What an LLC is, in one paragraph
A limited liability company is a business entity created under state law. Its main legal feature is that the company, not the owners, is responsible for the company's debts, so the owners' personal assets are normally protected. Its main tax feature is flexibility: by default the IRS taxes an LLC with one owner together with that owner, and an LLC with two or more owners as a partnership, but an LLC can also choose to be taxed as a corporation. Owners of an LLC are called members.
Decide three things before you file
Most mistakes in forming an LLC come from rushing the decisions that sit before the paperwork.
- Who owns it, and in what shares. One owner or several changes both the tax treatment and what the operating agreement needs to say.
- Which state. The usual answer is the state where you live and run the business. Forming somewhere else often means registering in your home state as well. Our guide on which state to form your LLC in covers when another state makes sense.
- Whether an LLC is the right entity at all. If you expect to raise money from investors or to keep most profits inside the company, a corporation may fit better. See LLC vs S corp vs C corp.
- Whether you need a company yet. See LLC vs sole proprietorship.
The process, step by step
Choose and check the name
Every state requires the name to include "Limited Liability Company" or an abbreviation such as LLC or L.L.C., and to be distinguishable from companies already on the state's register. Search the state's business database before you settle on it. Checking whether the matching web domain and social handles are free saves a later rename. See LLC name rules.
Appoint a registered agent
Every state requires a registered agent: a person or company with a physical address in that state who accepts legal papers on the LLC's behalf. You can act as your own agent if you have an address in the state. Otherwise you hire a commercial agent, who charges a yearly fee.
File the formation document and pay the fee
Most states call it Articles of Organization. Delaware and Texas call it a Certificate of Formation. The form is short: the name, the registered agent, an address, and sometimes the management structure. Filing fees vary widely. Our LLC cost guide compares several states. Timing is covered in how long it takes to form an LLC.
Write an operating agreement
This is the internal contract between the members. It sets out who owns what, how profits are split, who makes decisions, and what happens if a member leaves or dies. Most states do not file it or require you to show it to them, but banks often ask for it, and without one your state's default rules decide those questions for you.
Get an EIN
The employer identification number is the LLC's federal tax ID. The IRS issues it free. If the person in control of the LLC has a Social Security number or ITIN, the IRS online application issues it immediately. See how to get an EIN online, or how to get one without an SSN or ITIN.
Open a business bank account
Keep the LLC's money separate from yours from the first payment. Mixing personal and business funds makes bookkeeping and tax filing harder, and it can weaken the liability protection the LLC gives you. Banks usually ask for the stamped formation document, the EIN, the operating agreement and identification for each owner.
Register for state taxes and licenses you need
Depending on what you sell and where, you may need a sales tax permit, a payroll registration if you hire, and a city or county business license. Selling physical products online can create sales tax duties in several states.
Choose the tax treatment
The default tax treatment applies automatically. If you want the LLC taxed as an S corporation or a C corporation instead, that takes an election filed with the IRS, and it has deadlines.
Put the yearly deadlines in a calendar
Record the state annual report or tax date, the federal return date and any sales tax filing dates. Missing a state filing is the most common way an LLC loses its good standing.
Who can form an LLC
Any adult can file the formation document, and most states let you file online. States do not require the owners to live in the state, and they do not require them to be US citizens. What each state does require is a registered agent with a physical address inside it. Owners living outside the US should read whether a non-US resident can own a US LLC.
Single-member or multi-member
The number of owners matters more for tax than for the state filing.
For the full comparison, including married couples, see single-member vs multi-member LLC.
| One member | Two or more members | |
|---|---|---|
| Default federal tax treatment | Disregarded: the owner reports the profit on their own return | Partnership: the LLC files Form 1065 and gives each member a Schedule K-1 |
| Separate federal return for the LLC | Not usually, unless the owner is a foreign person, in which case Form 5472 applies | Yes, every year |
| What the operating agreement must cover | Management, succession and banking authority | All of that, plus profit shares, voting, and a member leaving or joining |
A single-member LLC owned by someone who is not a US person has an extra annual filing even when it makes no profit. See our Form 5472 guide.
Beneficial ownership reporting
For a period after January 2024, new US companies had to report their owners to FinCEN, the Treasury's financial crimes unit. That requirement no longer applies to US-formed companies. FinCEN exempted them in an interim rule in March 2025 and made the exemption permanent in a final rule issued on August 11, 2026, effective August 14, 2026. Reporting now applies only to certain companies formed outside the US that register to do business here. See who still has to file BOI reports.
Keeping the LLC in good standing
An LLC stays in good standing with its state as long as it keeps a registered agent and files whatever the state requires each year. The requirements differ a lot:
- Wyoming charges an annual report license tax of at least $60, due on the first day of the month the LLC was formed.
- Delaware charges a flat annual tax, $400 under its current form, due June 1.
- Florida requires an annual report between January 1 and May 1, with a $138.75 fee.
- New Mexico has no annual report for LLCs at all.
- California charges an $800 minimum annual tax.
An LLC that misses these filings can be dissolved by the state. Reinstating it usually costs more than the filings would have.
Common mistakes
- Forming in a low-fee state while running the business from a different one. The home state usually still requires registration and its own fees.
- Skipping the operating agreement. It matters most when something goes wrong, which is exactly when it is too late to write one.
- Using a personal account for business money.
- Assuming an LLC means no tax return. The owners still report the profit, and some LLCs file their own returns.
- Forgetting the first annual deadline, which often falls in a month you would not expect.
Where are the state-by-state guides?
Step-by-step formation guides, with each state's fees and deadlines: California, Colorado, Delaware, Florida, Georgia, Illinois, Nevada, New Jersey, New Mexico, New York, Texas, Washington, Wyoming.
Want the whole process handled for you?
We form the LLC in the state you choose, draft the operating agreement, get the EIN and help you open the bank account. One fixed fee, plus the state fee at cost.
Questions people ask
How long does it take to form an LLC?
It depends on the state and how you file. Online filings in some states are approved within a few business days. Wyoming, for example, quotes up to 15 business days for paper filings from the date they arrive.
Do I need a lawyer to form an LLC?
No state requires one. The formation document is short. Where professional help pays off is the operating agreement, especially with more than one owner, and the tax setup.
Does an LLC need its own tax return?
A single-member LLC owned by a US person usually does not, because its profit goes on the owner's return. A multi-member LLC files a partnership return. A single-member LLC owned by a foreign person files Form 5472 with a pro forma Form 1120.
Do I have to report my LLC's owners to FinCEN?
Not if the LLC was formed in the United States. FinCEN's final rule, effective August 14, 2026, permanently exempts US-formed companies from beneficial ownership reporting.
Can I form an LLC in a state where I don't live?
Yes. You need a registered agent with an address in that state. If you run the business from another state, that state will usually expect the LLC to register there as well.
Sources
Every fee, date and rule on this page was taken from these official and primary sources.
- IRS: Get an employer identification number
- FinCEN: Beneficial ownership information reporting
- Wyoming Secretary of State: Business entities frequently asked questions
- Delaware Division of Corporations: Certificate of Formation form, rev. 8/2026
- Florida Division of Corporations: LLC annual report help
- IRS: Instructions for Form 5472
Rules and fees change. If you are reading this long after September 30, 2026, confirm the figures with the source before you rely on them.
Related guides
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This guide is general information. It is not tax or legal advice for your situation.