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How to Form an LLC

LLC requirements vary state by state, and it’s important that you are well-versed in your specific state laws before proceeding. Generally, it comes down to these five basic steps:

  1. Name Your LLC
  2. Choose a Registered Agent
  3. File the Certificate of Formation/Articles of Organization
  4. Get an Operating Agreement
  5. Apply for an EIN and Review Tax Requirements

Forming a limited liability company may seem daunting and overwhelming, but it can be relatively straightforward once you have a clear understanding of how it works. In this comprehensive guide to forming your own LLC, we break it down so that you can understand everything there is to know about how to start an LLC and move forward most efficiently and effectively. Giving you the confidence and knowledge on how to set up an LLC.

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1. Name your LLC

Now that you’ve decided you want to form an LLC (definition), it’s time to bring your dream to life with its own name — and yes, it must be unique. When naming your LLC, you must choose something completely different from any other limited liability company in your state.

The rules as to how different your LLC’s name must be from others vary state by state. Although sometimes all it takes is switching up the punctuation or changing a word from singular to plural to qualify, it’s usually a smoother process when the names are more distinct. However, one component that is always required is the inclusion of “limited liability company” or an abbreviation of it at the end of the business name. The acceptable abbreviations also vary by state.

Perform a business name search online

It’s important to do your research to check if your desired business name is available. Google is helpful, as is checking around on social media, but you will also want to complete a business database search on your Secretary of State website.

Your LLC name needs to be different from other LLCs, and it also cannot be previously trademarked. There are two kinds of trademarks to be aware of: federal and state. Visit the U.S. Patent and Trademark Office (USPTO) and search your business name or logo to make sure it hasn’t been federally trademarked.

Determining whether your desired business name already has a state trademark is trickier because many states don’t have a search engine for checking existing trademarks. Fortunately, the USPTO has a page linking to the office overseeing trademarks in each state. You can start by contacting the appropriate office in your state.

Registering a Trademark

Once you’ve determined that it’s available to use, you have the option of registering your own trademark. A state trademark is less expensive and much less complicated to get; however, it does restrict your trademark benefits to the state it’s recognized in.

On the other hand, federal trademarks are more costly and can take longer to get, but you can use your trademark nationwide, and there is much more protection provided for your company. Federal trademarks also allow for the ® symbol, whereas state trademarks only allow TM (trademark) or SM (service mark). Trademarking your LLC can keep other businesses from using the same name or anything too similar.

Registering a DBA Name for Your LLC

There is also an option to add a DBA name (“doing business as”) to your LLC. A DBA is just another name to call your business and can be very useful if your LLC offers multiple products or services. It can help differentiate between their specific business concerns.

Each state has different regulations when it comes to naming an LLC. You will often find that certain words are prohibited, including those that are considered profane or obscene or that may mislead people about the nature of the business. Some words are restricted in most states, such as “bank” and other forms of the word (“banking” and “banker”), “engineering,” “insurance,” and “savings.” In some states, business owners who wish to use words such as these must have a certain license and/or fill out additional paperwork.

You’ve spent time coming up with a name for your limited liability company and researching its availability — now you can think about securing it. Most states will allow you to reserve your desired name for a fee so that you don’t have to worry about someone else nabbing it before you can officially launch your business. Check with your state on the requirements to reserve your business name. Then, go one step further and reserve a domain name for your company website, so you have that set up and ready to go as soon as your business can launch.

2. Choose a Registered Agent

registered agent essentially acts as the liaison between an LLC and the state it’s registered in. This third-party individual or business entity acts as a point of contact on behalf of the business and receives things like tax forms and legal documents, government correspondences, and notices of a lawsuit.

You can be your own registered agent so long as you have a physical street address in the state in which your LLC is filed (P.O. boxes aren’t allowed); however, hiring an outside registered agent service has its benefits.

It allows you to have more privacy and flexibility and can decrease the added stress that can come with being your own agent. Using a third-party registered agent service, such as the one offered at ZenBusiness, ensures that you are compliant with the law, always protected, and strategically organized.

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We can serve as your registered agent. Simply click the button above to form your LLC and sign up for our registered agent service.

3. File the Certificate of Formation / Articles of Organization

The official name for the paperwork filed to register your business depends on which state you are filing it in. Generally, the document is referred to as the Articles of Organization, but some states refer to it as a Certificate of Formation or Certificate of Organization. Regardless of what it’s called, the concept is the same: It is used to establish state recognition of the LLC and outline the details of its members.

Filing Requirements

Check your Secretary of State’s website to see the filing requirements, as these also vary state by state. You’ll always need basic information about the LLC and its members, including the LLC name and mailing address and the registered agent’s name and address. You might also be asked to state the purpose of the LLC and list any current LLC members and/or managers.

A few parts of the form might be unfamiliar to someone who is just entering the business world. You may be asked whether your LLC is member-managed or manager-managed. In a member-managed LLC, the members take it upon themselves to handle day-to-day operations and decide who’s responsible for what. In a manager-managed LLC, one or more supervisors are chosen by the members to be in charge.

You will also need to list the location of operations, which should be the place in which members work together. If the business is operated from a private home, list your home address. If mail is not deliverable to the place of work, make sure to include a USPS-verified mailing address.

The final, and most important, step is having an organizer of the LLC sign the form. Then, you are all set to submit it. In most states, this can be done online or by mail. Any instructions for submitting the signed form and payment can be found on your Secretary of State’s website.

View our step-by-step guide on how to file your Articles of Organization.

4. Get an Operating Agreement

Although LLC Operating Agreements are not required in every state, it’s a smart business move to have one. This legally binding document provides clear and concise definitions of all ownership terms and rules or management decisions. An operating agreement protects owners’ personal assets and outlines ownership percentages, responsibilities, voting power, and a succession plan if an owner decides to leave the business.

Having an Operating Agreement can prevent any miscommunication and resolve any conflicts between members. It is not required by law to file an LLC Operating Agreement with the Secretary of State, so once all parties have agreed upon the terms and signed it, it’s advisable to keep the document safe and secure with other important paperwork.

Create an LLC Operating Agreement Online

Utilizing an Operating Agreement template can set you up for success regarding having the right business structure and format for this important document. ZenBusiness offers various plan options that include a customizable LLC Operating Agreement template at a very reasonable price.

5. Apply for an EIN and Review Tax Requirements

After officially forming your LLC, you should consider registering it with the federal government by applying for an Employer Identification Number (EIN) from the IRS.

An EIN is the business equivalent of a personal Social Security number and is required if your LLC has multiple partners or employees. It’s free to apply for a Federal Tax ID Number aka EIN (Employer Identification Number) and can conveniently be done on the IRS website. When done online, the EIN is issued immediately.

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Limited Liability Company FAQs

  • How much does it cost to form an LLC?

    The costs to file an LLC vary state by state. Generally speaking, the filing fees can range anywhere from $40 to $500. In most states, you can file an LLC online using a credit or debit card or by mail with a check or money order. Visit your Secretary of State’s website to find all of the LLC filing fees associated with your particular state.

    In addition to the filing fee, some states also require business license fees, publication fees, name reservation fees, and other filing fees. There are also recurring costs that are required to maintain your LLC. These can include filing annual or biennial reports, license and permit renewals, and franchise taxes.

    But the biggest cost in launching your LLC may be in time and energy. Having a service that already knows the ins and outs of forming and running a business not only saves you time but also eliminates the stress and frustration of wrestling red tape and government bureaucracy. ZenBusiness can file your paperwork for you, provide a registered agent service, and supply an Operating Agreement template for one low price.

  • What is the processing time to form my LLC?

    It varies by state, but the standard time frame is two to three weeks from when the state receives your limited liability company documents, whether online or by mail, but can be expedited for an additional fee.

  • Where should I form my LLC?

    It is usually best to form an LLC in the state where your business is located.

  • Do I need a lawyer to form an LLC?

    No. You can form an LLC by yourself. There is no requirement to use a lawyer. Sign up with ZenBusiness today for expert help navigating the process.

  • Do LLCs get a 1099?

    If your LLC is filed as a corporation, you won’t need a 1099 for the business. However, if your LLC employs independent contractors, you will need to file 1099 forms for these individuals.

  • How do I dissolve my LLC?

    The steps may vary state to state, so check your state’s LLC dissolution procedures. Generally, the timeline is the same. You must file the Articles of Dissolution with your Secretary of State, and then file cancellations in any other states that your LLC does business in.

    Next, you must file your final tax return, pay any final payroll taxes, and close your EIN. There is a lot of paperwork and steps involved in the process. ZenBusiness can help ensure that you successfully dissolve your LLC without any hiccups along the way.

  • Can an S corporation own an LLC?

    Yes. Since an S corporation is a business entity, it can be the owner (or a member of) an LLC, but an LLC cannot own an S corporation — only individuals can own an S-Corp.

    However, an LLC can be taxed as an S corporation if it meets an S corporation’s eligibility requirements, which include having a limited number of shareholders who are U.S. citizens. To find out if your LLC is eligible, sign up with ZenBusiness today.

  • Can an LLC be a nonprofit?

    Yes, but it’s not all that common. Certain requirements must be met, and it can be a little confusing to understand all of the legalities. It’s always wise to seek a legal and/or financial professional when considering these questions.

  • Does an LLC make sense for me?

    When setting up an LLC there are different types of business models to consider when starting your own company. How do you know if an LLC is the best choice for you? Let’s compare the various options you have, as to how to create an LLC for your best purposes.

    S Corporation vs. LLC

    Rather than a business entity itself, an S corporation is a federal tax election. A C corporation or an LLC can apply to be an S-Corp. An S corporation is much like an LLC in that it protects its owners’ personal assets and avoids double taxation. Learn more about S corporations vs LLCs.

    Sole Proprietorship vs. LLC

    Operating a business as a sole proprietor is relatively low-cost and straightforward, but there is no liability protection like an LLC offers. Compare LLCs and sole proprietorships.

    The major difference between operating as a sole proprietorship versus an LLC is the separation between personal and business. Personal assets are kept separate in an LLC, whereas a sole proprietor’s personal and business expenses are the same. If someone sues the business, they can go after your personal savings and property.

    General Partnership vs. LLC

    Here, you are dealing with formalities. Forming an LLC requires several specifics, including paperwork that is drafted and filed with the Secretary of State and paying the filing fee. When forming a partnership with someone, it requires a much less formal agreement between the two parties.

    Visit LLC vs. Partnership for a full comparison.

    Limited Liability Partnership (LLP) vs. LLC

    An LLP operates as an LLC in that it provides limited liability, but an LLP provides it to a different extent. With an LLC, all members are protected from being personally responsible for any business debts or lawsuits. In contrast, an LLP only provides liability protection to each partner for their direct investment. Compare LLC vs. LLP in more detail.

    LLC vs. C Corp

    Like an LLC, a C corporation has liability protection, but it does not protect its owners from double taxation. C corporation owners pay corporate and personal income tax. Learn more about LLCs vs. C corps.

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