How to Form an LLC in the US (Plain-Language Guide)

LLC means limited liability company. It is a business structure created under state law. Many owners choose an LLC because it can separate personal assets from business debts and lawsuits, as long as the business is formed and run properly.

An LLC can work well for:
- one-person businesses
- two or more co-owners
- freelancers and consultants
- retail, e-commerce, and service businesses
- real estate and holding businesses in some cases

That said, an LLC is not automatically the best choice for every business. Tax treatment, investor plans, ownership structure, and state rules can all matter. If you are comparing options, see LLC vs. corporation: which is right?.

Two terms often confuse new owners:
- S-corp means S corporation tax status. It is not a separate business entity under state law. An LLC or a corporation may ask the IRS to be taxed this way if eligible.
- C-corp means C corporation, a corporation that is taxed under the default corporate tax rules.

This guide is general educational information only. FoundryCounsel is not a law firm, not an attorney, and does not give legal advice or create an attorney-client relationship.

Most small businesses form their LLC in the state where they actually operate. For example, if you live in Illinois, sell from Illinois, and serve customers from Illinois, that is often the simplest place to start.

Some owners hear about forming in states like Delaware, Wyoming, or Nevada. That can make sense in a few situations, but not always. If your business is physically operating in another state, you may still need to register there as a foreign LLC and pay additional filing fees and annual fees.

Before filing, check the rules with the state's Secretary of State, which is the government office that handles business entity filings in most states.

Ask these practical questions:
- Where will the business actually operate?
- Where do the owners live and work?
- Will the business need local licenses or permits?
- Will you have a storefront, warehouse, or employees in one state?
- Will investors or complex ownership be involved?

If your situation is straightforward, forming in your home state is often simpler. If it is not straightforward, a licensed attorney can help you avoid extra registrations, duplicate fees, or ownership problems later.

You can also learn more about formation basics on our business entity formation page.

Your LLC name usually must be different from other registered business names in that state. Most states also require the name to include a designator such as "LLC" or "Limited Liability Company."

Start with the Secretary of State's business name search tool. That helps you see whether the name appears available for filing. Availability in a state database does not guarantee you can use the name everywhere, so also think about branding and trademark issues.

A DBA means doing business as. It is a trade name the business uses that is different from its legal name. For example, "Maple River Holdings LLC" might use the DBA "Maple River Studio." In many states, a DBA requires a separate filing.

If the name matters to your brand, also search the federal trademark database at USPTO.gov. The USPTO is the United States Patent and Trademark Office. A state entity filing and a trademark are different things. Forming an LLC does not automatically give nationwide trademark rights.

A simple example:
1. You check your state database for "Blue Harbor Consulting LLC."
2. You search USPTO.gov for similar names in related services.
3. You decide whether to file the LLC under that name or use a legal name plus a DBA.

If you are investing in packaging, signs, a website, or a product line, legal review before launch can be cheaper than changing the name later.

To create the LLC, you usually file articles of organization with the state. Articles of organization are the formal document that creates the LLC under state law. Some states use a different name, but the idea is the same.

The filing usually asks for basic information such as:
- the LLC name
- the business address
- the purpose of the business, sometimes in broad terms
- whether the LLC will be managed by its owners or by managers
- the name and address of the registered agent

A registered agent is a person or company with a physical address in the state who is designated to receive official legal and government documents for the business.

You may be allowed to act as your own registered agent in some states if you meet the requirements. Many owners instead hire a registered agent service for privacy and reliability.

State filing fees are state-dependent flat-fee ranges, not quotes. In many states, initial LLC filing fees are roughly $40 to $500, with many falling around $100 to $300. Some states also charge annual or biennial report fees.

Be careful with upsells after you file. Some companies offer extras you may not need right away. Focus first on the required state filing, the registered agent if needed, and your internal business documents.

If your ownership is complicated, your business is regulated, or you are forming with partners, a lawyer can review the filing before submission. If you want help finding one, you can get matched for free.

An operating agreement is the internal document that explains how the LLC is owned and how it will run. Even if your state does not require one, it is usually a smart document to have.

A basic operating agreement often covers:
- who owns what percentage of the LLC
- how profits and losses are shared
- who can sign contracts or spend company money
- how decisions are made
- what happens if an owner wants to leave
- what happens if there is a dispute, death, disability, or deadlock

If there is more than one owner, do not skip this step. Many business disputes start because co-owners had verbal understandings but no written rules.

A generic example: two friends form an LLC together. One contributes cash. The other contributes full-time work and customer relationships. If they never write down ownership percentages, salary rules, voting rights, or exit rights, conflict can grow quickly when money starts coming in.

If you have co-founders, you may also want help with partnership and founder agreements.

For businesses that will sign customer or vendor documents, common related contract terms include:
- NDA means non-disclosure agreement, a contract used to protect confidential information.
- MSA means master services agreement, a main contract that sets the legal terms for ongoing work between businesses.

You can read more about contract help here: contracts and agreements.

An EIN means Employer Identification Number. It is a tax ID number issued by the IRS for a business. Many LLCs need an EIN to open a business bank account, hire workers, or file certain tax forms. You can learn more in What is an EIN and how to get one?.

Apply through IRS.gov. Be careful with unofficial websites that charge for basic EIN applications.

After formation, you may also need to handle:
- state tax registration
- sales tax permits, if you sell taxable goods or services
- payroll setup, if you have employees
- local business licenses
- industry-specific permits

This is where many owners get tripped up. Forming the LLC is only one part of starting legally.

Also think about tax classification. By default, a one-owner LLC is often taxed differently from a multi-owner LLC, and some LLCs later elect S-corp tax treatment. Tax classification can affect payroll, self-employment taxes, and filings. Check IRS.gov and talk with a qualified tax professional or licensed attorney for decisions specific to your situation.

For compliance topics beyond formation, visit business compliance and licensing.

Once your LLC is approved, keep the business separate from yourself in real life, not just on paper.

Good next steps:
1. Open a separate business bank account.
2. Use the LLC's legal name on contracts, invoices, and important records.
3. Sign documents correctly, such as "Maria Chen, Manager, Oak Street Foods LLC."
4. Keep major business records organized.
5. Track annual report deadlines and state notices.

Common mistakes include:
- forming in a state that creates unnecessary extra registration work
- using a name without checking trademark risk
- skipping the operating agreement
- mixing personal and business money
- forgetting annual reports or franchise taxes
- assuming the LLC alone covers all licensing needs

You may want a licensed attorney if:
- there are two or more owners
- one owner is contributing intellectual property, cash, or major equipment
- you are buying or selling part of an existing business
- the business will raise money from investors
- the business is regulated, such as food, health, construction, finance, or transportation
- you are signing a commercial lease

A commercial lease is a rental agreement for business space, such as an office, store, or warehouse. These leases often contain personal guarantees, repair obligations, and rent escalation clauses that deserve careful review. Learn more at commercial leases and real estate.

Legal fees for formation help are state-dependent flat-fee ranges, not quotes. For a straightforward single-owner LLC, lawyer flat fees may sometimes range from roughly $300 to $1,500+ depending on state and scope. Multi-owner or more complex setups can cost more. You can read more at How much does a business lawyer cost?.

If you want help finding a licensed business attorney, how it works explains the process, or you can get matched. FoundryCounsel is a free matching service for business owners, not a law firm, and does not provide legal advice.