How to Start an LLC (Step-by-Step, 2026)

To start an LLC, you file Articles of Organization with your state's business filing office (usually the Secretary of State), pay a filing fee that runs roughly $50 to $500 depending on the state, name a registered agent to receive legal notices, and — the moment your paperwork is approved — get a free EIN from the IRS and open a dedicated business bank account. Most single-member LLCs are up and running in a few business days to two weeks. That's the whole spine of it. Everything else — an operating agreement, licenses, choosing a tax election — is refinement on top of those core steps.

The part almost every "how to start an LLC" article ignores is what happens after the certificate arrives: a fresh LLC has no credit file, no trading history, and often no revenue yet, which shapes how — and when — it can borrow. This guide walks the full formation sequence in an operator's order, then gets honest about funding a business that's only weeks old.

The 7 Core Steps to Form an LLC

Formation is a checklist, not a mystery. Done in the right order, each step feeds the next — you can't get an EIN before the state approves your Articles, and you can't open a proper bank account before you have the EIN.

1. Pick your state of formation. For most owners this is the state where you actually live and operate. Forming in Delaware or Wyoming to "save on taxes" usually backfires for a local business — you'll still have to register as a foreign LLC in your home state and pay both sets of fees.
2. Choose and clear a name. It must be distinguishable from existing entities in your state and typically must include "LLC" or "Limited Liability Company." Run a name search on your Secretary of State's site and, ideally, check for a matching domain and federal trademark conflicts.
3. Appoint a registered agent. This is the person or service with a physical in-state address who accepts legal and state mail during business hours. You can be your own agent, but many owners use a paid service (roughly $100–$300/year) to stay private and never miss a service of process.
4. File the Articles of Organization. This is the actual act of "starting" the LLC. You submit the entity name, address, registered agent, and management structure, then pay the state fee. Most states now accept online filing.
5. Write an operating agreement. Only a handful of states legally require one, but you want it regardless. It defines ownership percentages, profit splits, voting, and what happens if a member leaves — and banks and funders often ask to see it.
6. Get your EIN from the IRS. The Employer Identification Number is free and issued instantly through the IRS website. You need it to open a bank account, hire, and file taxes. Never pay a third party for one.
7. Open a business bank account and get licensed. Separating business and personal money is what actually protects your liability shield. Then layer on any city, county, or industry licenses your business requires.

For a deeper look at what to do once the entity exists, see our pillar on starting and running a small business.

What It Costs and How Long It Takes

Two numbers drive most owners' planning: the upfront cost and the wait. Both vary widely by state, and the recurring costs matter more than the one-time filing fee.

Figures above are illustrative ranges for planning; check your own state's current fee schedule. On timing: online filings are often approved in a few business days, though some states clear same-day and others take two to three weeks by mail. Many states sell expedited processing for an extra fee if you need the certificate fast for a lease or bank appointment.

The recurring line most new owners forget is the annual report or franchise fee. Miss it and the state can administratively dissolve your LLC — quietly stripping the liability protection you filed for in the first place.

Single-Member vs. Multi-Member, and How LLCs Are Taxed

An LLC is a legal structure, not a tax structure — the IRS lets you choose how it's taxed, which is one of the format's biggest advantages.

• Single-member LLC: By default, taxed as a sole proprietorship (a "disregarded entity"). Profits and losses flow onto your personal return via Schedule C. Simple, but you owe self-employment tax on net profit.
• Multi-member LLC: By default, taxed as a partnership. The LLC files an informational return (Form 1065) and issues K-1s to each member, who report their share personally.
• S-corp election: Any LLC that clears a reasonable profit threshold can elect S-corporation tax treatment (Form 2553) to potentially cut self-employment tax by paying the owner a reasonable salary plus distributions. This adds payroll and accounting overhead, so it earns its keep only above a certain profit level — talk to a CPA before electing.

The through-line for a lender or funder: an LLC's income usually lands on the owner's personal tax return, so your business and personal finances stay closely linked in a new entity's early life. That's exactly why underwriters lean on bank deposits, not just the entity's age, when they evaluate a young LLC.

Funding a Brand-New LLC: The Honest Version

Here's what the formation guides don't tell you: forming an LLC does not create business credit or borrowing power on day one. A newly filed entity has no payment history, no trade lines, and — critically — no bank statements showing revenue. Traditional term loans and most bank lines want two or more years in business and strong personal credit. That shuts out the majority of true startups.

What's realistic in the first year:

• Owner capital and personal savings — still the most common startup funding, contributed as an owner's investment.
• SBA microloans and CDFI lenders — startup-friendly but paperwork-heavy and slow, often 30–90 days.
• Business credit cards — usually underwritten on your personal FICO, useful for smaller, revolving needs.
• Revenue-based financing / MCA marketplaces — once the LLC is actually depositing revenue, this becomes the fastest path to working capital because approval leans on bank deposits and cash flow rather than credit score or entity age.

Revenue-based options generally require the business to be generating and depositing revenue — commonly a few months of consistent deposits and roughly $10,000+ in monthly revenue, with personal FICO around 500+. Because underwriting reads your deposit history instead of your credit report, decisions can land in 24–48 hours and funding follows quickly. It's not for a business that hasn't opened yet — but for an LLC that's a few months in and growing faster than its bank balance, it fills the gap term lenders won't. See our overview of early-stage business financing for how these stack up. No responsible funder should ever call approval "guaranteed."

Decision Framework: When Revenue-Based Funding Fits a Young LLC

The tool has to match the moment. Use this to gut-check whether revenue-based financing is the right early move or the wrong one.

It works best when:

• Your LLC is already banking consistent revenue (typically several months of deposits, ~$10,000+/month) and the business simply outruns its cash on hand.
• You need capital fast — to buy inventory before a busy season, cover payroll during a receivables gap, or take a growth opportunity that won't wait 60 days.
• Your personal credit is thin or rebuilding (FICO in the 500s) but your sales are healthy — cash flow is your strongest qualification.
• You can comfortably absorb the repayment out of daily or weekly cash flow without choking operations.

Avoid it when:

• You haven't opened yet or have no meaningful deposit history — there's nothing for a revenue-based underwriter to read. Owner capital, microloans, or credit cards fit better.
• You qualify for a bank term loan or SBA loan and can wait for it — patient capital is generally cheaper for long-horizon needs.
• The need is a long-term fixed asset (real estate, heavy equipment with a multi-year life) better matched to longer, amortizing financing.
• Your margins are already tight and daily/weekly remittances would push cash flow negative. The wrong financing turns a growth problem into a survival problem.

Short version: revenue-based funding is bridge capital for a business that's already moving, not seed money for one that hasn't started.

Common Mistakes That Sink New LLCs

Most first-year damage isn't dramatic — it's quiet paperwork failures that erode the protection you paid to set up.

• Commingling funds. Running personal and business money through one account is the fastest way to lose your liability shield if you're ever sued. Open the business account immediately and use it for everything business-related.
• Skipping the operating agreement. Even solo owners benefit — it reinforces the entity's separateness and settles ownership questions before they become disputes.
• Missing annual reports. Administrative dissolution is common and reversible only through reinstatement fees and hassle. Calendar every state deadline.
• Forming out-of-state to chase tax myths. A local business rarely benefits from a Delaware or Wyoming LLC and usually pays double fees for the privilege.
• Borrowing before there's revenue to support it. Taking on repayment before the business generates cash is how young LLCs stall. Match the financing to where the business actually is.
• Ignoring licenses and permits. Formation with the state doesn't cover city, county, or industry-specific licensing. Check all three levels.