How to Start an LLC

Forming an LLC is relatively simple. You can set up an LLC by following the steps below:

Choose a Name

Before registering the name in the state where you plan to do business, check available online directories, the secretary of state’s office for your state, or your county clerk’s office to make sure the name is available. It’s also wise to do an online search to ensure your name isn’t too close to another business’ name and that you’re not inadvertently associating your business with meaning or movement that doesn’t align with your brand. 

Also, your name needs to meet your state’s naming guidelines. Here are some common state LLC naming guidelines:

  • Your company name must include “limited liability company” or one of its abbreviations (LLC or L.L.C.).
  • Your company name can’t include words that could confuse your LLC with a government agency (FBI, Treasury, etc.).
  • Restricted words (e.g. Bank, Attorney) may require additional paperwork and a licensed individual, such as a lawyer, to be part of your LLC.

Finally, if you may sell your business later, avoid using your personal name for the business.

Pick a Registered Agent

Your registered agent is the person who receives official mail and correspondence for the LLC, so you’ll need their name and address. This can either be yourself, another member of your LLC or third-party registered agent service.

File Articles of Organization

These are the legal documents you must file with your secretary of state to make your LLC a legal entity. To file, you’ll need a business name and address for your principal place of business and the management type.

Create an Operating Agreement for Your LLC

While not every state requires an LLC operating agreement, it’s a good idea for multiple-member LLCs and single-member LLC owners who want additional protection against personal liability. This legal document often includes an ownership breakdown, management structure, duties/powers of managers and members, member voting rights, and information about how profits and losses are distributed.

Obtain an EIN

As an individual, you have a social security number. You’ll need an Employer Identification Number (EIN) for your business. The IRS uses a nine-digit EIN to identify your business so that you can apply directly to the IRS without any fees.

Commonly asked questions about LLCs

What’s the Difference Between an LLC and a Sole Proprietorship?

LLCs are entities that provide legal separation between the members (owners) and the business. Sole proprietorships do not. So, if the business gets sued, the owner may have to pay out from their assets.

What’s the Difference Between an LLC and an S Corporation?

While not all do, LLCs have the option to convert to an S corp rather than the default C corporation. Members must file an additional Form 2553 with the IRS. As an S corp, they’ll no longer have to pay taxes twice (double taxation). There are some limitations, however, such as there can only be up to 100 shareholders, and none can be corporations for foreigners.

How Many Owners Can an LLC Have?

An LLC can have infinite owners (members). There is no maximum.