How to form an LLC

Forming an LLC is a state filing, done in an afternoon in most states. The work that follows, a tax ID, an operating agreement and a report every year or two, is what owners forget. The filing fee is often the smallest cost: the yearly taxes and reports after it add up to more within a few years.

1. Pick the state and the name

Most owners form the LLC in the state where they live and work. Forming elsewhere, such as in Delaware, can mean registering in your home state as well and paying two sets of fees.

The name must be available in the state's business records and include "LLC" or a permitted variation. Most Secretary of State websites have a name search.

2. Name a registered agent

Every LLC needs a registered agent: a person or company with a street address in the state who accepts legal papers and state notices for the business. California requires an individual who lives in the state or a registered corporate agent. Delaware requires agents to keep a street address and office in Delaware.

You can be your own agent if you live in the state. Commercial agents charge a yearly fee for the service, and some owners use one to keep their home address off the public record.

3. File the articles of organization

The formation document goes by different names: articles of organization in California, a certificate of formation in Texas and Delaware. It asks for the LLC's name, address, registered agent, and whether members or managers run it. Fees for a standard filing:

Each state page on StructureCost lists the fee and the official source.

New York adds a step. Section 206 of its LLC Law requires the new LLC to publish a notice once a week for six weeks in two newspapers chosen by the county clerk, within 120 days, and file proof with the Department of State. Skip it and the LLC's authority to do business in New York is suspended. In some counties the newspaper bill runs far higher than the filing fee.

4. Get an EIN

An EIN is the business's federal tax ID. The IRS EIN page says "You never have to pay a fee for an EIN." You apply online at IRS.gov. You need the Social Security number or ITIN of the responsible party, and the IRS issues only one EIN per responsible party per day.

Banks ask for an EIN to open a business account, and you need one for payroll or an S election. Get it right after the state approves the LLC. Sites that charge for an EIN are selling a free form.

5. Write an operating agreement

The operating agreement sets out who owns what share, how profit is split, who makes decisions, and what happens if a member leaves or dies. For a single-member LLC it is short. For a multi-member LLC it is the document that settles fights later.

It is usually kept with the company's records rather than filed with the state. New York's Section 417 says members "shall adopt a written operating agreement", and allows it to be made before, at the time of, or within 90 days after filing the articles.

6. Decide how it is taxed

The IRS LLC page sets the defaults: a single-member LLC is disregarded and its profit goes on your personal return, and a multi-member LLC is a partnership. You can choose to have it taxed as a corporation, or file Form 2553 to make it an S corp. The calculator shows what each choice costs at your profit.

7. Federal ownership reporting

Owners who formed an LLC in 2024 heard they had to report its owners to FinCEN. That no longer applies to companies formed in the United States. FinCEN says its March 2025 interim final rule "removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information." Treat a letter that asks for a fee to file it with suspicion.

8. Keep it in good standing

Every year or two, the state wants a report, a fee, a tax, or all three. Miss them and the LLC can lose its good standing, and in time be cancelled.

These yearly costs are part of what StructureCost adds up for each state, because they are the real price of having an LLC rather than running as a sole proprietor.