How to Form an LLC:
The Real 9-Step Process (2026)
Forming an LLC takes about 1-3 weeks of elapsed time and 4-8 hours of actual work. Most online "LLC formation services" charge $200-$500 to do steps that are free or near-free on your own. Here is the honest walk-through, with realistic time and cost estimates for each step.
Step 1: Name Availability Search
Time: 30 minutes. Cost: Free.
Pick a name and check it is available in your state. Every state Secretary of State has a free entity name search on its website. Search for exact matches and for confusingly similar names (eg "Smith Consulting LLC" might block "Smith Consulting Group LLC"). Name reservation is optional in most states; a few states (Pennsylvania, Wisconsin) offer name reservation for $10-$70 holding the name for 30-120 days while you complete the rest of the formation.
Also check the US Patent and Trademark Office TESS database (tmsearch.uspto.gov) for federal trademarks on the name. State LLC name registration only protects the name within the state's filing system, not as a trademark. Federal trademark protection is a separate filing ($250-$350 per class) at the USPTO, worth considering for any name you intend to invest in commercially. Check available domain names (.com, .co, ideally) in parallel; many founders find their preferred LLC name only to discover the matching domain is taken or premium-priced.
Step 2: Registered Agent Decision
Time: 15 minutes. Cost: $0 (self) or $100-$300/year (commercial service).
Every LLC must have a registered agent in the state of formation. The registered agent has a physical address in the state (not a PO box) where legal documents and state correspondence can be served during business hours. You can be your own registered agent in your state of formation if you have a physical address there and are reliably available during business hours. The cost is zero but your address becomes public record.
Commercial registered agent services (Northwest Registered Agent, InCorp, ZenBusiness, IncFile / Bizee, Harvard Business Services) charge $100-$300/year. The benefits: their address is on public record instead of yours (privacy for home-based businesses), they reliably forward mail and legal documents, they handle state filing reminders. For most home-based small business owners the $100-$200/year for a registered agent service is worth it for the privacy alone. Out-of-state founders forming in another state (eg forming a Wyoming LLC while living elsewhere) must use a commercial registered agent because they have no physical presence in the formation state.
Step 3: File Articles of Organization
Time: 30-60 minutes. Cost: $40-$500 depending on state.
The Articles of Organization (called Certificate of Organization in Massachusetts and some other states; Certificate of Formation in Delaware and Texas) is the document that legally creates the LLC. Each state has its own form, but the contents are similar: LLC name, registered agent name and address, principal office address, organisation type (member-managed or manager-managed), and signature of organiser. State filing is generally online through the Secretary of State portal. Processing times range from same-day (Delaware, for an additional rush fee) to 4-6 weeks (some less-automated states during peak times).
Filing fees vary by state: $40 (Kentucky) to $500 (Massachusetts and Tennessee). The full 50-state comparison is on our cost comparison page. Some states offer expedited service for an additional fee, typically $50-$200 for 24-hour processing. For most non-urgent formations, standard processing is fine and saves the expediting fee.
Step 4: Operating Agreement
Time: 1-3 hours. Cost: $0 (template) to $1,500 (attorney-drafted).
An operating agreement is the LLC's internal governance document. It specifies how the LLC is managed, how profits and losses are allocated, how members are admitted or removed, what happens on dissolution. Most states do not legally require an operating agreement to be filed, but having one in writing is best practice and is often required by banks when opening business accounts.
For single-member LLCs the operating agreement can be a 2-3 page document covering the basics. Templates are available from the Small Business Administration (sba.gov), many state bar associations, and operatingagreementtemplate.com among others. For multi-member LLCs the operating agreement is meaningfully more important because it governs the relationships between members and any disputes that might arise; attorney-drafted operating agreements for multi-member LLCs typically cost $800-$2,500 depending on complexity. The investment is generally worth it for any LLC with more than one member.
Step 5: Get an EIN from the IRS
Time: 10 minutes. Cost: Free.
The Employer Identification Number is the LLC's federal tax ID, equivalent to a Social Security Number for the business. Apply directly at irs.gov (search "EIN online application") for free; the application is interactive, takes about 10 minutes, and assigns an EIN immediately. Do not use third-party services that charge $50-$150 for this; the IRS does it for free in the same amount of time.
The online EIN application is only available to applicants whose principal business is in the US. For non-US-resident applicants the application is by phone, fax, or mail using Form SS-4, which takes longer. Once issued, the EIN is permanent and does not need renewal. The EIN appears on your 1040 Schedule C (if disregarded SMLLC), on bank account applications, on W-9 forms you provide to clients, and on annual partnership or corporate returns if the entity has elected those classifications.
Step 6: Open a Business Bank Account
Time: 1-2 hours plus 1-2 weeks bank processing. Cost: $0-$25/month account fees.
Separating business and personal finances is essential for LLC liability protection (mixing accounts is one of the most common bases for veil-piercing). Open a business checking account using the EIN, Articles of Organization, and operating agreement. Major bank options: Chase Business Complete Checking ($15/month, fee waivers for activity), Bank of America Business Advantage ($16-$30/month tiered), Wells Fargo Initiate Business Checking. Online-first options often have no monthly fee: Mercury, Relay, Novo, Bluevine, Brex (for tech startups, with revenue requirements).
Get a separate business credit card too. Major options include Chase Ink, American Express Business Platinum, Capital One Spark, Bank of America Business Advantage Cash Rewards, and several others. Separate cards make Schedule C bookkeeping dramatically easier at tax time. Aim to apply within 6-12 months of the EIN issuance; many cards consider business age and revenue history in approval decisions.
Step 7: State and Local Business Licences
Time: 30 minutes to 2 hours per licence. Cost: $0-$500 per licence.
Many states and most cities require business licences in addition to LLC formation. Nevada has a $200 annual state business licence required of nearly all businesses. Washington requires a state business licence ($90) for most activities. Most cities (Los Angeles, San Francisco, New York City, Chicago, Atlanta, Boston, Denver, Seattle) require local business licences with fees ranging from $25 to $1,000+ depending on industry and revenue. Profession-specific licensing (contractors, food service, alcohol, healthcare, real estate) adds more.
Check your state Department of Revenue or Department of Commerce for state-level requirements, and your city clerk or business licence office for local requirements. The Small Business Administration's free business licence wizard at sba.gov provides a state-by-state checklist. Most home-based service businesses without retail sales or regulated profession requirements can get away with just the state-level LLC formation and city home-occupation permit (often free for low-impact home businesses).
Step 8: Set the Annual Report Calendar
Time: 15 minutes to set up calendar reminders. Cost: $0-$800/year depending on state.
Most states require an annual report (or biennial, or periodic) filing to confirm the LLC's current contact information and pay any state fees. The deadline is typically the anniversary of formation or a fixed calendar date depending on state. Annual report fees range from $0 (Arizona, Ohio, Mississippi, Missouri, others) to $800 (California minimum franchise tax, technically a tax not a report fee). Missing the deadline incurs late fees and, if extended, administrative dissolution of the LLC.
Set calendar reminders for 30 days before and 7 days before your state's annual deadline. Use a commercial registered agent (Northwest, etc) and they will typically send filing reminders too. Most state online portals make the filing 5-10 minutes once you know the password to your account. Treat this as a recurring annual chore on the same scale as filing your personal tax return. Administrative dissolution due to missed annual reports is one of the most common reasons LLCs fail to maintain liability protection; do not let it happen.
Step 9: File the Federal BOI Report
Time: 30-60 minutes. Cost: Free (direct filing) or $50-$300 (commercial service).
The Corporate Transparency Act (CTA) introduced a federal beneficial ownership information (BOI) filing requirement administered by the Financial Crimes Enforcement Network (FinCEN). LLCs and other reporting companies must disclose information about their beneficial owners (individuals with substantial control or 25%+ ownership interest). The filing is online at fincen.gov, takes 30-60 minutes, and is free.
The CTA has been subject to several court challenges and legislative changes through 2024-2026. Specific deadlines and applicability have shifted multiple times. As of mid-2026, BOI filing is generally required for domestically-formed LLCs with the deadlines varying by entity formation date. Failure to file when required carries civil penalties of $500/day up to $10,000, plus criminal penalties for wilful non-compliance. The filing is not public; it goes to FinCEN's secure database. Check current FinCEN guidance at fincen.gov before filing because the rules continue to evolve.
Total Time and Cost Summary
For a typical single-member LLC formed in a moderate-cost state (say, Ohio with $99 filing, $0 annual report, $50 registered agent service annual):
- Total time (active work): 6-10 hours spread over 2-4 weeks.
- Total year-1 cost (DIY): Filing fee $99 + registered agent $50 + bank account $0-$25/month + EIN free + operating agreement template free = roughly $150-$200 year one.
- Total year-1 cost (via formation service): $300-$700 if you use ZenBusiness, Bizee, Northwest Registered Agent, or LegalZoom for the formation paperwork. The formation service is convenient but is doing steps you could do yourself in a few hours.
- Ongoing annual cost: Registered agent service ($50-$300/year if used), annual report fee (state-dependent), and any state business licence renewals.