Starting an LLC
Forming an LLC involves choosing a state, selecting a registered agent, filing articles of organization, and drafting an operating agreement. This guide walks through every step of formation.
Choosing a State
An LLC is formed under the laws of a specific state. Many business owners choose to form their LLC in the state where they live and primarily conduct business, though some choose other states based on their specific circumstances. Each state has its own filing requirements, fees, and ongoing compliance obligations.
Choosing a Name
The LLC’s name generally needs to comply with the naming rules of the state where it’s being formed, which often includes requirements such as including “LLC” or “Limited Liability Company” in the name and avoiding names already in use by another registered entity in that state.
Filing Articles of Organization
The formal step that creates the LLC is filing Articles of Organization (sometimes called a Certificate of Formation, depending on the state) with the appropriate state office, typically the Secretary of State. This document generally includes basic information about the LLC, such as its name, address, and registered agent.
Appointing a Registered Agent
Most states require an LLC to have a registered agent — a person or entity designated to receive legal and official documents on behalf of the company. The registered agent must generally have a physical address in the state of formation.
Drafting an Operating Agreement
While not always legally required, an operating agreement is a foundational document that establishes how the LLC will be owned and managed. It outlines ownership percentages, management structure, and the rules that govern how the business operates internally.
Obtaining an EIN
An Employer Identification Number (EIN) is generally needed to open a business bank account, hire employees, and handle tax filings. This number is issued by the IRS and serves as the LLC’s federal tax identification number.
Opening a Business Bank Account
Keeping business finances separate from personal finances is an important part of maintaining the liability protection an LLC is meant to provide. Most banks will require formation documents, an EIN, and often an operating agreement before opening a business account.
Ongoing Requirements
Forming the LLC is the first step, not the last. Most states require some form of ongoing filing, such as an annual report, to keep the LLC in good standing. Maintaining proper documentation as the business operates and grows is equally important.
Getting Started
ProPerForms prepares the formation documents and operating agreements entrepreneurs and business owners need to establish their LLC.
Forming an LLC involves choosing a state, selecting a registered agent, filing articles of organization, and drafting an operating agreement. This guide walks through every step of formation.
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