How to Form an LLC

Forming an LLC is one of the most important steps you will take as a small business owner — and one of the most straightforward. The process varies slightly by state but follows the same basic sequence everywhere: choose a name, file your Articles of Organization, pay the state filing fee, appoint a registered agent, and create an operating agreement.

Why Form an LLC?

A sole proprietorship is automatic — you start working, you are one. But it offers zero liability protection. If someone sues your business or you cannot pay a vendor, they can come after your personal bank account, your car, and your home. An LLC creates a legal wall between you and your business for a modest filing fee.

Step-by-Step: Forming Your LLC

Step 1 — Choose a business name. Your name must be unique in your state. Check your state Secretary of State website before committing to a name.

Step 2 — Choose a registered agent. Every LLC must have a registered agent — a person or service with a physical address in your state who receives legal documents on behalf of your business.

Step 3 — File your Articles of Organization. This official document is filed with your state Secretary of State and creates your LLC. State filing fees range from $50 to $500.

Step 4 — Create an operating agreement. Defines how the LLC is managed, how profits are distributed, and what happens if a member leaves. Strongly recommended even if not legally required in your state.

Step 5 — Get your EIN. Your Employer Identification Number is your business tax ID. Free from the IRS at irs.gov. Takes about 10 minutes online.