How to Start an LLC (2026 Guide)

How to Start an LLC: The Complete Guide for Every State

A limited liability company (LLC) is the most popular business structure in the United States, and for good reason. It combines the liability protection of a corporation with the simplicity and tax flexibility of a sole proprietorship. Whether you are launching a freelance business, opening a retail shop, or building a startup, an LLC gives you a strong legal foundation without the complexity of corporate governance.

Every year, millions of entrepreneurs file LLCs across all 50 states. The process is straightforward, affordable, and can often be completed in less than an hour online. Filing fees range from as low as $35 in Montana to $500 in Massachusetts, and most states let you handle the entire process without hiring a lawyer.

This guide walks you through everything you need to know about forming an LLC. You will learn what an LLC is, why it matters, how to set one up step by step, what it costs, and how it compares to other business structures. We also include a complete state-by-state breakdown with filing fees, annual costs, and direct links to start the process in your state.

What Is an LLC?

A limited liability company (LLC) is a legal business entity recognized in all 50 states. It creates a separation between your personal assets and your business obligations. When you form an LLC, the business becomes its own legal “person” that can own property, enter contracts, and take on debt independently from you.

The defining feature of an LLC is limited liability protection. If your business is sued or cannot pay its debts, your personal assets (your home, car, savings accounts, and personal bank accounts) are generally protected. Creditors can go after the assets owned by the LLC, but they typically cannot reach your personal property. This protection is sometimes called the “corporate veil,” and it is one of the primary reasons business owners choose this structure.

LLCs also offer pass-through taxation by default. This means the LLC itself does not pay federal income tax. Instead, profits and losses “pass through” to the owners (called members) and are reported on their personal tax returns. This avoids the double taxation that C corporations face, where profits are taxed at the corporate level and again when distributed as dividends to shareholders.

Another key advantage is flexibility. An LLC can have one member or hundreds. It can be managed directly by its members (member-managed) or by appointed managers (manager-managed). There are no requirements for annual meetings, boards of directors, or corporate officers. You get the legal protection of a formal business entity with far less paperwork and bureaucracy than a corporation.

LLCs can also choose how they are taxed. By default, a single-member LLC is taxed as a sole proprietorship and a multi-member LLC is taxed as a partnership. However, you can elect to be taxed as an S corporation or C corporation by filing the appropriate forms with the IRS. This flexibility lets you optimize your tax situation as your business grows.

Benefits of Forming an LLC

Personal Asset Protection

The most important benefit of an LLC is the legal barrier it creates between your business and personal finances. Without an LLC, a sole proprietor is personally responsible for every business debt and legal claim. If a customer sues your unincorporated business for $500,000, your personal bank accounts, home equity, and retirement savings could all be at risk. An LLC shields those personal assets from business liabilities.

Tax Flexibility

LLCs provide more tax options than almost any other business structure. The default pass-through taxation eliminates double taxation and simplifies your filing. As your income grows, you can elect S corporation taxation to potentially reduce self-employment taxes. If you ever need the tax characteristics of a C corporation, that election is available too. This adaptability means your LLC can evolve with your business without requiring you to form a new entity.

Less Paperwork Than Corporations

Corporations require annual meetings, detailed minutes, a board of directors, corporate officers, and extensive record-keeping. LLCs have none of these requirements. Most states ask only for an annual report or a simple renewal filing. You still need to maintain separate finances and keep basic records, but the administrative burden is dramatically lower. For small business owners who want to focus on running their business rather than managing corporate formalities, an LLC is the clear winner.

Business Credibility

Forming an LLC adds legitimacy to your business. The “LLC” designation after your company name signals to customers, vendors, and potential partners that you are operating a formally registered business. This credibility can help you win contracts, open business bank accounts, and build professional relationships. Many clients and vendors prefer to work with registered business entities rather than unincorporated individuals.

Management Flexibility

LLCs let you structure management however you prefer. In a member-managed LLC, all owners participate in day-to-day decisions. In a manager-managed LLC, you can appoint one or more managers (who may or may not be members) to handle operations while other members act as passive investors. This flexibility is valuable for businesses with silent partners, investor members, or complex ownership structures. Your operating agreement defines exactly how management works in your specific LLC.

How to Start an LLC: 6 Steps

Forming an LLC is a straightforward process in every state. While the specific forms and fees vary, the general steps are consistent. Here is what you need to do.

Step 1: Choose a Name for Your LLC

Your LLC name must be distinguishable from other business entities registered in your state. Most states require the name to include “LLC,” “L.L.C.,” or “Limited Liability Company.” Before settling on a name, search your state’s business name database to confirm availability.

Choose a name that is easy to spell, easy to remember, and relevant to your business. Check that the matching domain name and social media handles are available if you plan to build an online presence. If you are not ready to file right away, most states let you reserve a name for 60 to 120 days for a small fee.

Avoid names that are too similar to existing businesses in your state, as the filing office will reject them. Also avoid restricted words like “bank,” “insurance,” or “university” unless you have the appropriate licenses.

Step 2: Designate a Registered Agent

Every LLC must have a registered agent — a person or company authorized to receive legal documents and official correspondence on behalf of your business. The registered agent must have a physical address (not a P.O. box) in the state where your LLC is registered.

You can serve as your own registered agent, but many business owners hire a professional registered agent service. This ensures that legal notices are handled promptly and keeps your personal address off public records. Professional registered agent services typically cost $50 to $300 per year.

Step 3: File Articles of Organization

The Articles of Organization (called a Certificate of Formation or Certificate of Organization in some states) is the document that officially creates your LLC. You file it with your state’s Secretary of State office or equivalent agency.

The form is typically one to two pages and asks for basic information: your LLC name, registered agent name and address, business address, management structure (member-managed or manager-managed), and the names of organizers or members. Filing fees range from $35 to $500 depending on your state. Most states allow online filing, and many process applications within a few business days.

Step 4: Create an Operating Agreement

An operating agreement is an internal document that outlines how your LLC will be governed. It covers ownership percentages, profit distribution, voting rights, member responsibilities, and procedures for adding or removing members.

While not every state legally requires an operating agreement, every LLC should have one. Without it, your LLC defaults to your state’s LLC laws, which may not align with your intentions. An operating agreement also strengthens your liability protection by demonstrating that your LLC operates as a separate entity from its owners.

Step 5: Get an Employer Identification Number (EIN)

An Employer Identification Number (EIN) is a federal tax ID issued by the IRS. Think of it as a Social Security number for your business. You need an EIN to open a business bank account, hire employees, and file business tax returns.

Getting an EIN is free and takes just a few minutes. You can apply online at IRS.gov and receive your EIN immediately. Single-member LLCs with no employees are not strictly required to have an EIN, but getting one is strongly recommended. It keeps your Social Security number off business documents and is required by most banks to open a business account.

Step 6: Comply With State and Local Requirements

After your LLC is officially formed, there are a few more boxes to check. Open a dedicated business bank account to keep your personal and business finances separate. This separation is critical for maintaining your liability protection.

Check whether your state, county, or city requires any business licenses or permits for your industry. File for any state tax registrations you may need, such as sales tax permits or employer withholding registrations. Set a reminder for your state’s annual report or renewal filing deadline so you stay in good standing. Falling behind on annual filings can result in penalties or even administrative dissolution of your LLC.

How Much Does an LLC Cost?

The cost of forming an LLC varies significantly by state. The single largest expense is the state filing fee for your Articles of Organization, which ranges from $35 in Montana (the cheapest) to $500 in Massachusetts (the most expensive). Most states fall in the $50 to $200 range.

Beyond the initial filing fee, you should budget for these common costs:

• Registered agent service: $50 to $300 per year if you hire a professional service. Free if you serve as your own registered agent.
• Annual report or renewal fee: $0 to $500 per year depending on your state. Some states like Arizona, Missouri, New Mexico, and Ohio have no annual reporting requirements at all.
• Operating agreement: Free if you draft it yourself using a template. $500 to $2,000 if you hire an attorney.
• EIN: Free from the IRS.
• Business licenses and permits: Varies by location and industry, typically $50 to $500.

For most entrepreneurs, the total first-year cost of forming and maintaining an LLC falls between $100 and $800, with ongoing annual costs of $50 to $400 in most states. Some states carry additional costs that can raise the total significantly. California imposes an $800 annual franchise tax. Nevada charges $350 per year for its annual list and business license. New York requires a publication notice that can cost $300 to $1,500 depending on the county.

For a detailed breakdown of all LLC costs by state, including first-year totals and annual maintenance costs, see our complete LLC cost comparison. The table below shows the filing fee, annual fee, and processing time for every state.

LLC vs. Other Business Structures

An LLC is not the only option for structuring your business. Depending on your goals, revenue, and growth plans, a different entity type might serve you better. Here is how the LLC compares to the most common alternatives.

LLC vs. Sole Proprietorship

A sole proprietorship is the simplest business structure. There is nothing to file — you are automatically a sole proprietor the moment you start doing business. However, a sole proprietorship offers zero liability protection. Your personal assets are fully exposed to business debts and lawsuits. An LLC provides that critical layer of protection while remaining almost as simple to operate. For a detailed comparison, see our guide on LLC vs. Sole Proprietorship.

LLC vs. Corporation

Corporations (C corps) offer liability protection similar to an LLC, but they come with significantly more administrative requirements. Corporations must hold annual shareholder meetings, maintain a board of directors, keep detailed corporate minutes, and follow strict governance rules. Corporations also face double taxation by default — profits are taxed at the corporate level and again when distributed to shareholders as dividends. LLCs avoid both the paperwork and the double taxation. Learn more in our LLC vs. Corporation comparison.

LLC vs. S Corp

An S corporation is not a separate entity type — it is a tax election available to both LLCs and corporations. When an LLC elects S corp taxation, the owner can pay themselves a reasonable salary and take remaining profits as distributions, which are not subject to self-employment tax. This can produce meaningful tax savings for businesses earning above $40,000 to $50,000 in net profit. However, S corps have restrictions: a maximum of 100 shareholders, only U.S. citizens or residents as shareholders, and a single class of stock. Read our full breakdown at LLC vs. S Corp.

LLC vs. Partnership

A general partnership forms automatically when two or more people go into business together. Like a sole proprietorship, it provides no liability protection. Each partner is personally liable for all business debts, and one partner’s actions can create liability for the other partners. A multi-member LLC gives you the same collaborative structure with the added benefit of limited liability for every member. For a deeper look, see LLC vs. Partnership.

Start an LLC in Your State

Filing fees, annual costs, and processing times differ in every state. Use the table below to find your state and get started. Each link takes you to our complete guide for forming an LLC in that specific state, including step-by-step instructions, required forms, and state-specific tips.

Frequently Asked Questions About LLCs

What is the cheapest state to form an LLC?

Montana has the lowest LLC filing fee at just $35. Other affordable states include Kentucky ($40), Arkansas ($45), and several states at $50, including Arizona, Colorado, Iowa, Michigan, Mississippi, Missouri, and New Mexico. Keep in mind that the filing fee is only one part of the total cost. Annual fees, state taxes, and other requirements can make a “cheap” state more expensive over time. For example, Arizona charges $50 to file and has no annual report, making it one of the most affordable states for long-term LLC maintenance.

Do I need a lawyer to start an LLC?

No. The vast majority of LLCs are formed without a lawyer. State filing forms are designed to be completed by business owners without legal training, and most states offer online filing portals that walk you through the process step by step. However, consulting an attorney can be valuable if you have multiple members with complex ownership arrangements, operate in a heavily regulated industry, or need to structure your operating agreement to address specific scenarios like member disputes or business succession. For a straightforward single-member LLC, the DIY approach works well.

How long does it take to form an LLC?

Processing times vary by state, but most LLCs are approved within 3 to 10 business days when filed online. Some states, like Colorado and Wyoming, process filings on the same day. Others, like Alaska and New York, may take 10 to 15 business days for standard processing. Nearly every state offers expedited processing for an additional fee, which can reduce the timeline to 24 hours or even same-day approval. The filing itself typically takes 15 to 30 minutes to complete.

Can a non-US citizen form an LLC?

Yes. There are no citizenship or residency requirements to form an LLC in any US state. Non-US citizens, non-residents, and foreign nationals can all form and own LLCs. You will need a US mailing address (your registered agent can provide this) and may need an Individual Taxpayer Identification Number (ITIN) instead of a Social Security number. Some additional tax reporting requirements apply to foreign-owned LLCs. For a complete walkthrough, see our guide on how to start an LLC as a non-US citizen.

What is a registered agent?

A registered agent is a person or business designated to receive legal documents, tax notices, and official government correspondence on behalf of your LLC. Every state requires LLCs to maintain a registered agent with a physical street address in the state of formation. You can act as your own registered agent, appoint a trusted individual, or hire a professional registered agent service. Professional services cost between $50 and $300 per year and provide the added benefits of privacy (your personal address stays off public records) and reliability (they ensure nothing is missed during business hours).

Can I form an LLC in a state I don’t live in?

Yes, you can form an LLC in any state regardless of where you live. This is called forming a “domestic” LLC in another state. However, if you conduct business in your home state, you will likely need to register your LLC as a “foreign” LLC there as well, which involves additional filing fees and annual reports. For most small businesses, forming in your home state is the simplest and most cost-effective approach. Forming in states like Delaware, Wyoming, or Nevada offers certain legal or privacy advantages, but the added cost and complexity of maintaining foreign registrations often outweigh the benefits for smaller operations.