How to Start an LLC: Formation Requirements and Filings

A limited liability company is a creature of state statute. There is no federal LLC, no national registry, and no single form that creates one. Each state writes its own LLC act, runs its own filing office, sets its own fees, and decides what an LLC has to do each year to stay in good standing. Federal law enters only afterward, when the IRS decides how the company is taxed and whether it needs an employer identification number.

That split, state law creates the entity, federal law taxes it, explains most of what follows. It also explains why answers found online conflict: a rule that is true in Delaware is often wrong in California.

What an LLC is and what forming one does

An LLC is a business structure authorized by state statute. Owners are called members, and most states place no limit on how many members an LLC can have or what kind of person or entity a member can be. Individuals, corporations, other LLCs, and foreign entities can all hold membership interests, and nearly every state allows a single-member LLC. The IRS description of the LLC structure notes that a few regulated businesses, banks and insurance companies among them, generally cannot organize as LLCs.

Forming an LLC does two things. It creates a legal person separate from its owners, and it limits the owners’ exposure to the company’s debts. The Small Business Administration’s comparison of business structures describes the effect in plain terms: an LLC protects members from personal liability in most instances, so personal assets are generally not at risk if the company faces bankruptcy or a lawsuit. That protection is not absolute. Members remain liable for their own wrongdoing, for debts they personally guarantee, and in some cases for taxes the company fails to pay.

What forming an LLC does not do is change how the business operates day to day. It does not grant a license to do business, secure a trade name against competitors, or satisfy any tax registration. Those are separate filings with separate agencies, and a new LLC that stops at the formation document is usually not finished.

Key terms used across every state’s LLC act

State statutes differ in detail but share a vocabulary. The spoke articles below assume these terms.

Articles of organization. The document filed with the state to create the LLC. Some states call it a certificate of formation or a certificate of organization. It carries the company name, the registered agent, the address of the principal office, and in many states the names of the organizers.

Member. An owner of the LLC. Membership is an ownership interest, not an employment relationship, though a member can also work for the company.

Manager. A person who runs the company when the members choose not to run it themselves. Most state acts default to member-managed unless the articles say otherwise, and the choice usually has to be declared on the formation document.

Registered agent. The person or company designated to receive lawsuits and official notices on the LLC’s behalf. The SBA’s guidance on registering a business with state agencies states the rule every state applies: the registered agent must be located in the state where the company registers, and the designation happens before or at the time of filing.

Operating agreement. The contract among members governing how the company is run, how profits are split, and what happens when a member leaves. It is an internal document and is not filed with the state.

Foreign qualification. Registration by an LLC formed in one state to do business in another. The company remains domestic in its formation state and is treated as foreign everywhere else.

Good standing. The status of an LLC that is current on its state reports and fees. Losing good standing can block a lawsuit, a loan closing, or a sale of the business until the delinquency is cured.

Choosing the state of formation

An LLC is formed in exactly one state. That state’s act supplies the default rules for the company’s internal affairs no matter where the business actually operates, which is why the choice carries weight beyond the filing fee.

For a company whose customers, employees, and physical location sit in one state, the analysis is usually short: the formation state is the operating state. The complication arises when the business crosses state lines. According to the SBA’s state registration guidance, a business is typically treated as conducting activities in a state when it has a physical presence there, holds frequent in-person meetings with clients there, draws a sizable share of its revenue from there, or has employees working there. An LLC active in several states generally forms in one and files for foreign qualification in the others.

Foreign qualification is not free. A foreign-qualified LLC pays filing fees, annual report fees, and often taxes in both the formation state and each state where it qualified. The Certificate of Authority filing that accomplishes qualification usually has to be accompanied by a certificate of good standing from the formation state.

Several states have adopted some version of the Uniform Law Commission’s Revised Uniform Limited Liability Company Act, which standardizes the default rules on management, fiduciary duties, and dissociation. States that have not adopted it run on their own acts, so a provision that is standard in one state may be absent in the next.

The formation filing

The filing that creates an LLC is short. Most states use a one-page or two-page form and accept it online, and acceptance is often same-day or within a few business days. The information requested is consistent across states even where the form’s name is not.

Every state asks for a company name that is distinguishable from the names already on its register and that carries an LLC designator, typically “Limited Liability Company,” “LLC,” or “L.L.C.” Name availability is checked against that one state’s database, so clearing a name in the formation state says nothing about whether another company holds rights to it elsewhere. Trademark rights are a separate system, searchable through the USPTO trademark database.

Every state also asks for a registered agent and a registered office address within the state. A member can serve as the agent when they have a physical street address in the state and are available during business hours. Commercial registered agent services exist for companies that lack an in-state address or prefer not to publish a home address on a public record.

Beyond those two items, states diverge. Some require the LLC’s purpose, some require a statement of duration, some require the names and addresses of members or managers, and some require nothing more than the name, agent, and organizer’s signature. Filing fees vary widely by state, and a number of states charge separately for expedited processing or for a certified copy of the accepted filing.

The operating agreement

The operating agreement is the document that decides most disputes among members, and it is the one document the state never sees. Every state LLC act supplies default rules for the questions an operating agreement would otherwise answer: how profits are allocated, who has authority to bind the company, what vote is required for a major decision, whether a member can transfer an interest, and what happens when a member dies or walks away. Those defaults apply in full to any LLC that has no agreement.

The defaults rarely match what members actually intend. A common example is allocation: many state acts split profits equally per capita, so a member who put up nearly all of the capital shares profits evenly with a member who put up very little, unless the agreement says otherwise. Another is exit. In the absence of an agreement, some acts allow a departing member to force a buyout, and some leave the departing member holding an interest with no way to cash it out.

Single-member LLCs are not exempt from the reasoning. An operating agreement for a one-member company documents the separation between the owner and the business, states who takes over on the owner’s death or incapacity, and gives banks and title companies the authorization document they ask for. Courts examining whether to disregard an LLC’s separate existence look at whether the company observed formalities and kept its affairs distinct from the owner’s.

Federal steps after the state filing

The state filing creates the entity. Three federal items usually follow.

Employer identification number. An EIN is the company’s federal tax identification number. The IRS EIN application is free, issues the number immediately for domestic applicants who complete it online, and warns against third-party sites that charge for it. The online application must be completed in one session, expires after 15 minutes of inactivity, and is limited to one EIN per responsible party per day. The IRS instructs applicants forming a corporation or LLC to complete the state formation filing before applying, because an application that precedes the state filing can be delayed. An EIN is required to hire employees, to operate as a partnership or corporation for tax purposes, and to pay certain excise and employment taxes; most banks also require one to open a business account.

Federal tax classification. The IRS does not have a tax category called “LLC.” Under the classification rules described on the IRS LLC page, a domestic LLC with at least two members is treated as a partnership by default, and a single-member LLC is treated as a disregarded entity whose income appears on the owner’s return. Either can elect corporate treatment instead by filing Form 8832, Entity Classification Election. An LLC that has elected or is eligible for corporate treatment can go a step further and elect S corporation status under section 1362(a) by filing Form 2553. A single-member LLC is still treated as a separate entity for employment tax and certain excise taxes even while it is disregarded for income tax.

Beneficial ownership reporting. The Corporate Transparency Act originally required most newly formed LLCs to report their beneficial owners to the Treasury Department’s Financial Crimes Enforcement Network. That changed. Under an interim final rule FinCEN published on March 26, 2025, described on the agency’s beneficial ownership information page, the definition of “reporting company” now covers only entities formed under the law of a foreign country that have registered to do business in a U.S. state or tribal jurisdiction. Entities created in the United States are exempt from the reporting requirement, and U.S. persons are not reported as beneficial owners of the foreign entities that still file.

Staying in good standing after formation

An LLC that files once and never files again usually falls out of good standing within a year or two. Three obligations recur.

The first is the periodic report. Most states require an annual or biennial report confirming the registered agent, the principal address, and in some states the members or managers. Deadlines are set by state and are tied variously to the formation anniversary, a fixed calendar date, or the close of the fiscal year. A missed report typically triggers a late fee, then a delinquent status, then administrative dissolution.

The second is the registered agent. The designation has to stay current. An agent who moves out of state, resigns, or stops forwarding mail leaves the company without a lawful address for service of process, and a lawsuit served on a stale agent can still produce a default judgment.

The third is tax and license registration, which is separate from formation in every state. Depending on the business, that can include a state income or franchise tax account, a sales tax permit, employer withholding and unemployment insurance accounts, a state or municipal business license, and industry-specific permits. None of these follow automatically from the articles of organization.

Foreign-qualified LLCs carry each obligation twice. As the SBA notes in its registration guidance, a foreign-qualified business typically pays taxes and annual report fees both in its formation state and in every state where it is qualified.

Specific procedures and topics

The rules above hold in every state. The filing office, the form name, the fee, the report deadline, and the tax registrations do not. The articles below cover the state-specific procedures and the individual documents in detail.