We may earn a commission when you buy through links on this page. It doesn't change what we recommend.
Last checked . Picks are based on the prices, rates, fees and terms each provider publishes, checked at the source. We never rank products by commission. See how we’re funded.
Learning how to start an LLC is mostly a matter of order. You pick a name, appoint a registered agent, file with your state, get a federal tax ID and open a separate bank account. Each step is small. The costs and rules vary by state, though, and a few details trip people up, such as ongoing annual fees. This guide walks through how to start an LLC, what it does and doesn’t protect, how it’s taxed and what federal reporting applies now.
What an LLC is and why people start an LLC
A limited liability company blends features of a corporation and a partnership. The Small Business Administration (SBA) says an LLC protects your personal assets “in most instances,” and that profits and losses can pass through to the members’ personal income, with members paying self-employment tax. In the IRS default, a one-owner LLC is treated as a disregarded entity reported on the owner’s return, and an LLC with two or more members is taxed as a partnership. An LLC can also elect corporate treatment by filing Form 8832.
This is general information, not legal or tax advice. A lawyer or accountant can tell you whether an LLC fits your situation.
Step 1: Choose a name and check that it’s available
Begin with your state’s business search to see whether the name is taken. SBA’s launch checklist puts picking a structure and a name near the top. One catch: registering a DBA, short for “doing business as,” doesn’t give you legal protection on its own, the SBA notes.
Step 2: Choose a registered agent
You need a registered agent located in your state, the SBA says. Delaware wants an agent with a Delaware street address. In Texas the LLC can’t act as its own agent. The agent has to be a Texas resident or a registered entity with a street address, and a mailbox won’t do.
Step 3: File your articles of organization to start an LLC
This filing is what creates the LLC. The SBA says to register with the state, often through the Secretary of State or a business bureau. The main document is the articles of organization: name, address, members and registered agent. Some states call it a certificate of formation. Fees vary a lot. Here’s what the state agency pages showed:
Delaware charges $110 to file a certificate of formation, according to its August 2026 fee schedule. Texas charges $300 for its Form 205. Florida charges $125 for the required filing, which is $100 for the articles plus $25 for the registered agent designation, and $160 if you add the optional certified copy and certificate of status. Michigan charges $50 for its articles of organization. California charges $70 online.
SBA says total registration cost will be “less than $300,” but it varies by state, and several of the figures above plus annual costs show why not to rely on that as a promise.
Step 4: Know the ongoing costs after you start an LLC
Formation is only the first bill. Here’s what comes after. California’s Franchise Tax Board charges every LLC doing business in or organized in the state a flat $800 a year, and adds a fee once California income reaches $250,000. Delaware’s tax page says $400 a year, due June 1, though two older pages still list $300 and a non-government source says a 2026 law raised the number. Check Delaware’s site before you pay. Florida’s annual report runs $138.75, or $538.75 if it lands after May 1. Michigan wants an annual statement every February 15, beginning the year after you form.
Check for local licenses and permits as well. SBA treats them as a separate step, and what you need depends on your activity and location.
Step 5: Write an operating agreement
An operating agreement spells out who owns what percentage, who votes on what, how profits are shared and how a buyout works. Whether your state requires one varies, but SBA advises having one anyway. You don’t file it with the state. Even a single-member LLC gains from putting in writing how the business runs and how its money stays apart from yours.
Step 6: Get an EIN
The IRS says the Employer Identification Number application is free, and it warns about websites that charge for it. The online application runs in a single session, times out after 15 minutes of inactivity and asks for the responsible party’s Social Security number or ITIN. Go straight to the IRS website. With an EIN, the LLC can open a bank account, hire employees and file certain taxes. The IRS adds that even a single-member LLC uses its own name and EIN for employment and excise taxes.
Step 7: Open a business bank account
Keep business money apart from personal money once the LLC exists. Tidy books are only part of the reason. Courts can “pierce the veil” when an LLC looks like an extension of its owner and not a separate entity with its own finances and records, according to a Cornell law reference. Standards vary by state. Separate accounts and records help show the LLC stands on its own. Once money starts coming in, our guide on how to create an invoice explains what to put on one.
What you don’t get when you start an LLC
An LLC limits your personal liability for business debts. It isn’t a shield for everything, though. We couldn’t confirm on an official page how it treats your own wrongful acts or debts you personally guarantee, so ask a lawyer. It also doesn’t make taxes go away. Per the IRS, a single-member LLC owner pays self-employment tax on net earnings, just like a sole proprietor.
Do you have to file a beneficial ownership report after you start an LLC?
You may have heard about the federal Corporate Transparency Act. FinCEN’s website says it finalized a rule in August 2026 under which U.S. companies and U.S. persons are exempt from beneficial ownership information reporting. A FinCEN news release dated August 11, 2026 says the requirement is permanently eliminated for U.S. companies, while foreign companies registered to do business in the U.S. must still report. The page gives an effective date of August 14, 2026, while the release says it takes effect on Federal Register publication. Check FinCEN’s page if your situation involves a foreign-formed company.
Common mistakes when you start an LLC
People trip up in a handful of ways. They pick a name before checking that it’s free. They forget the annual fee or report and lose good standing. They mix personal and business money, skip the operating agreement, or pay a third-party website for an EIN that costs nothing. And plenty assume the formation cost is the whole cost.
Editor’s take
Before you start an LLC, price out the whole first year, not just the filing fee. Add the annual tax or report, the registered agent and any local licenses, then weigh the total against what the protection is worth to you. An LLC suits many small businesses. Still, a short talk with an accountant first can spare you a surprise that’s specific to your state.
