How to Form an LLC

The most important decision is where to form. Most small businesses should form in their home state — operating in a state where you're not registered means paying for a foreign qualification anyway, doubling your paperwork and costs.

That said, forming in Wyoming or Delaware makes sense if you: - Run an online business without a physical presence in any one state - Plan to raise outside investment (Delaware is standard for VC-backed companies) - Want maximum asset protection and privacy (Wyoming leads here) - Have no ties to an expensive state like California or New York

Wyoming has the strongest charging order protection and no state income tax. Delaware has the most flexible corporate law and is preferred by investors. New Mexico is the fastest and cheapest with no annual report required.

Your LLC name must be unique in the state and include a required designator such as "LLC," "L.L.C.," or "Limited Liability Company." Search your state's Secretary of State business name database before filing — a duplicate name will cause your filing to be rejected.

Consider these naming rules: - Cannot imply you're a government agency - Some states restrict words like "bank," "attorney," or "university" without approval - The name you file is your legal name; you can operate under a different "DBA" (doing business as) name

If you're not ready to file, most states allow you to reserve a name for 30–120 days for a small fee ($10–$50).

Every LLC must designate a registered agent — a person or company with a physical street address (not a PO box) in the formation state who is available during business hours to accept legal documents, service of process, and state notices.

Your options: - Yourself — free if you have a physical address in the state and are comfortable being listed publicly - An attorney or CPA — may already handle this for you - Professional registered agent service — $49–$300/year; keeps your address off public records; provides compliance reminders

If you're forming in a state where you don't physically reside, a registered agent service is required. Even if you do reside there, many LLC owners prefer a service for privacy.

The articles of organization (sometimes called a "certificate of organization") is the official document that creates your LLC. You file this with the Secretary of State and pay the state filing fee.

What you'll typically need to include: - LLC name (with designator) - Principal office address - Registered agent name and address - Member/manager names (varies by state) - Effective date (usually immediately) - Organizer signature

In most states you can file online in under 15 minutes. Processing ranges from 1 day (New Mexico) to 15 days (Alaska). Expedited service is available in most states for an additional $25–$150.

An operating agreement is the internal document that governs how your LLC operates. It's not filed with the state — it's a private agreement between members.

Even if you're a single-member LLC, you should have one. It: - Establishes that your business is separate from you personally - Documents ownership percentages - Defines how profits and losses are distributed - Specifies what happens if a member leaves or dies - Shows banks and courts that your LLC is legitimate

California, New York, Missouri, Maine, and Delaware require operating agreements by law. All other states strongly recommend them. Templates are widely available — or use a formation service to generate one.

An Employer Identification Number (EIN) is your LLC's federal tax identification number — like a Social Security number for your business. You need it to: - Open a business bank account - Hire employees - File federal and state taxes - Apply for business licenses

Apply free at IRS.gov — takes about 10 minutes and is available instantly online (Mon–Fri 7am–10pm ET). You do not need an attorney or paid service for this. Single-member LLCs without employees can use the owner's SSN instead, but an EIN is still recommended for banking and credibility.

A dedicated business checking account is not legally required but is essential for: - Maintaining your liability protection ("corporate veil") - Simplifying bookkeeping and tax preparation - Accepting payments professionally - Building business credit

What you'll need: EIN, articles of organization, operating agreement, and your personal ID. Most banks require an in-person visit, but online banks (Mercury, Relay, Novo) can open accounts remotely with no minimum balance and no monthly fees.

Never commingle personal and business funds — this is the #1 mistake that pierces the liability protection an LLC provides.

Forming your LLC is just the beginning. Ongoing compliance keeps your LLC in good standing:

Annual reports: Most states require a yearly (or biennial) report confirming your LLC information and paying a fee. Missing this can result in administrative dissolution. Due dates vary — many are on the anniversary of formation.

State taxes: Most states have pass-through taxation (you pay on your personal return). California has an $800 minimum franchise tax. Some states have gross receipts taxes regardless of profit.

Federal taxes: Single-member LLCs file Schedule C with personal return. Multi-member LLCs file Form 1065. You can elect S-Corp or C-Corp tax treatment for potential savings.

Licenses: Your business may need federal, state, or local licenses independent of your LLC.

Registered agent: Keep your registered agent updated so you don't miss important legal notices.