Checklist for Starting an LLC

Starting a limited liability company (LLC) is easy. And to make it even easier, we’ve created an LLC formation checklist.

A limited liability company offers the benefits of limited liability protection and tax options for small businesses.

This Checklist for Starting an LLC covers the necessary steps you need to take when you create your LLC.

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LLC Formation Checklist

Our checklist for forming an LLC will help you get your LLC off the ground quickly and easily. These are the things you will need to do when starting your LLC:

  1. Choose a business name
  2. Appoint a registered agent
  3. Submit the Articles of Organization
  4. Create an operating agreement
  5. Get an EIN

Let’s take a look at each part of the LLC startup checklist.

Step 1: Choose a Name

Once you’ve decided to start a new business, choosing a business name is an important step on the LLC checklist. There are several things to keep in mind when naming your business:

Marketing Considerations
You want your name to be easy to market. This can mean different things for different businesses, but some general tips are to keep names short, memorable, and easy to pronounce. Some business owners also like to have the name be descriptive so that potential customers can easily figure out what the company does.

Legal Considerations
Each state has its own rules and regulations for business names. Most require the name to be “distinguishable” from any other registered business name in the state, not be misleading about what the company does, and to contain the words “limited liability company,” the abbreviation “LLC,” or something similar.

“Doing Business As” (DBA) Name
You may also want to consider getting a DBA, which would allow the LLC to operate under a different name than its legal one. This can be useful if your business has multiple brands or distinct services.

Domain Name
If your business name is available as a web domain, that’s a big plus. However, there are often creative alternatives if the domain is not available.

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If you’re stuck and having trouble coming up with LLC business name ideas, try our free business name generator tool.

For more details about how to name your LLC, check out our How to Name a Business state guides, which offer step-by-step instructions.

Step 2: Appoint a Registered Agent

Most states require LLCs to have a registered agent. A registered agent is an individual or business entity that accepts tax and legal documents on behalf of your business. In some states, a registered agent is also known as a resident agent, statutory agent, or agent for service of process.

A business owner or other individual in the company can be the LLC’s registered agent as long as they meet the following requirements:

  • Is 18 years or older
  • Has a physical address in the state where the business is formed
  • Is available (in person) during normal business hours

However, it is usually a good idea to hire a registered agent service. There are a few advantages to hiring a registered agent service:

  • Compliance with the law
  • Peace of mind
  • Flexibility
  • Privacy

Check out our Best Registered Agent Services guide for help picking the best registered agent for your LLC.

Step 3: Submit the Articles of Organization

The Articles of Organization is the LLC formation document that you must file with the state. In some states, it’s called a Certificate of Formation or Certificate of Organization. In this document, you’ll list some of the basic information about the company. This can include its address, registered agent, whether it is member-managed or manager-managed, and its owners.

Different states have different forms, which can typically be filed online or by mail, depending on the state. The LLC filing fee varies by state as well, from $40 to $500.

Filing the articles of organization is not difficult, and you can usually do it yourself. Our How to File the LLC Articles of Organization state guides walk you through the process step by step.

If you want professional help, these Best LLC Services can file the Articles of Organization for you.

Step 4: Create an Operating Agreement

An operating agreement is a legal document that outlines the ownership and member duties of your limited liability company.

A handful of states (California, Delaware, Maine, Missouri, Nebraska, and New York) legally require LLCs to have an operating agreement, but it is optional in most states. However, we recommend having one even if it is not required for a few reasons.

First, an operating agreement can help prevent or resolve disputes between LLC owners. And even if your business is a single-member LLC, an operating agreement can bring the company credibility and ensure courts uphold its limited liability status.

Operating agreements usually have at least six main sections:

  • Organization
  • Management and Voting
  • Capital Contributions
  • Distributions
  • Membership Changes
  • Dissolution

You can use our custom free LLC operating agreement tool to create the document in an easy-to-use question-and-answer format. Or, you can download our free operating agreement template if you prefer. If you’d rather not write it yourself, you can also hire an attorney to assist you.

Step 5: Get an EIN

An Employer Identification Number (EIN) is like a Social Security number (SSN) for your LLC. It is sometimes called a Federal Employer Identification Number (FEIN), or Federal Tax Identification Number (FTIN).

You need an LLC if any of the following apply to your business:

  • Your LLC has employees
  • Your LLC is a multi-member LLC
  • Your LLC files excise taxes
  • Your LLC withholds taxes for nonwage income paid to a nonresident alien

But even if you own a single-member LLC with no employees, getting an EIN is a good idea. Most banks require that your LLC have one to open a business bank account. Check out our 7 Benefits of Getting an EIN article to better understand why your LLC should have one.

How to Form an LLC

Forming an LLC is easy. There are two options for forming your LLC:

  • You can hire a professional LLC formation service to set up your LLC (for a small fee)
  • Or, choose your state from the list below to start an LLC yourself

Step 1: Select Your State

For most new business owners, the best option is to form your LLC in the state where you live and where you plan to conduct your business:

Visit our Best State to Form an LLC guide to learn more about starting an LLC for persons that live outside of the USA, real estate investors, and online businesses.

 

Steps After Forming an LLC

After forming an LLC, there are some important things you should do, including:

To learn more, visit our guide on the important things you need to do after forming an LLC.

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LLC Checklist FAQ

What must be filed to form an LLC?An orange arrow pointing down

The Articles of Organization (called a Certificate of Formation or Certificate of Organization in some states) must be filed to form an LLC. The Articles of Organization filing fee varies from state to state and costs between $40 and $500.

Can I set up an LLC on my own?An orange arrow pointing down

Yes, you can set up an LLC on your own. Our How to Form an LLC step-by-step state guides can help you through the process.

How do you structure an LLC?An orange arrow pointing down

LLCs can be structured as either a single-member LLC (one owner) or a multi-member LLC (more than one owner). They can also be either member-managed or manager-managed.

Is an S corp better than an LLC?An orange arrow pointing down

An S corp could potentially be better than an LLC if the company meets certain conditions. Check out our LLC vs. S Corp guide for more information.

How do owners of LLC get paid?An orange arrow pointing down

Owners of an LLC get paid in a couple of different ways: either a distribution that passes through to your individual tax return or a reasonable salary and distribution if the LLC elects to be taxed as an S corporation (S corp).

Should I hire a lawyer to form an LLC?An orange arrow pointing down

You generally do not need to hire a lawyer to form an LLC. You can start an LLC using our How to Form an LLC guides or hire an LLC formation service to help you.

Do I need a separate bank account for my LLC?An orange arrow pointing down

Yes, you need a separate business bank account for your LLC. This will prevent the company’s corporate veil from being pierced and maintain the LLC’s personal liability protection.

Which bank is best for LLC?An orange arrow pointing down

Check out our Best Banks for Small Business guide to help choose the best bank for your LLC.

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