How to Form an LLC: 8 easy step-by-step way to protecting your business

I’ve been through the LLC formation process myself, and let me tell you, it’s quite the journey, but don’t worry, I’m here to guide you through it with some insider tips.

Creating an LLC is simpler than you think, and with the right tools, it can be a breeze. For a seamless, hassle-free experience, I highly recommend Tailor Brands and Northwest Registered Agent.

Tailor Brands offers comprehensive LLC formation tools that make the process as easy as pie, while Northwest Registered Agent is renowned for their stellar customer service and privacy protection.

Let’s dive in and get your LLC up and running in no time.

What’s an LLC?

An LLC is a smart way for business owners to protect themselves. I’ll explain what it means and why it’s useful. LLCs shield your personal stuff from business problems.[1] If the business gets sued or owes money, your house and savings are usually safe.

LLCs are pretty easy to run too. You don’t need a bunch of fancy rules like big companies do. It’s a mix of what’s good about corporations and simpler business types.

Here’s a quick list of LLC perks:

• Protects personal assets
• Easy to manage
• Flexible tax options

I think LLCs are great for many small businesses. They give peace of mind without too much hassle.

Also Read – How to Form LLC for Online Business

How to Form an LLC

1. Pick a Unique Name

Choose a distinctive name for your LLC that follows state rules. I recommend checking availability and reserving your chosen name.

2. Select an Agent for Service

The next step is to choose a Registered Agent.

An LLC Registered Agent is a person or company who accepts legal documents and state notices on behalf of your Limited Liability Company.

Designate someone to receive legal papers for your LLC. Northwest Registered Agent is my top pick for this role.

3. Submit Formation Papers

File the required documents with your state to officially create your LLC. Fees vary by location.

4. Choose a Management Structure

Decide if members will run the LLC or if you’ll appoint managers. This affects how decisions are made.

5. Draft an Operating Agreement

Create rules for how your LLC will function. This important document outlines member roles and responsibilities.

6. Handle Tax and Legal Requirements

Get necessary licenses and permits. Apply for an EIN from the IRS for tax purposes.

7. File Yearly Reports

Most states require annual filings to keep your LLC in good standing. Mark your calendar for these deadlines.

8. Expand to Other States

If doing business outside your home state, register as a foreign LLC in those locations.

What Does Starting an LLC Cost?

The price to start an LLC varies across states. I’ve found that filing the Articles of Organization, which creates your LLC, can cost between $30 and $350. In 2024, the average filing fee in the US is $132.

But that’s not all. After forming your LLC, you’ll face ongoing costs:

1. Annual Report fees (average $91 in 2024)
2. Taxes
3. Business licenses and permits

These ongoing costs can differ a lot based on:

• Your state
• Your industry
• What your business does
• How much money your business makes

Some states charge as little as $0 for Annual Reports, while others ask for over $200. Other fees vary widely too.

To budget accurately, I suggest checking your specific state’s requirements and fees. This will give you a clearer picture of both startup and ongoing costs for your LLC.

How fast can I set up my LLC?

Creating an LLC can be quick or take a while, depending on a few factors. Where I form it matters a lot. Some states are faster than others.

I can speed things up by filing online instead of mailing paper forms. Most online filings are done within 2 weeks, often much sooner. Mailed forms usually take longer, from a few days to several weeks.

If I’m in a hurry, I can pay extra for expedited service in most states. This can cut the wait time significantly. For the smoothest process, I recommend services like Tailor Brands or Northwest Registered Agent. They’re top picks for helping navigate LLC formation quickly and easily.

What do I do after my LLC is approved?

Congratulations on getting your LLC approved, now that you’ve taken this crucial step, there are several important actions you need to take to ensure your business is fully operational and compliant. Here’s a roadmap to guide you through the next steps:

1. Create an Operating Agreement: Outline ownership structure and operating procedures to prevent future disputes.
2. Obtain an Employer Identification Number (EIN): Apply through the IRS website to open a business bank account, hire employees, and file taxes.
3. Open a Business Bank Account: Separate personal and business finances for legal and tax purposes. See “How to open a business bank account“
4. Apply for Necessary Business Licenses and Permits: Ensure compliance with local and state regulations.
5. Register for State Taxes: Register with your state’s tax authority if you plan to sell taxable products or services.
6. Get Business Insurance: Protect your business with general liability insurance and other industry-specific coverage.
7. Set Up Accounting and Record-Keeping Systems: Use accounting software or hire an accountant to manage finances.
8. Comply with Ongoing Legal Requirements: Stay current with annual reports, franchise taxes, and other state-specific obligations.