ӣƵ

BLUEPRINT

Advertiser Disclosure

Editorial Note: Blueprint may earn a commission from affiliate partner links featured here on our site. This commission does not influence our editors' opinions or evaluations. Please view our full advertiser disclosure policy.

When you’re ready to start a business and have decided that a limited liability company (LLC) is the business structure that will provide you with the greatest benefits, there are a number of key steps you need to take. From selecting a business name to ensuring you stay compliant with annual reporting requirements, LLC formation will be an ongoing process.

If you’re wondering how to start an LLC, this guide has you covered with all of the information you need to get your business up and running. 

What is an LLC?

A limited liability company, or LLC, is a business structure that offers excellent liability protection for a relatively low startup cost. LLCs protect owners by forming a clear and legal separation between each member and the business entity itself. Such protection can protect members’ personal assets should your business face legal trouble in the future. 

If you want to dive deeper into the ins and outs of LLCs or are still deciding upon a business structure, check out our guide, What is an LLC? If you already know that an LLC is right for you, read on.

How to start an LLC in 5 steps

Because LLCs are business structures that are allowed by state statute, the steps to forming an LLC vary depending on the state in which you register your LLC. However, there are a handful of general steps every LLC must take. 

Consider an LLC service: An affordable LLC service can manage the entire LLC startup process for you, helping to ensure everything is filed promptly and correctly. If you prefer to handle it yourself, read on:

1. Select an available business name 

Have the perfect name for your business in mind? While it’s important to come up with a marketable name that is reflective of your brand, your new business name will also need to fall in line with several state and federal requirements.

State requirements

Any new business seeking LLC registration must come up with a unique business name that is not currently in use. In this regard, getting your business name registered with the state you chose will likely come on a first-come, first-served basis. 

This is why you will want to check that your name is available before ordering business cards and branded merchandise. Your state’s database is typically found on the secretary of state’s website and is called a business entity search or business name availability check.

Florida’s website allows users to search businesses by entity name. This is a great way to determine if you need to change your LLC’s name to comply with requirements. In Arkansas, there is a naming guideline document that will give you suggestions for distinguishing an LLC name and changes that do not legally distinguish a name.

The secretary of state’s website often offers other resources to help you choose a unique and acceptable name. These include prohibited-word lists and guidance on how a company can legally distinguish its name from other business names.

Federal requirements

You’ll also want to head over to the U.S. Patent and Trademark Office’s website to ensure another brand hasn’t already registered your preferred online business name to protect it against infringement on a national level. If that’s the case, you’ll need to pick a different name.

That’s because using a business name that’s already trademarked, even if the other business is in another state, can expose your business to trademark infringement lawsuits. This rings especially true for online LLCs since taking your new business venture to the internet gives your brand global exposure.

Name reservation

Once you’ve chosen an LLC name and ensured it’s available for use, you can reserve the name to ensure it remains available until you form your LLC with your state. Some states even require you to take this step. You must check with your secretary of state’s website to learn if you are required to reserve your name prior to filing your LLC with the state.

The name can often be reserved for 60 to 180 days and sometimes comes with the option to renew once that period passes. Filing fees for reserving your business name will vary by state.

Marketability

Finally, search your business name’s domain and social media handles to ensure its digital forms are available.

Once you’ve confirmed your name can be legally used and is marketable, consider reserving it with your state to ensure it remains so until you officially form your business. You can often complete the reservation process through your secretary of state website using a name reservation form. For example, in Arkansas, this form is called an . A reservation fee of between $10 and $50 usually applies. 

Learn more: How to name a business

2. Choose a registered agent

Regardless of the state in which you file, your LLC must designate a registered agent to receive legal and other important paperwork on your LLC’s behalf. Registered agents are individuals or companies that live or operate in the state where your LLC operates. They must be available at the listed registered agent address (such as a business office) during all regular business hours throughout the year to fulfill their duties. 

Registered agents must be 18 or older and live in the state. You can elect an LLC member or manager or designate yourself as the registered agent (if you live in the state where the LLC is formed). If you’re forming an LLC out of state or cannot perform the duties internally, you may also consider hiring a company that provides registered agent services. 

Should I be my own registered agent?

Each state allows business owners to be their own registered agents; however, a few tradeoffs involved with self-representation may not be convenient or doable. Here are some considerations when deciding whether or not to serve as your own registered agent: 

  • Privacy: Registered agents must provide their names and addresses at filing, and such information becomes public record and available for anyone to search and find. This can be especially inconvenient for home-based businesses or businesses without a physical address. 
  • Reputation: Serving as your registered agent could expose your business to embarrassment as legal paperwork (such as notices you are being sued) are delivered to your office in front of clients or employees. 
  • Loss of flexibility: You must be available at the listed registered agent address during all business hours throughout the year. You may not leave, for example, to meet with a client or for paid time off. 

If you’re forming a single-member LLC and it’s only you at the helm, it may be a good idea to speak to an attorney before deciding whether acting as your registered agent is in your best interest. 

Designating a registered agent

The pathway to designating your registered agent depends on who you register. For example, if you plan to serve as your business’s registered agent, make sure you have a physical address prepared where you will be present during regular business hours to receive key documents. P.O. boxes are not acceptable.

If, however, you choose to appoint a third party as your registered agent, you must find an entity that is available to serve your business during all regular business hours during the year and has a physical address within your state. Expect to pay between $0 and $300 to hire a registered agent service. Once you’ve hired one, provide their information and a representative’s signature on your LLC formation papers. 

Read our best registered agent services list to narrow your search for the right fit for your business. 

3. Draft an operating agreement

Not every state requires an operating agreement when forming an LLC, but it’s still a crucial part of LLC formation — especially if you’re forming a new business with multiple members. 

The operating agreement covers the legal, managerial and financial responsibilities of each member of your LLC. It sets clear expectations from the beginning that every member should adhere to during the LLC’s operations. In doing so, it offers the following benefits:

  • Protection against state rules: Most states have default rules regarding how an LLC should operate. These rules may contradict your LLC’s needs and your members’ wishes. As a legally binding document, an operating agreement allows your LLC to override those rules and set its own. 
  • Dispute prevention and resolution: By setting clear expectations, you create a clear operational foundation that mitigates the risk of confusion and disputes among members down the line. And, if your members should disagree, an operating agreement offers clarity or guidelines for resolving the dispute. 
  • Confirmed separation of personal and business assets: Your operating agreement confirms your entity’s LLC structure and each member’s ownership percentages. In doing so, it can prevent members from being personally liable for business or other members’ liabilities should the LLC be sued. 

What should an operating agreement include?

A solid operating agreement needs to include the following key concepts:

  • How profits will be distributed. 
  • Each member’s ownership percentages.
  • Each member’s initial contribution to the LLC. 
  • How members can leave the LLC if desired or needed. 
  • How the LLC can be dissolved. 
  • The LLC’s accounting methods. 
  • Members’ voting rights and responsibilities.
  • How and when meetings will be held. 
  • The procedure for one member buying out the ownership percentage of another. 

You can draft your agreement using a free operating agreement template such as those provided by Northwest Registered Agent and Rocket Lawyer. However, since this is a legally binding document, before all members sign the agreement, we strongly encourage you to consult a business attorney to ensure the document meets your LLC’s unique needs.

4. Submit your state’s LLC articles of organization form 

An articles of organization form (also known as a certificate of formation in some states) is required to set your business up as a registered legal entity with the state. Typically, each state provides its own form available for download or completion online on the secretary of state’s website.

For example, here are some articles of organization forms from various states:

  • Arkansas: .
  • Kentucky: .
  • Florida: .
  • Delaware: .
  • Michigan: .

Though information-provision requirements vary by state, the following information will likely be requested as you fill out this form:

  • Your LLC’s name. 
  • Your name, address, phone number and email.
  • Your registered agent’s name, address, phone number and email. 
  • The name of your LLC’s organizer (i.e., you) and a member of your LLC (if a multi-member LLC). 
  • The submitter’s name, contact information and signature. 
  • The date you wish your LLC to form. 
  • Your LLC’s purpose. 
  • The duration of your LLC (i.e., “perpetual”). 

You will also be required to submit a filing fee. Depending on your state’s requirements, this filing fee ranges from $40 to $500. You must be prepared to either submit a check (by mail) or credit or debit card information (online) to cover this fee. 

Each state has different requirements for submitting an articles of organization form. Determine the requirements for submitting your articles of organization in your state. This information is often available in the form’s instructions or on the screen where you access the form online. 

5. File the beneficial ownership report

Starting in 2024, businesses now have to file a beneficial ownership information (BOI) report when registering as an LLC. This form was created after Congress passed the Corporate Transparency Act in 2021. The goal is to make it harder for individuals to benefit from actions such as tax fraud, money laundering and other illegal activities revolving around money.

The website to file your BOI form launched on Jan. 1, 2024. If your company was created before that date, then you have until Jan. 1, 2025, to file it. If you formed your LLC within 2024, you will have 90 days from the date you receive the public notice of your company’s creation to file. 

If you don’t plan on forming your LLC until 2025, then you will have 30 days to file from the date you receive the public notice of your company’s creation.

If you are classified as a reporting company — a business that is privately owned, domestic or foreign, that is registered to do business within the U.S. — then you must file this report. When filing, you will need some of the following information: 

  • The full legal name of your company. 
  • The DBA (or “doing business as”) name. 
  • The company’s business address (not a P.O. Box or a lawyer’s office).
  • The state or tribal jurisdiction where your company was formed. 
  • Your taxpayer identification number (either your social security number or your EIN). 
  • An identity document, like your filed articles of incorporation or organization.

If you want to fill out the BOI form, you must be an employee, owner or third-party service provider that is authorized to act on the LLC’s behalf. The beneficial owner is someone who owns at least 25% of the LLC’s interests. 

If you are an individual filer, you will need your: 

  • Name. 
  • Date of birth. 
  • Address.
  • Identifying number and issuer from either a non-expired U.S. driver’s license, passport or identification document issued by your state, local government or Indian tribe.

If you don’t have a non-expired U.S. license, passport or identification document, you can submit a non-expired foreign passport.

If your company has multiple owners, keep in mind that only two individuals can qualify as company applicants. It will be either the individual who directly filed the documents that created the LLC or the individual who is primarily responsible for directing the filing. To put this simply, you might have two applicants, but you won’t ever have more than two.

Some companies can be exempt from this form — 23 types of companies, to be exact. This can include accounting firms, public utility companies, credit unions and banks, tax-exempt organizations and inactive businesses. To see if your LLC is exempt, check the list on the .

You can find the BOI form on . You can submit the form without the help of an attorney. You will either: 

  • Download the PDF provided on FinCEN’s website, fill it out and submit it.
  • Use FinCEN’s online platform to fill out the information that is needed. 

Once you submit the form, you will not have to do it each year. Once the BOI form is reported, you will only need to refile if your LLC information needs to be corrected or updated. There is no fee for submitting this form. 

If you’re trying to decide between a sole proprietorship and an LLC, keep in mind that with a sole proprietorship, this form won’t be necessary unless you have filed papers with your state to become a sole proprietor.

If you fail to fill this form out in the timeframe above, you could face civil and criminal penalties, according to FinCEN. For more information, FinCEN created a to help you fill out your BOI form. 

Other tasks to consider

As well as everything you need to do above when forming your LLC, there are also other tasks you should consider. Obtaining an EIN, getting your required business licenses and permits, separating your personal and LLC assets and filing any annual reports should all be on your to-do list.

1. Obtain an EIN

An employer identification number (EIN) helps keep the money and assets tied to your new LLC legally separated from your personal finances. It is also used for tax administration purposes. While an EIN isn’t always necessary depending on your business size, structure and industry, it’s a safer alternative to using your Social Security number, which should be reserved for personal use.

The IRS states that all businesses must be legally formed before applying for an EIN, so make sure you’ve completed the previous steps and have access to your formal registration certificate before doing so. Once you’re ready, you can apply directly through the IRS using the for free. 

This application takes a few minutes to complete and must be filled out in one sitting. Once you’ve submitted the form, you will immediately receive a confirmation document with your EIN. Keep this document with your business formation and other important business documents for future use. 

2. Get required business licenses and permits

Depending on the industry in which your LLC operates, you may need to obtain a business license from your state and pay licensing fees. Check with your state to learn your business licensing requirements, fees and deadlines. Many states offer a website page dedicated to providing such information. 

Remember that you must periodically renew your business license(s), usually annually or biannually. Avoid letting your business license lapse by taking special note of periodic deadlines and setting calendar reminders well in advance. Failing to renew required licenses could jeopardize your LLC’s legal status. 

Pro tip: Some registered agent service providers offer digital calendars with deadline alerts for important filing dates, such as your annual report filing deadlines and business license renewal deadlines. Check with your registered agent to see if this feature is available and to learn how you can access it. 

3. Separate personal and LLC assets

Taking mindful steps toward separating business assets and finances from your personal accounts is crucial to forming an LLC that offers proper limited liability protection. Obtaining an EIN is an excellent first step toward legal separation. A smart (and relatively easy) second step is to open up a business bank account to manage your business funds and expenses. 

Many banks require you to have an EIN before creating your new account. Once your business bank account is established, you can withdraw members’ (or your) payments based on the payment structure outlined in your operating agreement. You can also pay business expenses from this account, such as estimated taxes. 

Pro tip: Avoid making payments directly from your business account for personal reasons, thus mixing or commingling funds that are required to be kept legally separated.

4. File annual reports

One of the most attractive benefits of forming an LLC is the low cost of keeping the business active with the state. Filing an annual report serves this purpose. However, if you forget to report to the state that your business is still active and in good standing, it could cost you a lot of money and will likely result in the forced administrative dissolution of your LLC. 

Most states require you to file an annual report on time, and you may also need to pay an annual fee. In Florida, for example, missing the May 1 filing deadline will result in a $400 late filing fee just to keep your LLC active. 

Check your state’s annual filing and fee requirements, typically found on your secretary of state’s website. In addition, mark your calendar at least one month before the filing deadline to help avoid unnecessary late fees. Some states will also send a reminder to your registered agent before the yearly filing deadline. Look for such notices.

Why should you start an LLC?

As with any new business venture, there are some pros and cons to be aware of when starting an LLC. As you consider if an LLC is right for you and your business, keep your future in mind as well as the present, as your goals for growth and scaling may be some of the most critical factors in which business structure you want to opt for.

LLCs are perfect for small business owners and entrepreneurs seeking limited liability protection and relatively low startup costs. The registration process is simple and, in most cases, can be done online. 

If you’re registering in your home state, you can act as your LLC’s registered agent and avoid ongoing payments to a registered agent service. There are also several tax benefits to forming an LLC that give business owners more flexibility over how they are taxed. 

For example, when you form your LLC, it will be taxed by default as either a sole proprietorship or partnership, but you can also choose for your LLC to be taxed as an S corp or a C corp, depending on what your members decide, or what tax structure your accountant believes will net you the most savings come tax season.

Forming an LLC may not be the best option for larger businesses with multiple parties involved. Unless procedural directives are clearly stated in your company’s operating agreement, you may run into issues should any member(s) need to transfer their share of ownership in the LLC. In fact, some states require business owners to dissolve the LLC altogether should any change in ownership occur. 

Benefits of an LLC

  • Low startup and maintenance cost: Forming an LLC can be a relatively straightforward process. Fees will vary across states, but these are generally not prohibitive for most small businesses. You will also have annual reporting requirements. For a deeper dive into formation costs, check out How much does it cost to form an LLC?
  • Personal liability protection: As its name suggests, LLCs limit personal liability. This means that if your business faces lawsuits or bankruptcy, your personal assets, like your car or home, will not be at risk.
  • Tax-election control: LLCs are by default deemed “pass-through” entities, meaning that any profits or losses get passed through to your personal income tax. However, LLCs also have the option to elect to be taxed as either C corporations or S corporations, which gives business owners a lot of control over their preferred taxation method. 

Drawbacks of an LLC

  • Filing process varies from state to state: Every state has its own specific set of requirements and fees when it comes to LLCs. If your business only operates in one state, this may be entirely manageable, but those who operate in multiple states or nationwide may find it to be a lot to juggle. In this case, leveraging the assistance of a reputable LLC service may be a good option, as most will help businesses with multi-state operations form and maintain their standing with little headache to owners. 
  • Cumbersome change of ownership: While you can sell or transfer ownership of an LLC, it’s not without its complexities, and in many cases, you may ultimately need to employ the help of an attorney to navigate the process with you. Ownership changes will involve notifying the IRS, all applicable secretaries of state, and all banking institutions you work with. You will also need to carefully follow all tax regulations.
  • Multi-state LLCs require multiple registered agents: Registered agents are required in all 50 states. As with forming an LLC, this requirement is not so cumbersome when you are only forming in a single state. Once you expand beyond that, however, juggling multiple registered agents can feel unwieldy. Registered agent services can help ease this.

6 different types of LLCs 

NUMBERS OF OWNERSTAXESBEST FOR
Single-member LLC
1
Taxed as a pass-through entity
Solopreneurs and small business owners
Multi-member LLC
Multiple members, at least 2 owners
Taxed as a pass-through entity
Best for those wanting to start an LLC together
Series LLC
Multiple LLCs managed by single partnering LLC
Will file one return as the main LLC
Best for businesses needing clear separation of business assets like rental properties
Professional limited liability company (PLLC)
Those who can provide the services for the license
Taxed as a pass-through entity
Best for professional service providers
L3C
Able to have multiple owners
Same as other LLCs; taxed as partnership with two or more members
Entrepreneurs on a mission; business owners focused on the mission more than profits
Restricted LLC
Able to have multiple owners
LLC profits not taxed for first 10 years
Only for those residing in Nevada

There are six types of LLCs. Single-member and multi-member are the most common and most likely to apply to the average small business. Series LLCs, PLLs, L3Cs and restricted LLCs will apply to less-common, specific use cases.

Single-member LLC

A single-member LLC has one owner. They are taxed as pass-through entities, meaning profits are taxed as income on the owner’s personal income tax return. The LLC protects the owner from liabilities due to business debts, not personal finance responsibilities (called “limited liability protection).

This structure is best for solopreneurs and small business owners looking to get their businesses up and running quickly with low startup costs and limited liability protection. 

Multi-member LLC

A multi-member LLC has multiple members and at least two owners. For example, it is a common business structure for spouses wishing to start an LLC together. It outlines its operating decisions in a legally-binding operating agreement to prevent confusion or disputes among members, among other benefits. It must obtain an employer identification number (EIN) from the IRS even if it does not hire employees.

In this structure, members are only responsible for their share of profits, not business debts. 

Series LLC

Series LLCs are multiple LLCs that are managed by a single parenting LLC. The underlying “mini LLCs” operate independently of other involved LLCs and have separate business assets. Series LLCs are popular with businesses that need clear separation of various business assets, such as rental properties or investment portfolios.

An example is a landlord who owns ten rental homes and wants liability protection and clear separation for each asset. This type of LLC is only available in 22 states. 

Professional limited liability company (PLLC)

A PLLC is an LLC structured specifically for professional service providers, such as doctors. It requires that each professional member obtain and maintain business licenses pertaining to their profession. For example, each doctor within a PLLC must obtain a medical license. Each PLLC must be dedicated to only one profession. For instance, a PLLC may be made up of doctors, attorneys, certified public accountants (CPAs) or veterinarians. 

A PLLC offers personal liability protection for each professional from malpractice suits against other involved members. However, each professional within the PLLC can still be sued personally in a malpractice suit. 

L3C

Also known as a low-profit limited liability company, an L3C focuses on a mission first (like charities) and then earnings as a close second. The structure is best for entrepreneurs on a mission, whether it be a charitable organization, a clean energy startup or socially motivated business owners who are focused more on the mission and less on profits. In doing so, they gain the liability protection of an LLC and the official capacity to further their missions.

To form this type of LLC, the businesses must further the accomplishment of charitable or educational purposes, not have income generation as its primary goal and not be in business to accomplish legislative or political ends.

In turn, for the purposes of furthering the mission, it can receive funding from foundations, like charitable organizations. It can also receive funding from banks, pension funds or investors. 

Restricted LLC

These LLCs avoid paying taxes for the first ten years of formation. However, they are also prohibited from making distributions to their members and are only allowed to form and operate in Nevada. This structure is best for Nevada residents and business owners who are looking for ways to pass on assets tax-free, as well as for estate planning purposes. When an LLC is restricted, it must be clearly stated as such in its articles of organization.

Foreign vs. domestic LLCs

DOMESTIC LLCFOREIGN LLC
Headquarters or offices located in LLC’s formation state
Yes
No
Requires a registered agent
Yes
Yes
Required formation paperwork
Articles of organization or a certificate of formation; beneficial ownership information report
Foreign limited liability application for registration or foreign limited liability company certificate of registration; beneficial ownership information report
Example business types
Single-entity businesses, state-specific businesses or business headquarters
Franchises

Foreign and domestic LLCs both refer to which state your LLC will call home, with both options coming with their own unique set of pros and cons. 

A foreign LLC may sound like an international affair, but it actually refers to a company doing business in a state other than the one in which it was formed. Because LLC rules vary from state to state, requiring out-of-state businesses to register as foreign LLCs assures the state that such companies will abide by that state’s specific tax-filing rules and regulatory requirements. 

Domestic LLCs, by contrast, are limited liability companies doing business in the same state they were originally formed in. Domestic LLCs are common with small business owners who provide goods and services in their own communities with little to no interstate commerce. Their formation makes the most sense for brands that aren’t seeking multi-state expansion. When they’re ready to expand across states, they may then register in the chosen expansion states as a foreign LLC.

Registering in one’s own state as a domestic LLC usually involves completing and submitting articles of organization for an LLC along with a filing fee. In contrast, when forming foreign LLCs, companies must look for a foreign limited liability application form in the foreign state in which they wish to operate their LLCs, complete the form and submit the associated filing fee, usually between $50 and $800, depending on the state.

For example, a franchise owner may fill out a foreign limited liability registration form in each additional state in which they wish to open new franchise locations.

Both domestic and foreign LLCs will now require you to submit a beneficial ownership information report upon formation.

How much does it cost to start an LLC? 

While the cost to start an LLC is relatively modest when compared to other business startup costs, it does vary from state to state. For example, the LLC filing fee for the state of Kentucky is $40, whereas registering your new LLC in Massachusetts is going to set you back $500. 

Other associated fees that may apply include the cost to employ a registered agent service, reserving a business name, publication costs and legal consultation service fees. You’ll also need to consider ongoing costs such as annual taxes, foreign LLC registration fees and reporting fees. 

How are LLCs taxed?

LLCs can be taxed as sole proprietorships or partnerships (the default tax status upon registration). For sole proprietorships and partnership LLCs, taxes are passed through the LLC to members’ personal income tax returns based on their share of ownership.

LLCs can also elect to be taxed as a C corp or an S corp, each of which come with different tax structures and benefits, such as the ability to avoid double taxation or only be taxed on a set salary rather than all business profits. 

LLCs vs. other entities

 LLCSole proprietorshipPartnershipS corpC corp
Ownership or leadership structure
Owners are called members. No maximum number of members. Management determined by members’ wishes
Sole ownership and control of business
Two or more partners, some with more liability
Shareholders own the S-corporation. The corporation owns the business. A board of directors is elected by shareholders
Shareholders own the C-corporation. The corporation owns the business. A board of directors is elected by shareholders
Liability
Protects against personal liability
Can be held personally liable
In limited partnerships, one partner with unlimited liability and the rest with limited liability. In limited liability partnerships, all partners have limited liability
Strong protection from personal liability but higher cost to form and more extensive recordkeeping required
Strong protection from personal liability but higher cost to form and more extensive recordkeeping required
Taxation
Members can elect to be taxed as sole proprietorship, partnership, S corp or C corp
Pass-through entity where sole owner reports business profits or losses on personal tax return
Profits or losses are passed through to partners. Each partner pays personal income taxes on profits based on their share of ownership. The LLC itself is not taxed
Designed to help corporations avoid double taxation. Accommodates pass-through taxation on profits and certain losses
Profits are taxed to the corporation when earned, then again to shareholders when dividends and salaries are distributed. Shareholders cannot deduct incurred losses
Stocks
Cannot issue stock
Cannot issue stock
Cannot issue stock
Allows for the selling of stocks to raise business funds. Multiple classes of stock allowed
Only one class of stock allowed

For small business owners and solopreneurs, forming an LLC will likely give you the most bang for your buck. You’ll have personal liability protection, low startup costs and an easy filing process that, in most cases, won’t require attorney assistance and consultation fees.

An LLC can provide you with affordable peace of mind and assurance that, should your business encounter legal liabilities around business debt, your personal assets are protected. 

On the other hand, if you want to form a business that is separate from its owners (and can even be held legally liable for its own actions), then a corporation may make more sense. Corporations can be easily divided among shareholders and can help you avoid the dissolution rules some states have regarding LLC membership changes.

These business entities are also perfect for startups seeking to raise capital through the sale of company stock. 

Frequently asked questions (FAQs)

It depends, but in most cases, forming an LLC in your home state is the best choice for small business owners. Filing fees are relatively small when compared to other business startup costs.

You can often also act as your own registered agent, thus avoiding paying a third-party service. In addition, filing in your home state eliminates the complexity of keeping track of another state’s tax deadlines, obligations and annual fees. 

Yes, but if you are setting up your LLC in another state, you’ll need a registered agent who lives and/or does business in that state to represent you. Registered agents are responsible for receiving and handling legal documents and notices for your business in the state where your LLC is registered. You also need to file foreign LLC registration papers.

Yes, which is why it’s a good idea to carefully research any state in which you plan on forming an LLC before finalizing your decision to form there. While in most cases, your own home state will be the most logical formation location, some states are more business-friendly than others and, so, require lower startup and maintenance costs and a less complicated formation process compared to others.

No. Entrepreneurial DIYers can save a little money by setting up an LLC on their own, but every state does have an LLC formation filing fee. Fees that may apply to the setup process include: 

  • Initial filing: $40 to $500.
  • Name reservations: $10 to $50 per name reservation.
  • Registered agent services: $0 to $300 per year. 
  • Legal consultations: $69 per hour. 
  • LLC publication requirement: $0 to $300 (one-time fee).
  • Operating agreement: $0 to $300 (one-time fee).

Most of the steps involved in forming a new LLC can typically be done in less than a day. However, processing times may vary and some states have specific requirements that will take more time.

For example, there are currently three states in the U.S. that require business owners to advertise the formation of their new LLCs in local newspapers at the beginning of the registration process. These announcements must be published multiple times over a period of weeks before the LLC can open and operate. 

These states are New York, Nebraska and Arizona, and the duration and placement of such public notices — as well as the associated costs — vary between them.

If you have employees, you need an employer identification number (EIN). If you operate a single-member LLC with no employees and no tax liability, you do not need an EIN. 

However, it is free to obtain an EIN from the IRS, and sometimes they are required to open certain types of business bank accounts or are required by state tax law. So, it may not be a bad idea to obtain one. This also allows for potential future growth if you eventually take on employees.

An LLC operating agreement is essentially a roadmap for an LLC’s internal operation. This document is a legally binding, official contract and is required in most states to form an LLC. 

An operating agreement outlines provisions, regulations and rules regarding the business’s financial or functional decisions and ultimately helps to protect both the limited liability status and your agreement with state regulations. To learn more, read What is an LLC operating agreement?

An LLC beneficial ownership information (BOI) report is now required for LLCs. As of Jan. 1, 2024, all LLCs will need to file this report. If you formed your LLC before Jan. 1, 2024, then you have one year to file. If you formed your LLC in 2024, then you will have 90 days from the date of your public notice of formation to file. 

There is no fee to file your BOI report, and you can find the form on . According to FinCEN, you can face civil and criminal penalties if you fail to fill out this form for your LLC.

Yes, you can change the name of your LLC. It just requires — you guessed it — more paperwork. You will need to:

  • Check that your desired name is available.
  • Confer with your operating agreement.
  • Amend your articles of organization.
  • Notify any relevant agencies.
  • Change the name on all business-related accounts, as well as in your branding.

We recommend thinking very carefully about your business name when you choose it in order to avoid the hassle of a change later down the road.

LLCs are considered a separate business structure from S corps and are organized in their own unique way with each state. However, an LLC can elect to be taxed as an S corp.

Potentially, but it is rare. An LLC that is owned by a single, tax-exempt organization and which also meets the complex IRS requirements for LLCs acting as exempt organizations mandate can exist as a nonprofit. It is much more straightforward to simply form a nonprofit corporation.

It’s possible but not recommended. It may be tempting to try to simplify your operations by having multiple businesses under the larger umbrella of one LLC, and it is possible to do this, but we don’t recommend it.

Blurring boundaries between assets, incomes and operations can put your protected liability status at risk, defeating one of the primary benefits of forming an LLC in the first place.

Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.

Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.

John Cagle

BLUEPRINT

For over a decade John has worked as a marketing consultant and copywriter for companies ranging from small and midsize businesses (SMB) to Fortune 500 tech firms like Adobe. He has helped countless brands across a variety of industries develop content marketing strategies to create value-driven experiences that better connect with audiences, build brand loyalty and improve customer retention. John is also an entrepreneur, small business owner and licensed real estate advisor. He graduated from Western Governors University with a B.S. in Business Administration.

Sierra Campbell is a small business editor for ӣƵ Today Blueprint. She specializes in writing, editing and fact-checking content centered around helping businesses. She has worked as a digital content and show producer for several local TV stations, an editor for U.S. News & World Report and a freelance writer and editor for many companies. Sierra prides herself in delivering accurate and up-to-date information to readers. Her expertise includes credit card processing companies, e-commerce platforms, payroll software, accounting software and virtual private networks (VPNs). She also owns Editing by Sierra, where she offers editing services to writers of all backgrounds, including self-published and traditionally published authors.