How to form an LLC, step by step

Last updated: 2026-05-13

Forming an LLC is mostly paperwork — seven steps that most founders finish in an afternoon, with the state filing fee as the only required cost. Everything else is optional or free. Average Year-1 all-in runs $100–$300 in most states, $35 in Montana, $800+ in California.

This guide walks the seven steps in order, with the costs and timing that actually apply in 2026. If you want the per-state numbers up front, run the cost calculator for your state and come back.

Step 1 — Pick the state

Form in your home state. That is the answer 90% of the time. The "Delaware advantage" only applies to startups that will raise institutional venture capital, and the "Wyoming advantage" only applies to anonymous holdcos that aren't operating in another state. If the LLC's actual operations happen in one place — your living room, a client's job site, a leased office — that state is the answer.

The reason: every state where you "do business" requires you to either form there or foreign-qualify there. A foreign qualification means filing the same paperwork twice, paying both states' fees, and maintaining two registered agents. A Delaware LLC operated from California pays Delaware ($300/yr franchise) and California ($800/yr franchise + $70 foreign-qualification fee + $25 statement of information). $1,195/yr to do what California-only would have cost $820. That's the math that ends most "Delaware vs home state" debates.

Cases where forming somewhere else is correct:

• Venture capital track — Delaware. Required by every standard term sheet.
• Anonymous asset-holding entity that operates nowhere — Wyoming or New Mexico.
• Real estate holdco that owns property in one specific state — that state.
• Non-US founder, no US footprint — Wyoming or Delaware (no state nexus to anywhere else).

Full breakdown: Best states to form an LLC.

Step 2 — Name the LLC

Three rules apply in every state:

1. Name must include "LLC", "L.L.C.", or "Limited Liability Company".
2. Name cannot duplicate or be confusingly similar to an existing entity in that state.
3. Name cannot include reserved words (Bank, Insurance, University, etc.) without separate approval.

Search availability on the Secretary of State business database before filing — every state has one, free, no login. Confirm in 30 seconds. If the name is taken, you'll find out fast and avoid a rejected filing fee.

Optional: name reservation. Most states let you reserve a name for 60–120 days for $10–$50 while you prepare the rest of the paperwork. Skip unless you're not ready to file within the next two weeks.

Also check: domain availability and a quick US trademark search at uspto.gov/trademarks/search. The state name database doesn't check trademarks; a registered mark in your industry beats your state-level approval if the mark holder ever sues.

Step 3 — Appoint a registered agent

Every state requires every LLC to designate a registered agent: a person or service with a physical street address in the state of formation, available during business hours to receive legal mail and tax notices.

Three options:

• Be your own RA — free if you have a physical address in the state. Your address becomes public record. Service of process happens at your front door.
• Use a friend or family member — same risk as above plus you depend on them being home when the process server arrives.
• Hire a service — $35–$300/year. Northwest is the privacy benchmark at $125/yr. ZenBusiness bundles RA in formation packages then charges $199/yr after Year 1.

If you operate the LLC from a home address and don't want it on the internet, RA services pay for themselves. Full breakdown: Registered agent explained.

Step 4 — File the Articles of Organization

This is the single document that creates the LLC. Called Articles of Organization in most states, Certificate of Formation in Delaware and Texas, Certificate of Organization in Massachusetts. The form is one or two pages and asks for:

• LLC name (from Step 2)
• Registered agent name and address (from Step 3)
• Principal office address
• Organizer signature
• Member or manager names — required in CA, FL, NY, TX; skipped in WY, NM, NV

Filing fee: ranges from $35 (Montana) to $500 (Massachusetts). Most states $50–$200. Processing time: 5–15 business days standard, same-day in Delaware/Wyoming/Florida online filing. Expedited filing: $50–$200 extra to drop to 1–3 business days.

File online if the state offers it (45 of 51 do). The field-by-field explainer covers every box on every state's form.

You'll get back a stamped Certificate of Formation (DE/TX) or Filing Acknowledgment (everywhere else). Save the PDF — you'll need it for the bank account in Step 7.

Step 5 — Get an EIN from the IRS

The EIN (Employer Identification Number) is a free 9-digit number that identifies the LLC for tax purposes. Required to open a business bank account, hire employees, or file business tax returns.

Free at IRS.gov. Takes 10 minutes online if you have a US Social Security Number or ITIN. The "Apply for an EIN Online" wizard issues the number immediately at the end.

If you're a non-US founder without an SSN/ITIN: file Form SS-4 by fax (4 business days) or mail (4–6 weeks). Phone application no longer available to international applicants as of 2025.

Formation services upsell EINs at $50–$100. Skip unless your formation package already includes it (ZenBusiness Pro and above do; Bizee and Northwest charge separately). Full guide: How to get an EIN.

Step 6 — Draft an operating agreement

The operating agreement is the LLC's internal contract: who owns what percentage, how decisions are made, how profits are distributed, what happens when a member leaves. Required by law in California, New York, Missouri, Maine, and Delaware. Recommended everywhere else — banks ask for it, courts use it to determine member rights, and without one your state's default LLC rules apply (usually unfavorably).

For a single-member LLC, the operating agreement is short (3–5 pages) and mostly procedural. For a multi-member LLC, it's the most important document the LLC will ever sign — it should cover capital contributions, distribution waterfalls, transfer restrictions, buy-sell triggers, and dispute resolution.

Templates: single-member and multi-member templates with every clause explained. ZenBusiness Pro and Bizee Gold include a custom-drafted operating agreement in the formation package.

Step 7 — Open a business bank account

The reason for the LLC structure is liability protection: the LLC's assets and debts are separate from yours. To preserve that protection, the LLC needs its own bank account — commingling personal and LLC funds is the single most common reason courts pierce the LLC veil and let creditors come after the owner personally.

Bring to the bank:

• Articles of Organization (stamped copy from the state)
• EIN letter from the IRS (the CP 575 confirmation)
• Operating agreement
• Government-issued ID

Most online business banks (Mercury, Relay, Bluevine, Novo) open accounts entirely online in 1–3 business days. Traditional banks (Chase Business, BofA, Wells Fargo) require an in-person visit. Full comparison with fee structures and which fits which kind of business: best business banking for new LLCs.

Step 8 — The BOI report (most US LLCs are now exempt)

The Beneficial Ownership Information report under the Corporate Transparency Act no longer applies to LLCs formed in the United States. FinCEN's March 2025 interim final rule narrowed the requirement by place of formation: every entity created in a US state is exempt, regardless of whether its owners are US or non-US persons. The only companies that still file are entities formed in another country that then register to do business in a US state.

So if you formed your LLC in any US state, you don't file a BOI report — even if you or your owners are non-US persons. The earlier "foreign-owned US LLCs still file" guidance is out of date. The one case that still reports is a foreign-formed company qualifying into a US state. Full breakdown: foreign-qualification and foreign-ownership rules.

Total cost and timing

Realistic Year 1 budget for a single-member LLC formed in your home state:

• State filing fee: $35–$500 (median ~$100)
• Registered agent service: $0 (DIY) or $125–$300/yr
• Operating agreement: $0 (template) or $50–$200 (drafted)
• EIN: $0 (DIY) or $50–$100 (service)
• Annual report (most states, due Year 2): $0–$300
• Franchise tax (some states): $0 (most), $300 (DE), $800 (CA)
• Publication (NY, AZ, NE only): $40–$1,500

Median total Year 1: $100–$300. California: $1,000+ (mostly the franchise tax). New York: $400–$1,700 (mostly publication, NYC counties are the expensive ones). Run the calculator for your state's exact total.

DIY vs hiring a formation service

The state Secretary of State filing portal is free and the form is one page. DIY is the cheapest option and not particularly hard. Formation services (ZenBusiness, Northwest, Bizee, LegalZoom) charge $0–$300 above state fees and bundle the registered agent service, operating agreement, and EIN application.

Use a service if:

• You want a registered agent service anyway (RA alone is $125–$300/yr — the formation bundle is often the same price)
• You're forming in a state with a complex form (publication-required NY, multi-step CA)
• You want the operating agreement and EIN handled in one purchase

Skip the service if you have a physical address in your home state, are comfortable with one online form, and will use the IRS's free EIN wizard.

If a formation service makes more sense than DIY, seven of them are reviewed and ranked here. ZenBusiness Pro at $199 is the best balance for most operators; Northwest at $125 is the privacy benchmark; Doola is the only one set up for non-US founders.

Common mistakes

• Forming in Delaware while operating in California. Costs $1,195/yr instead of $820. The "Delaware advantage" doesn't survive contact with foreign-qualification math.
• Skipping the operating agreement. Banks ask for it. Courts use it. State default rules apply if you don't have one — and they're rarely what you'd have chosen.
• Being your own RA at a home address you don't want public. Your address is on the state business database, which is searchable forever.
• Paying $99 for an EIN. The IRS issues them free in 10 minutes online. The only reason to pay is if you're a non-US founder paying a service to file Form SS-4 by fax.
• Filing in NY without budgeting publication. $40–$1,500 surprise depending on county. Plan it before filing.
• Commingling funds. Personal expenses on the LLC card or LLC revenue in the personal account both pierce the liability protection.

Bottom line

Form in your home state, use the state's online filing portal, get the EIN free at IRS.gov, sign a template operating agreement, open the business account at any online business bank. Total time: one afternoon. Total cost: $100–$300 in most states.

If you want the registered agent service handled and the operating agreement drafted for you, ZenBusiness Pro at $199 plus state fee is the best balance. For privacy-first formation, Northwest at $39 plus state fee with the $125/yr RA renewal is the cheapest national option with the strongest no-data-sale posture.

Frequently asked questions

Related guides

• Best states to form an LLC
• Best LLC formation services 2026
• Articles of Organization, explained
• How to get an EIN
• Operating agreement template

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