How to Start an LLC in 2026: The Complete Step-by-Step Guide

The limited liability company is the default legal structure for new American businesses, and for good reason: it is the cheapest way to put a legal wall between your business and your personal savings, house, and car. Roughly three quarters of new formation filings in most states are LLCs, ahead of corporations, partnerships, and every other entity type.

It is also simpler than most founders expect. Forming an LLC is one document filed with one state agency, plus a short list of follow-up tasks that this guide covers step by step. You do not need a lawyer for a standard formation, and the state fee is a one-time cost between $35 and $520 depending on where you file.

What trips founders up is not the filing. It is the decisions before it (which state, what name, who manages) and the obligations after it (operating agreement, EIN, licenses, annual reports). Skip those and the LLC either fails to protect you when it matters or gets administratively dissolved by the state within a year or two. This guide covers the entire arc, with current fees for all 50 states and the specific mistakes that cost real money.

What an LLC Is and Why Founders Choose It

A limited liability company (LLC) is a state-registered business entity that legally separates the business from its owners, called members. If the LLC is sued or cannot pay its debts, creditors can generally reach only the LLC's assets, not the members' personal property. Profits pass through to the members' personal tax returns by default, so the entity itself pays no federal income tax.

That single paragraph explains most of the LLC's popularity, but it is worth unpacking the four specific advantages that drive the choice:

1. The liability shield. A sole proprietor and their business are legally the same person. One slip-and-fall claim, one unpaid vendor, one delivery-van accident, and personal assets are on the table. The LLC breaks that chain. Courts respect the separation as long as you maintain it, which is why the operating agreement and a separate bank account in the steps below are not optional extras.

2. Pass-through taxation without corporate formalities. A default LLC files no separate federal income tax return at the entity level (single-member LLCs report on Schedule C; multi-member LLCs file an informational Form 1065). There is no board, no required annual shareholder meeting, and no corporate minute book. When profits grow, an LLC can also elect S-corporation tax treatment to reduce self-employment tax, a move covered in our Form 2553 guide.

3. Credibility and contracts. Banks, payment processors, wholesale suppliers, and commercial landlords treat a registered entity differently from an individual. Many will not open business accounts or sign leases without one. Government and enterprise contracts almost always require it.

4. Flexibility. An LLC can have one member or hundreds, be managed by its members or by hired managers, and split profits in almost any proportion the members agree to. Corporations are far more rigid on all three points.

The honest comparison matters too. An LLC costs money that a sole proprietorship does not, both at formation and every year afterward in annual report fees and franchise taxes. If you are testing an idea with no revenue, no employees, and no meaningful liability exposure, staying a sole proprietor for a few months is defensible. Our LLC vs sole proprietorship comparison covers exactly where the crossover point sits, and LLC vs C-corporation covers the venture-capital case where a corporation wins.

Three Decisions to Make Before You File

The filing itself takes twenty minutes. These three decisions are what deserve your attention, because two of them are expensive to reverse.

Decision 1: Which state

For most founders the answer is the state where the business actually operates, full stop. An LLC formed in another state must still register in your home state before doing business there, a second filing called foreign qualification that comes with its own fee, its own registered agent requirement, and its own annual report. The Delaware or Nevada formation that internet forums recommend usually means paying two states forever instead of one.

The real exceptions: startups raising institutional capital (investors expect Delaware entities and often require conversion anyway), non-US founders with no home state (Wyoming, Delaware, and New Mexico are the common picks), and holding companies formed purely to own assets in a specific state. If none of those describes you, form at home.

Decision 2: What name

Every state applies the same two tests. The name must be distinguishable from every entity already registered in that state, and it must include a designator such as "LLC," "L.L.C.," or "Limited Liability Company." States also restrict words like "bank," "insurance," and "university" without regulatory approval.

Search the state's business database before you get attached to anything; our name availability tool checks it in seconds. Two more checks worth five minutes each: the USPTO trademark database (a state approving your name does not protect you from a federal trademark claim; see our trademark guide) and domain availability. If your filing date is weeks away, most states will reserve a name for a small fee, typically $10 to $50 for 30 to 120 days.

Decision 3: Who manages

Articles of Organization in most states ask whether the LLC is member-managed (every owner can sign contracts and bind the company) or manager-managed (only designated managers can). Single-member LLCs and small partnerships almost always choose member-managed. Choose manager-managed when there are passive investors who should not have signing authority, or when you want a non-owner running daily operations. This choice appears on the public record and flows into your operating agreement, so decide it now rather than amending later.

The 8 Steps to Start an LLC

Here is the entire process at a glance, followed by the detail for each step. The same sequence works in all 50 states and DC; only the fees, form names, and processing times change.

Step 1: Confirm your formation state

If Decision 1 above pointed you home, this step is done. If you operate in multiple states, form in the state with your primary operations, then foreign qualify in the others once you have employees, offices, or regular in-person business there. Selling online into a state does not by itself usually require registration; physical presence and payroll usually do.

Step 2: Run the name search and lock your name

Search the exact name and close variants in the state's entity database. States apply "distinguishable on the record" strictly: punctuation and designators do not count as differences, so "Summit Consulting LLC" will be rejected if "Summit Consulting, Inc." exists. If you plan to operate under a brand different from the legal name, that is a DBA registration, a separate filing in most states after the LLC exists.

Step 3: Appoint a registered agent

Every state requires the Articles to name a registered agent: a person or company with a physical street address in the state (never a PO Box), available during normal business hours to accept lawsuits, state notices, and tax correspondence. You can serve as your own agent if you meet those requirements, but the address goes on the permanent public record and a missed delivery can mean a default judgment or administrative dissolution. The trade-offs are covered honestly in Should You Be Your Own Registered Agent? and the full market landscape in our registered agent guide. Commercial services run $100 to $300 per year; File.Business charges $149/year and includes the first year free with a new formation.

Step 4: File the Articles of Organization

This is the formation. The document is called Articles of Organization in most states (Certificate of Formation in Texas and Delaware, Certificate of Organization in a few others), and it is filed with the Secretary of State or the state's equivalent agency, almost always through an online portal. Expect to provide: the LLC name, principal address, registered agent name and address, management structure, organizer signature, and in some states the members' names and the business purpose. A general purpose clause ("any lawful business") is acceptable nearly everywhere.

Pay the state fee (full table below), submit, and the state returns stamped Articles once approved. That stamped document plus your EIN is what banks ask for. If you are comparing this filing to its corporate cousin, see Articles of Organization vs Articles of Incorporation.

Step 5: Adopt an operating agreement

The operating agreement is the LLC's internal constitution: who owns what percentage, how profits split, who can sign, what happens when a member wants out, dies, or divorces. It is not filed with the state. California, Delaware, Maine, Missouri, and New York legally require one, but the practical requirement is universal: banks ask for it, and in a dispute or an audit it is the primary evidence that the LLC is a real, separate entity rather than an alter ego of its owner. Single-member LLCs need one for exactly that reason. Start with Operating Agreement Essentials, then the state-specific guides, and see Do You Need an LLC Operating Agreement? if you are tempted to skip it.

Step 6: Get your EIN from the IRS

The Employer Identification Number is the LLC's federal tax ID. It is free, and the only official source is the IRS EIN application, which issues the number immediately online for applicants with an SSN or ITIN (non-US founders apply by fax or mail using Form SS-4; see our guide for foreign founders). Never pay a third party that markets "EIN filing" as a standalone $75 to $300 product; you are buying a free government service. The complete walkthrough, including the SS-4 fields that confuse people, is in The Ultimate Guide to EINs, and File.Business includes EIN filing with formations.

Step 7: Licenses, permits, and tax registrations

Forming the LLC registers the entity; it does not license the activity. Requirements stack across three levels: state (professional and industry licenses, seller's permits), county and city (general business licenses, zoning, health permits), and federal for regulated industries (alcohol, firearms, transportation, broadcasting). If you sell taxable goods or services, register for a sales tax permit in each state where you have nexus. The SBA's license lookup is the best federal starting point, and our business license lookup covers state and local layers.

Step 8: Open the bank account and set up compliance

Open a dedicated business checking account with the stamped Articles, the EIN letter, and the operating agreement. Run every business dollar through it. Commingling personal and business funds is the single most common reason courts disregard the liability shield ("piercing the veil") and reach personal assets.

Then set up the recurring obligations before they can surprise you: calendar the state's annual report deadline, note any franchise tax, and check the current status of federal beneficial ownership reporting. Under FinCEN's March 2025 interim final rule, LLCs formed in the United States are currently exempt from BOI reporting, and only certain foreign-formed companies must file; the requirement has changed more than once, so verify the current rule in our BOI status tracker or directly at fincen.gov/boi. A compliance monitoring service automates all of this per entity, per state.

LLC Filing Fees in All 50 States

Starting an LLC costs between $35 (Montana) and $520 (Massachusetts) in one-time state filing fees, and the median state charges $100. The table below shows the state formation fee and the recurring annual cost (annual report, franchise tax, or equivalent) for every jurisdiction. Fees are passed through at cost when you file with File.Business; each state name links to a full cost breakdown.

Four states need footnotes. California's recurring figure includes the $800 annual franchise tax that every California LLC owes beginning in its first tax year, plus the $20 Statement of Information. Delaware LLCs pay a flat $300 annual tax by June 1 with no annual report. Texas shows $0 because most small LLCs owe no franchise tax, but the annual franchise tax filing (including the Public Information Report) is still mandatory by May 15. New York's $9 biennial statement hides the real cost: new LLCs must publish formation notices in two newspapers for six weeks within 120 days, which runs from roughly $300 to over $1,600 depending on the county. Full comparisons live in our LLC cost by state tool.

How Long LLC Formation Takes

Most states approve an online LLC filing in one to five business days, and a growing number approve the same day. Paper filings and a handful of slower states stretch to two to four weeks. Nearly every state sells expedited processing, from 24-hour service for $25 to $100 up to same-hour service for several hundred dollars in Delaware and Nevada.

The practical takeaway: a founder who starts on Monday in a fast state can be invoicing under the LLC with a business bank account by Friday. The long pole is rarely the state; it is usually license approvals and bank onboarding.

Your First Year of LLC Compliance

Formation is a moment; compliance is a schedule. Every state expects a recurring filing that confirms the LLC's address, agent, and ownership, and most attach a fee. Miss it and the state moves the entity from good standing toward administrative dissolution, usually within months.

The first-year checklist for a typical LLC:

Annual (or biennial) report. Deadlines vary wildly: fixed dates like Florida's May 1, anniversary-based dates, and biennial schedules in states like California and New York. Look yours up in annual report deadlines by state and file through the state portal or an annual report service. Late fees range from $25 to Florida's $400.

Franchise and entity taxes. California's $800 is due in year one; Delaware's $300 is due June 1; Texas requires the franchise report even at $0 owed. These are entity-level obligations separate from income tax; see what franchise tax is.

Federal and state income tax setup. A single-member LLC files Schedule C with the owner's 1040 and pays quarterly estimated taxes; multi-member LLCs file Form 1065 and issue K-1s. If profits are consistently strong, evaluate the S-corp election before the March 15 deadline for the tax year.

BOI status check. Domestic LLCs are currently exempt under the March 2025 interim final rule, but the requirement has already changed twice; check the current status once a year.

License renewals and registered agent continuity. Local licenses typically renew annually, and your registered agent must remain valid every day the entity exists; a lapsed agent is a dissolution trigger.

This is the category of problem compliance monitoring exists to eliminate: every deadline for every entity in every state, tracked automatically, with filings prepared before they are due.

Common LLC Formation Mistakes

Six mistakes account for most of the expensive problems we see in new LLCs. Each is avoidable at formation for free.

Three Real-World Formation Scenarios

How File.Business Forms Your LLC

Everything in this guide is doable yourself, and this guide is written so you can. What File.Business changes is the error rate and the follow-through. We run the name check against the state record, prepare and file the Articles with the state fee passed through at no markup, include the first year of registered agent service, file the EIN, and generate the operating agreement. Same-day filing is available in most states, backed by a 60-day money-back guarantee.

After approval, the entity lands in a workspace where compliance monitoring tracks the annual report, franchise tax, and license deadlines automatically, and BosAI answers the "what does my state require next" questions this article can only answer generally. Formation is the front door of a system built to keep the entity alive, not a one-time transaction.