How To Set up an LLC

How To Set up an LLC

Setting up a limited liability company (LLC) can offer entrepreneurs a perfect balance of personal asset protection, flexibility, and simplicity. The process might seem daunting for those who are unfamiliar with business formation. In this article, we’ll provide a step-by-step guide on setting up an LLC and how the best online LLC service providers can get you started. Keep reading to learn more.

Select a Registered Agent


A registered agent is an individual or business that serves as the official point of contact for your LLC, receiving legal documents and correspondence on behalf of the company. Most states require an LLC to appoint a registered agent when filing their formation documents, ensuring there is always a designated person to accept crucial paperwork.

Registered agents must be residents of the state where the LLC is formed and have a physical street address where they can receive documents during regular business hours. Members of the LLC can serve as registered agents, or they can appoint another individual or a professional registered agent service to fulfill this role.

Using a professional registered agent service can offer additional benefits, such as privacy, compliance monitoring, and reliability. These services can even help you set up your LLC, simplifying the process. For instance, USA Today offers information on the best LLC service providers, including LegalZoom, ZenBusiness, Incfile, Rocket Lawyer, and Active Filings.

Choose Your LLC’s Name

The first step in setting up an LLC is to choose the right name for your business. You’ll want to select a unique, memorable, and relevant name that reflects your company’s brand. Be sure to consider the target market and the nature of your business when deciding on a name. Moreover, the chosen name must not infringe on existing trademarks or other names, as this could result in legal issues down the road.

Each state has its own rules regarding LLC names, but generally, they must include LLC, L.L.C., or Limited Liability Company within the name. Be sure to verify the name’s availability in your desired state by checking the state’s official LLC registration website or the Secretary of State’s website. If planning to operate in multiple states, it’s essential to ensure the name is available in each jurisdiction.

Some states allow entrepreneurs to reserve a chosen LLC name for a specific duration—generally between 30 and 180 days—providing time to prepare and submit the necessary paperwork.

File Articles of Organization


Articles of Organization are the legal documents needed to officially register your LLC with the state. While each state has its specific requirements and forms, the information required generally includes the LLC’s name, principal address, registered agent information, and the names and addresses of its initial members.

Filing fees for Articles of Organization vary by state, so check with your state’s LLC filing agency for accurate details. Keep in mind that filing Articles of Organization is just the beginning. You will also need to comply with ongoing state and federal regulations to maintain your LLC’s status.

Some states allow for online submission of Articles of Organization, making the process quicker and more convenient. Once submitted and approved, you will receive a confirmation that your LLC is legally registered and can move forward with completing the remaining steps toward forming your business.

Create an Operating Agreement

An Operating Agreement is an essential document that outlines the rules and regulations governing your LLC. It defines the rights and responsibilities of each member, their ownership percentages, and the decision-making processes within the organization. Although not every state requires an Operating Agreement to be submitted when registering an LLC, it’s still a crucial document to establish and maintain good business practices and protect members’ rights.

Operating Agreements can be customized to meet the unique needs of your business. Consider consulting an attorney or seeking the help of an online business formation service to ensure the Operating Agreement complies with applicable laws and meets your specific needs.

Once the Operating Agreement has been completed, review and approve it along with all members, documenting their acceptance in the form of signed and dated signatures. Keep the signed Operating Agreement accessible and safe for future reference.

Obtain an Employer Identification Number (EIN)

An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a unique identification number assigned by the Internal Revenue Service (IRS) for tax purposes. Most LLCs need an EIN to open a bank account, apply for business licenses, and file taxes. Obtaining an EIN is free, and you can apply online through the IRS website.

Once your LLC has been registered, visit the IRS’s website and complete the EIN application form. You will typically receive your EIN immediately upon submission of the form. Remember to keep your EIN safe and secure, as it’s the primary identification number for your business on various tax and financial documents.

If your LLC has more than one member, the IRS will classify it as a partnership for tax purposes, unless you choose to be taxed as a corporation. Single-member LLCs are generally treated as sole proprietorships for taxation, but they may also choose to be taxed as a corporation if desired. Your accountant or tax advisor can help determine the best tax classification for your business.

Open a Business Bank Account

Opening a business bank account is an essential step for maintaining accurate financial records and keeping personal and business finances separate. A separate account also helps maintain the necessary liability protection for LLC members. To open a business bank account, you will generally need your EIN, Articles of Organization, and Operating Agreement, as well as personal identification documents.

Shop around to find a bank that offers the best services and benefits for your specific business needs, such as low fees, online banking, and access to loans or credit lines. Keep in mind that some banks may have specific requirements for LLCs, such as minimum balance requirements or additional documentation.

Along with a business bank account, consider acquiring a business credit card to further streamline your company’s financial transactions and improve overall financial management. A business credit card also helps build your company’s credit profile.

Apply for Necessary Licenses and Permits


Depending on the nature of your business and the state and local regulations, you may need to obtain licenses and permits to operate legally. Examples include professional licenses, sales tax permits, health and safety permits, and zoning permits.

Contact your state’s business licensing office, or consult a professional advisor to determine which licenses and permits are required for your specific industry and business activities. Additionally, if you plan to hire employees, you will need to comply with state and federal regulations, such as obtaining workers’ compensation insurance and setting up a payroll tax system.

Maintain Your LLC’s Ongoing Compliance

After successfully setting up your LLC, it’s crucial to ensure ongoing compliance with all state and federal regulations. This typically includes filing annual reports, paying applicable taxes, maintaining licenses and permits, and consistently updating the Operating Agreement as needed. Failure to meet regulatory requirements can lead to fines, penalties, and potentially the dissolution of your LLC.

Consider using a registered agent service or a professional business formation service to help stay on track with all ongoing compliance requirements. These services can provide regular reminders about deadlines and alert you to any changes in regulations ensuring your LLC remains in good standing.

Following these steps closely will help ensure the smooth formation of your LLC. Remember to maintain ongoing compliance with state and federal regulations, allowing your business to thrive and grow legally.

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