart. Written ones don’t.

It overrides your state’s default rules. Every state has a default set of rules that govern LLCs without operating agreements. Those rules may not reflect how you actually want your business to run. For example, some states default to splitting profits equally regardless of how much each member contributed.

Banks and investors will ask for it. Opening a business bank account, applying for a loan, or bringing on an investor will almost always require you to produce your operating agreement. Not having one slows everything down.

Single-member LLCs need one too

It might seem unnecessary when you’re the only owner, but a single-member LLC without an operating agreement is the most vulnerable to having its liability protection challenged. The document demonstrates that your business is a real, separate legal entity, not just a personal account with a different name on it.

Step 6. Apply for an EIN

An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is used to identify a business entity. It’s a 9-digit number assigned by the IRS to identify taxpayers who are required to file business tax returns. 

You can form an LLC without an EIN but it is almost always required at some point. For instance, if you want to open a business bank account or hire employees you will need one.

There are 4 ways you can apply for an EIN, online, mail, fax or by phone:

Online: The preferred method when applying for an EIN is online. Be aware that the online application is available Monday through Friday from 7 a.m. to 10 p.m. Eastern time. Once the application is completed, an EIN number will be issued immediately. Also be aware that only US residents or those whose principal business office is in the US can file online and the applicant must have a valid Social Security Number, ITIN or EIN.

Mail or Fax: There is also the option to mail or fax in the completed Form SS-4 to the IRS address listed on the Instructions for Form SS-4 PDF or get the fax number at “Where to File Your Taxes” (for Form SS-4). You’ll receive your EIN in the mail in approximately 4 weeks if done by mail or within 4 business days if done by fax.

Phone: You can call the Business & Specialty Tax Line at 800-829-4933 (7am-7pm local time) and get your EIN immediately over the phone if you are the responsible party.

Step 7. Get Your Licenses, Permits, and State Tax Registrations

Forming your LLC makes it a legal entity, but it doesn’t automatically make it legal to operate. Depending on your industry and location, you may need additional licenses, permits, or tax registrations before you open your doors or start trading.

Business licenses and permits

There’s no single federal business license that covers all LLCs. Instead, requirements are set at the state, county, and municipal level, and they vary significantly by industry.

A freelance consultant and a food truck owner are both LLCs, but their compliance picture looks completely different. Common license and permit categories include:

• General business licenses: Required by most states and many cities simply to operate
• Professional licenses: Required for regulated professions such as contractors, healthcare providers, accountants, and real estate agents
• Zoning and land use permits: Required if you operate from a physical location
• Health and safety permits: Required for food service, childcare, and similar industries
• Sales tax permits: Required in most states if you sell physical goods

The best starting points for finding your specific requirements are the SBA’s license and permit tool and your secretary of state’s website. We also have detailed guides on licenses and permits for each state.

State tax registration

Your EIN registers you with the federal government for tax purposes. But most states have their own tax registration requirements that are separate and in addition to your EIN.

Depending on your state and business type, you may need to register for:

• State income tax – If your state has one (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming do not)
• Sales tax – If you sell taxable goods or services
• Payroll/employer taxes – If you plan to hire employees

Check your state’s department of revenue or taxation website to confirm what applies to your LLC. We also have a detailed guide on LLC taxes.

Steps after forming an LLC

Formation is a one-time process. Compliance is ongoing. Once your LLC is up and running, there are recurring obligations you need to stay on top of, because missing them can result in penalties, fines, or your LLC being dissolved by the state.

Initial report

A few states require you to file an Initial Report or Statement of Information immediately or shortly after forming an LLC. This is separate from your annual report and is a one-time filing that confirms your LLC’s basic details with the state.

• California: Statement of Information filed within 90 days of formation
• Connecticut: Initial Report filed within 30 days of formation
• Louisiana: Initial Report filed at the same time as the Articles of Organization
• Nevada: Initial List of Officers filed at the time of formation

Publication Requirements

Three states have publication requirements that must be met within a given timeframe after the Articles of Organization are approved.

• Arizona: Newspaper notice in the same county for three consecutive publications within 60 days
• Nebraska: Newspaper “Notice of Organization” in a nearby circulation for three consecutive weeks within 45 days.
• New York: Notice in two county newspapers for 6 consecutive weeks within 120 days.

Annual reports

This step is usually applicable after you’ve been trading for a tax year, but it’s useful to know it now. An LLC annual report, also known as a “statement of information”, provides your state with crucial details relating to your business, including any changes or information that occurred since your last filing period. 

Most states require LLCs to file an annual or biennial report to keep their registration current. This is typically a short filing that confirms your LLC’s contact information, registered agent, and members, but it comes with a deadline and a fee. The report can usually be filed online and the fees vary from state to state, ranging from $50 in Mississippi to $500 in Massachusetts.

What should you include in your annual report?

Each state has varying requirements for an annual report but generally include:

• Your principal business address
• The names and addresses of your members and managers
• Significant identification numbers for your business, such as your state entity number
• The purpose of your business
• A list of authorized signatories
• Your registered agent’s information

What happens if you don’t file an annual report for your LLC?

While it may seem a formality, filing your annual report on time is essential, and the consequences of failing to file can be severe. For example, some states may impose a late fee, penalties, and taxes, while others may even dissolve your LLC.

Annual fees and franchise taxes

In addition to your annual report, many states charge an annual fee or franchise tax just to maintain your LLC’s status. These are separate from income taxes and are owed regardless of whether your business made money.

Notable examples:

• California charges a minimum annual franchise tax of $800, due even in your first year
• Delaware charges an annual LLC tax of $300
• New York has filing fees that vary based on income

Federal and state tax filings

By default, LLCs are treated as pass-through entities for federal tax purposes, meaning the business itself doesn’t pay federal income tax. Instead, profits and losses pass through to the members and are reported on their personal tax returns.

However, LLCs have flexibility in how they’re taxed:

• Single-member LLCs are taxed as a sole proprietorship by default
• Multi-member LLCs are taxed as a partnership by default
• Any LLC can elect to be taxed as an S-corp or C-corp, which may offer tax advantages depending on your income level — this is worth discussing with a tax professional

State tax treatment varies and doesn’t always mirror the federal default. Some states impose their own LLC-level taxes regardless of the federal classification.

LLC tax filing tips

1. Find and take advantage of any eligible tax deductions or credits available to your LLC.
2. Always review business tax deadlines in advance and add them to your calendar. Plus, you can always hire a certified accountant or tax professional to file your taxes. 
3. Research and understand your state’s tax requirements ahead of time.

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 open a business bank account for your LLC:

• Opening a business account separates your finances from your business. And you should, otherwise, you could lose your limited liability protection. Having a separate entity increases the chances of maintaining the protection.
• A separate bank account for your LLC provides your business with an air of credibility and professionalism.
• By separating your business and personal accounts, it’s far easier to gain a clear picture of your finances. 
• It also assists your accountant in establishing what’s business related and what’s personal, which is especially helpful when completing your end-of-year-tax return. 
• You can keep an eye on your business expenses, ensuring your cash flow stays consistent. 

Get business insurance

Business insurance can help protect you against unforeseen mishaps, like fire and water damage, stock and premise damage, a missed deadline, or a client data breach.

Common everyday risks such as a slip-and-fall injury, an employee car accident, or a work-related injury. Some policies also cover supply breakdown, business interruption compensation, and legal costs.

You might need “public liability insurance.” in the case of a customer injuring themselves while on your business property. 

Furthermore, some states require LLCs to have additional insurance, while others leave it up to your discretion. In addition, if you have employees, you must have workers’ compensation, unemployment, and disability insurance. 

Visit your state’s website to find the exact insurance requirements your business model requires or read more on why your LLC needs business insurance. 

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