LLC Registration: How to Form an LLC, Step by Step

LLC registration: how do I start an LLC, step by step?

You form an LLC with a state, not with the IRS: you file articles of organization with the state's business filing office, then handle the federal and banking steps. The IRS asks you to register the LLC with the state before you apply for an EIN. The usual order:

1. Pick the state. In most cases, the state where you live and run the business. You decide; nothing is filed yet.
2. Check the name. It needs an ending such as "LLC" or "Limited Liability Company" (each state lists the endings it accepts) and must differ from names already on the state's records. Search the state's business records.
3. Choose a registered agent. A person or company with a street address in the state who accepts legal papers for the LLC; New York names its Secretary of State instead, and a separate agent is optional. Get the agent's consent first.
4. File articles of organization. Texas and Delaware call it a certificate of formation. File it with the state's business filing office (often the Secretary of State), online or by mail, with the state fee.
5. Sign an operating agreement. The owners' rules on money, votes and exits. It stays with the LLC; it is not filed.
6. Get an EIN. Free from the IRS, after the state approves the LLC.
7. Open a business bank account in the LLC's name. More: business bank account.
8. Register for state taxes and licenses the business needs, such as sales tax, payroll or a local license, with the state tax agency and the city or county.
9. Calendar the follow-ups. Some states start a clock at formation, and an S corporation election is due within 2 months and 15 days after the first tax year begins.

What makes it harder: two or more owners (the LLC files a partnership return by default, and the operating agreement decides who gets what); wanting S corporation tax from the first year (Form 2553 is due within 2 months and 15 days of the start); forming in one state while living or working in another (both states can require filings); a responsible party with no SSN or ITIN, or a business run from outside the US (the online EIN application is not open to either); and a licensed profession (in New York a professional service LLC files different articles, and California does not let an LLC render professional services; see professional LLC or professional corporation).

What to gather before you file:

• The LLC name, with a backup.
• The principal office street address and a mailing address.
• The registered agent's name, in-state street address and consent.
• Each member's or manager's name and address, and who will manage the LLC.
• How ownership and profit are split, if there are two or more owners.
• The responsible party's SSN or ITIN for the EIN.

Which state should I form my LLC in?

Usually the state where you live and work. Forming elsewhere, for example in Delaware ($110 to file) or Wyoming ($100), adds a state rather than replacing yours: California's $800 annual tax applies to every LLC organized or doing business in California. See which state to form in and registering in another state.

What goes on the articles of organization, and who signs?

The articles name the LLC, its registered agent and address, and usually who manages it; an organizer signs. The organizer can be the owner or anyone else. Three state forms show the pattern:

Florida's articles ($125) also need the registered agent's own signature accepting the role, and the LLC cannot be its own agent. Listing the managers or managing members is optional there, but the state notes most banks want them on record to open an account.

Member-managed means the owners run the LLC; manager-managed means named managers do. Pick the one the operating agreement will say. More on agents: registered agent. Fees in every state: LLC cost by state.

How long does LLC approval take, and can I start before it?

It takes days online and longer on paper, depending on the state. Wait for the state's filing receipt before you apply for the EIN, open the bank account or commit to anything in the LLC's name. California lists 5 days or less online and 10+ days for paper forms; check your state's posted times before you file.

The LLC exists once the state files the articles, or on an effective date you choose within the state's limits. Texas allows a date up to 90 days after signing; Florida allows up to 5 business days before or 90 days after filing.

The IRS says an EIN application filed before the state formation may be delayed. New York warns that a name search or reservation is not approval of the name, so make no spending or commitment that relies on the name until the articles are filed.

How do I get an EIN for my LLC, and when?

Apply right after the state approves the LLC. The online application is free and issues the EIN at once if approved; print the confirmation letter for your records. You can use it if the LLC was formed in the US, its principal place of business is in the US, and the responsible party has an SSN or ITIN; if not, see EIN without an SSN. The IRS warns against websites that charge for an EIN.

Enter the name exactly as on the articles, within the IRS character rules: letters, numbers, hyphens and ampersands only. Spell out other symbols or replace them with a space, use a hyphen for a slash, and drop apostrophes. The application names a responsible party, the person who controls the LLC and its assets.

You can use the EIN right away to open a bank account or apply for licenses. Whether a one-owner LLC strictly needs an EIN: EIN for a single-member LLC. Wait times, a stuck application or a name that doesn't match: EIN delayed, lost or not matching.

Do I need an operating agreement, and is it filed?

Some states require one, and it is not filed with the state. New York, for example, requires members to adopt a written operating agreement before, at or within 90 days after filing the articles. With one owner, it is still the written record of who owns and runs the LLC; with two or more, it sets each owner's share of profit, which drives the tax return. Tax terms to include, and whether a one-member LLC needs one: operating agreement tax terms.

What must be done in the first 90 days after forming an LLC?

Open the bank account, register for the state taxes you need, and meet any state clock that starts at formation. The clocks below are examples; your state may have others.

Other states' steps: Texas, New Jersey, Washington, Illinois, Georgia, Massachusetts, Pennsylvania, North Carolina, Virginia, Arizona and Ohio. Every state's yearly fee and report: LLC annual fees and reports by state. For the full after-approval list, see after you form your company; for books from the first transaction, setting up books for a new LLC.

How will the IRS tax my new LLC, and is there an election to make now?

By default, a one-member LLC is disregarded and its income goes on the owner's return; an LLC with two or more members is a partnership. Either can instead elect to be taxed as a corporation or an S corporation.

The S election is the one with a short clock. Form 2553 is due within 2 months and 15 days after the tax year it covers begins; an authorized officer signs it and every member consents. For a new LLC, that first year begins on the earliest of the day it first has owners, first has assets or begins doing business, and an election filed before that day is not valid. A missed deadline is not always final: the instructions give relief to an LLC that files within 3 years and 75 days of the intended effective date and shows reasonable cause. Whether to elect: how LLCs are taxed and S corporation from day one.

Does a new LLC have to file a BOI report?

No. Under FinCEN's final rule, US companies are exempt from beneficial ownership reporting; only certain companies formed under a foreign country's law and registered to do business in a US state still report. Details: BOI report: who still files.

Can I form an LLC by myself?

Yes. The organizer who signs the articles can be the owner, and New York's Department of State says no lawyer is required, while noting that articles have legal effect and operating agreements create enforceable rights. What each route leaves undone: who should form your LLC.

Example

These examples are illustrative; figures are in US dollars.

One owner in Florida

A shop owner files articles online for $125 and names herself as registered agent at the shop's street address. Once the state's records show the LLC, she applies for the EIN online and receives it the same session, then opens the bank account that week. The LLC is disregarded, so its profit goes on her own return. Her first annual report is due between January 1 and May 1 of next year.

Two partners in New York

Two partners file articles for $200 on March 1. They sign a written operating agreement by May 30, within 90 days. They publish the notice in the two newspapers the county clerk designates for six weeks, then file the Certificate of Publication with the affidavits and the $50 fee by June 29, within 120 days. The LLC files a partnership return by default.

One consultant in California

A consultant files Form LLC-1 for $70 on March 10. The Statement of Information is due by June 8, within 90 days. If the LLC keeps its default tax treatment, its first $800 annual tax is due by June 15, the 15th day of the fourth month counting March as the first. If it instead first had assets and began business on March 10 and the consultant wants S corporation tax from the start, Form 2553 is due by May 24: the 2-month period ends May 9, plus 15 days. California then taxes it as a corporation too: it files Form 100S and pays the corporate franchise tax, which has its own $800 minimum, instead of the LLC tax; whether that minimum applies in year one is on California LLC steps.

Different for you?

• Two or more owners: settle the split and the agreement first with splitting ownership between LLC partners and operating agreement tax terms, and get business formation help.
• The two owners are spouses: the default is a partnership return, but community property states have special rules for married owners; see spouse and family LLCs and get business formation help.
• You already run the business as a sole proprietor: see sole proprietor to LLC and get business formation help.
• You want S corporation tax from the first year: the Form 2553 clock starts at formation, and a late election needs IRS relief; see S corporation from day one and get business formation help.
• You will form in one state but live or work in another: see registering in another state and which state to form in, and get business formation help.
• A founder lives outside the US or has no SSN or ITIN: follow US LLC for non-residents, step by step and get cross-border tax help.
• You are a US citizen living abroad: see forming a US LLC while living abroad and get cross-border tax help.
• You are in the US on a visa: see starting an LLC on a visa and get cross-border tax help.
• The LLC is approved and you want the books right from day one: see setting up books for a new LLC and bookkeeping help.