Everything you need to know about starting a limited liability company in any U.S. state, from filing to compliance.
A Limited Liability Company (LLC) is a business structure that combines the liability protection of a corporation with the tax flexibility of a partnership or sole proprietorship. LLC owners (called "members") are shielded from personal liability for business debts and lawsuits, meaning creditors generally cannot go after your personal assets like your home, car, or savings accounts to satisfy business obligations.
LLCs are the most popular business structure in America for good reason. They are simpler to form and maintain than corporations, offer pass-through taxation by default (avoiding double taxation), and provide significant flexibility in how profits are distributed and management is structured. Whether you are a solo freelancer, a small business owner with partners, or a real estate investor, an LLC is likely the right structure for your needs.
While requirements vary slightly by state, every LLC formation follows the same general steps:
Most people should form their LLC in the state where they live and conduct business. Forming in a "business-friendly" state like Delaware or Wyoming sounds appealing, but if you operate in a different state, you will need to register as a foreign LLC there anyway, paying double the fees. Forming in your home state is almost always the right call for small businesses.
Your LLC name must be unique within your state and include an LLC designator ("LLC," "L.L.C.," or "Limited Liability Company"). Search your state's business registry to confirm availability. Consider reserving the name while you prepare your filing, though not all states offer this option.
Every state requires a registered agent with a physical address in the state who can receive legal documents on behalf of your LLC during business hours. You can serve as your own agent in most states, or hire a professional service for $100 to $150 per year.
Submit your formation document (called "Articles of Organization" in most states, "Certificate of Formation" in some) to your state's Secretary of State or equivalent office. This is the document that legally creates your LLC. Filing fees range from $40 (Kentucky) to $500 (Massachusetts).
While not required in most states, an operating agreement is essential for defining ownership percentages, profit distribution, management structure, and procedures for adding or removing members. Banks often require one to open a business account.
Apply for a free Employer Identification Number from the IRS at IRS.gov. You need an EIN to open a business bank account, hire employees, and file federal taxes. The online application takes about 10 minutes and provides your EIN immediately.
Separate your personal and business finances by opening a dedicated business checking account. This is critical for maintaining your liability protection and makes tax time significantly easier. Most banks require your Articles of Organization, EIN confirmation, and operating agreement.
Every state has unique rules that affect your LLC. Here are the key variables to research for your state:
Northwest Registered Agent handles all the paperwork for $39 + state fee. Includes free registered agent service for the first year, privacy protection, and compliance alerts.
Start My LLCBy default, a single-member LLC is taxed as a sole proprietorship and a multi-member LLC is taxed as a partnership. In both cases, profits "pass through" to the owners' personal tax returns. You report business income on Schedule C (single-member) or receive a K-1 (multi-member) and pay income tax at your personal rate plus self-employment tax of 15.3% on net earnings.
LLCs can also elect to be taxed as an S-Corporation or C-Corporation by filing the appropriate IRS form. S-Corp election is popular for profitable businesses because it can reduce self-employment tax by allowing owners to pay themselves a "reasonable salary" and take remaining profits as distributions not subject to SE tax. This strategy typically becomes beneficial when net business income exceeds $50,000 to $75,000.
Use our state tax calculators to see how your LLC income will be taxed in your specific state, including both federal and state brackets.