How to Start an LLC in 7 Easy Steps (2025)

Forming a limited liability company (LLC) is the best way to gain personal asset protection and add credibility to your startup or small business. To start an LLC, you need to choose a unique business name, file your state’s formation documents, and comply with additional requirements such as appointing a registered agent and obtaining an EIN. 

Whether you’re launching a tech startup or local business, you can follow our step-by-step guide below or hire a formation service to handle the paperwork — it’s simpler than you might think.

1. Select Your State
2. Name Your LLC
3. Choose a Registered Agent
4. File Formation Documents
5. Create an Operating Agreement
6. Get an EIN
7. Ensure Legal & Tax Compliance

Want to streamline the process? Northwest can form your LLC for just $29 plus the state fee.

TLDR: LLC Formation Essentials

• What is an LLC? – A limited liability company (LLC) provides personal asset protection, flexible tax options, and reduced paperwork compared to corporations while maintaining professional credibility
• Formation process – Choose a state, select a unique name with “LLC” designation, appoint a registered agent, file Articles of Organization, create an operating agreement, get an EIN, and ensure tax and legal compliance
• Formation options – Either DIY using our comprehensive step-by-step guide below or hire a professional LLC formation service to handle the process for you 
• Post-formation steps – Open a separate business bank account, obtain necessary licenses and permits, set up proper accounting systems, and maintain compliance with annual state filing requirements

The Complete Guide to Starting Your LLC

Starting an LLC doesn’t have to be complicated. This comprehensive guide breaks down the entire formation process into manageable steps, from selecting your state to fulfilling all legal requirements.

We’ll walk you through each step with clear instructions and insider tips to save you time and prevent costly mistakes. By the end of this guide, you’ll have all the information you need to successfully form your LLC and get your business up and running.

Step 1: Select Your State

​For most entrepreneurs, forming your LLC in your home state is the simplest and most cost-effective approach. While states like Delaware and Wyoming are known for business-friendly laws, choosing your home state avoids the need to register as a foreign LLC elsewhere, minimizing additional paperwork and fees. ​

Every state has its own quirks when it comes to LLC formation. Filing fees, processing times, and specific requirements can vary significantly. 

Find your state-specific guide below:

• Alabama
• Alaska
• Arizona
• Arkansas
• California
• Colorado
• Connecticut
• Delaware
• Florida
• Georgia
• Hawaii
• Idaho
• Illinois
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maine
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Mississippi
• Missouri
• Montana
• Nebraska
• Nevada
• New Hampshire
• New Jersey
• New Mexico
• New York
• North Carolina
• North Dakota
• Ohio
• Oklahoma
• Oregon
• Pennsylvania
• Rhode Island
• South Carolina
• South Dakota
• Tennessee
• Texas
• Utah
• Vermont
• Virginia
• Washington
• Washington D.C.
• West Virginia
• Wisconsin
• Wyoming

Step 2: Name Your LLC

Your LLC name isn’t just about clever branding — it’s a legal identifier that needs to follow state rules. Think of it as the foundation of your business identity. You want something memorable that customers can easily find, but it also needs to satisfy your state’s legal requirements.

Here are a few common LLC naming rules:

• Includes the words “Limited Liability Company,” “Limited Company” or Initials “LLC” or “L.L.C.”
• Name cannot include indicators of other business entities
• Name cannot contain restricted words or phrases (such as bank, attorney, and university) without approval

Our LLC name search guide walks you through confirming availability in your state.

Need help with name ideas? Try our business name generator to spark creativity. And don’t forget to secure your domain:

Step 3: Choose A Registered Agent

Every LLC needs a registered agent — think of them as your company’s official point of contact for legal and government communications. This person or entity accepts important documents like lawsuits, subpoenas, and official notices on behalf of your business. While it might seem like a small detail, having the right registered agent is crucial for maintaining your LLC’s good standing.

In most states, a registered agent must meet these requirements:

• is 18 years or older
• has a physical address in the state where business is conducted
• is available (in person) during normal business hours

Most business owners choose to use a professional registered agent service. These typically cost $100-$300 annually, but provide valuable benefits: privacy protection (keeping your personal address off public records), reliability (ensuring you never miss important notices), and convenience (especially if you travel frequently).

Step 4: File Your Articles of Organization

This is where your LLC officially comes to life. Articles of Organization (sometimes called Certificate of Formation or Certificate of Organization in certain states) is the document that transforms your business idea into a legally recognized entity.

The specific requirements vary by state, but most Articles of Organization include some standard information:

• Your LLC’s name and principal address
• The purpose of your business (which can be stated generally as “any lawful business activity”)
• Your registered agent’s information
• Your management structure (member-managed or manager-managed)
• The names and addresses of the organizers filing the paperwork

How to File Formation Documents

Filing has gotten much easier in recent years, with most states offering online submission options:

Simply visit your state’s business filing portal (usually through the Secretary of State website), complete the required forms, pay the filing fee (which ranges from $40 to $500 depending on your state), and submit your application.

Processing times vary significantly by state — from same-day approval with online filing to several weeks for mail submissions. If you’re in a hurry, many states offer expedited processing for an additional fee.

It’s also important to watch out for publication requirements in states like Arizona, Nebraska, and New York. These states require you to publish a notice about your new LLC in local newspapers, which can add to your startup costs.

Step 5: Create an LLC Operating Agreement

Although not legally required in most states, an operating agreement is a smart investment. It acts as your LLC’s rulebook, defining operations, ownership rights, and dispute resolution.

For single-member LLCs, it reinforces the separation between personal and business finances, protecting your assets in legal matters. For multi-member LLCs, it’s essential for preventing conflicts over decisions, profits, and ownership changes.

What to Include in Your Agreement

A solid operating agreement addresses the details that matter most to your specific business situation:

• Who owns what percentage of the company and what capital contributions they’ve made. 
• How decisions get made — by majority vote, unanimous consent, or some other method. 
• How profits and losses are divided among members. 
• What happens if someone wants to sell their portion, leave, or if you need to bring in new members. 
• What happens if you eventually need to dissolve the business.

You can also download a template or create a custom Free LLC Operating Agreement using our online tool.

Step 6: Get an EIN

An Employer Identification Number (EIN) is like your business’s Social Security number (SSN) — a unique nine-digit identifier issued by the IRS. Even if you don’t plan to hire employees right away, getting an EIN is a smart move for most LLCs.

Getting Your EIN Is Simple (and Free)

The easiest way to get your EIN is through the IRS website. The online application takes about 15 minutes, and you’ll receive your EIN immediately upon completion.

Step 7: Ensure Legal & Tax Compliance

Meeting tax and regulatory obligations is crucial to keeping your LLC compliant and running smoothly. Key considerations include:

• Obtain Necessary Business Licenses & Permits: Certain industries and locations require specific licenses or permits to operate legally. Check with your local, state, and federal authorities to ensure compliance.
• Register for State Taxes: If your LLC sells taxable goods or services, you may need to collect and remit sales tax. If you have employees, you’ll need to register for state payroll taxes and unemployment insurance.
• Understand Federal Tax Obligations: Your LLC’s tax responsibilities depend on how it’s classified (default pass-through taxation vs. S corp election). Ensure you’re familiar with IRS requirements and deadlines.
• Set Up Business Accounting: Hiring a business accountant is one of the best ways to ensure you’re taking advantage of LLC tax benefits; possibly saving you and your company thousands of dollars per year.

Steps After Forming an LLC

Congratulations on forming your LLC! However, your journey isn’t quite complete. There are several important next steps to ensure your business operates properly and maintains compliance with various regulations.

Open a Business Bank Account

This is non-negotiable. Mixing personal and business finances is one of the quickest ways to pierce your LLC’s liability protection. A dedicated business account creates clear financial boundaries, simplifies accounting, and helps establish business credit.

Get the Right Insurance

Your LLC’s liability protection has limits. Business insurance fills the gaps and provides an additional layer of security. Depending on your industry, you might need general liability insurance (protects against common risks like customer injuries), professional liability insurance (for service businesses), property insurance, workers’ comp (if you have employees), or specialized coverage for your specific industry.

File Your Annual Report

Many states require LLCs to file annual reports, which includes updating your registered agent address and paying your annual filing fee or franchise tax.

Visit our LLC annual report guide to learn more.

Monitor Beneficial Ownership Information (BOI) Reporting Details

The Corporate Transparency Act (CTA) was enacted to enhance transparency in business ownership and combat illicit activities such as money laundering and fraud. It required most LLCs to report their beneficial owners — individuals who own or control at least 25% of a company or have significant influence over its operations — to the Financial Crimes Enforcement Network (FinCEN).​

However, as of March 21, 2025, FinCEN removed all BOI reporting requirements for U.S. LLCs and persons. Now, only foreign entities registered in the U.S. must file BOI reports within 30 days of registration.

For the most current information and potential future changes, visit the FinCEN website or consult a legal professional.

Benefits of an LLC

What makes LLCs so popular among entrepreneurs? It’s the unique combination of protection, flexibility, and simplicity they offer. Here’s why creating an LLC might be the right move for your startup:

Liability Protection That Matters

The “limited liability” in LLC is the star feature. It creates a legal separation between your business and personal assets. If your business faces lawsuits or can’t pay its debts, your personal property — home, personal bank accounts, vehicles — generally remains protected. You can take business risks without putting your personal financial future on the line.

Tax Options That Grow With You

Pass-through taxation entails a business’s profits passing through to the LLC member’s individual tax returns. Like a sole proprietorship, an LLC is taxed as a pass-through entity, also known as a disregarded entity. 

Once this process is completed and after any tax deductible expenses are taken out, the LLC member pays self-employment taxes and income tax on their portion of the business income. 

Alternatively, LLCs can choose to elect to be taxed as an S corporation (S corp) or C corporation (C corp). If S corporation tax status is elected, LLC members can be taxed as employees of the business; potentially reducing tax burden.

Less Red Tape, More Business Focus

Unlike corporations, which must hold board meetings, keep detailed minutes, and follow rigid operational protocols, LLCs face fewer ongoing formalities. There’s less paperwork, fewer required meetings, and more flexibility in how you run things. This lets you focus on growing your business instead of managing administrative requirements.

Credibility Boost

Adding “LLC” to your business name instantly signals legitimacy to customers, vendors, and partners. It shows you’ve taken steps to establish a formal business entity, which can be particularly important when you’re just starting out and building trust with new customers or approaching potential business partners.

Frequently Asked Questions