What Is an LLC?
A Limited Liability Company (LLC) is a popular legal structure for small businesses in the USA. It combines the liability protection of a corporation with the tax benefits and simplicity of a sole proprietorship or partnership.
Benefits of Starting an LLC
- Personal liability protection for business debts
- Pass-through taxation (no double tax)
- Flexible management structure
- Professional credibility
- Easy to set up and maintain
Step-by-Step Guide to Forming an LLC
- Choose a Name for Your LLC
It must be unique and include "LLC" or "Limited Liability Company." Check availability through your state’s website.
- Appoint a Registered Agent
This is a person or business authorized to receive legal documents on behalf of your LLC.
- File Articles of Organization
This document is filed with your Secretary of State and includes basic details about your business.
- Create an Operating Agreement
Although not required in all states, it’s a good practice. It outlines ownership, roles, and operational rules.
- Apply for an EIN (Employer Identification Number)
You can get one free from the IRS. Needed for taxes, hiring employees, and opening a business bank account.
- Register for State Taxes and Permits
This varies by state and type of business. You may need sales tax permits or business licenses.
- Open a Business Bank Account
Keep your business and personal finances separate to protect your LLC status.
LLC Formation Costs by State
LLC filing fees range from $40 (Kentucky) to $500 (Massachusetts). On average, expect to pay $100–$200.
- California: $70 filing fee + $800 annual tax
- Florida: $125 filing fee
- Texas: $300 filing fee
- New York: $200 filing + publication requirement
Common Mistakes to Avoid
- Not separating personal and business finances
- Failing to file annual reports or fees
- Choosing the wrong name or domain
- Not having a clear operating agreement
Should You Use an LLC Formation Service?
Platforms like ZenBusiness, Incfile, and Northwest Registered Agent offer affordable LLC setup packages, often including EIN filing, registered agent services, and compliance reminders.
FAQs About Starting an LLC in 2025
- Do I need a lawyer? No, but it helps for complex structures.
- Can I form an LLC in a different state? Yes, but you must register as a foreign LLC if doing business elsewhere.
- How long does it take? 1–3 weeks depending on the state.
Final Thoughts
Forming an LLC is a smart move for protecting your assets and establishing your business legally. Follow these steps carefully, or consider using a trusted formation service to simplify the process.