How to Form an LLC

A Limited Liability Company (LLC) is a popular business structure that combines the liability protection of a corporation with the flexibility of a partnership.

Step 1: Choose your state. Most businesses form in the state where they operate. Delaware and Wyoming are popular for their business-friendly laws but may require additional registration in your home state.

Step 2: Choose a name. The name must be distinguishable from existing business names in your state, include "LLC" or "Limited Liability Company," and not include restricted words (bank, insurance) without proper licensing.

Step 3: Designate a registered agent. Every LLC needs a registered agent — a person or company with a physical address in the formation state who receives legal documents on behalf of the LLC.

Step 4: File Articles of Organization. Submit this document to your state's secretary of state. It includes the LLC name, registered agent, address, and member/manager information. Filing fees range from $50 to $500.

Step 5: Create an operating agreement. While not always legally required, an operating agreement is essential. It outlines ownership percentages, profit distribution, management structure, and procedures for adding or removing members.

Step 6: Get an EIN. Apply for a free Employer Identification Number from the IRS (irs.gov). You need this for bank accounts, taxes, and hiring.

Step 7: Open a business bank account. Keeping personal and business finances separate is critical for maintaining liability protection.

Step 8: Comply with ongoing requirements. Most states require annual reports and fees. Some require publication of the formation.

This is legal information, not legal advice.