LLC Formation Checklist (50-State Coverage)

#What forming an LLC actually does

A limited liability company is a state-law entity that gives you two things:

1. Limited liability: the business’s debts and lawsuits don’t reach your personal assets (assuming you maintain the corporate veil — see below)
2. Pass-through taxation by default: single-member LLC is taxed as sole prop; multi-member LLC is taxed as partnership. Either can elect S-corp or C-corp tax treatment

That’s it. An LLC doesn’t make your business legal. It doesn’t get you a special tax rate. It just creates a separate legal person that owns the business assets, signs the contracts, and stands between your personal life and the business’s liabilities.

#The 7-step checklist

#Step 1: Pick your formation state

For most owners, form in the state where you actually do business. If you live in Texas and serve Texas customers, form a Texas LLC. The exceptions are narrow:

• Delaware: only worth it if you’re VC-track and your investors expect Delaware C-corps (in which case you’re not forming an LLC anyway)
• Wyoming / Nevada: privacy-conscious owners sometimes form here, but you’ll still need to register as a foreign LLC in your home state — doubling the cost
• Texas LLC for non-Texas business: not worth it; Texas LLC formed in another operating state still pays Texas franchise tax

Default: home state.

#Step 2: Name the LLC + check availability

LLC names must include “LLC” or “Limited Liability Company” (or state-specific variant). Most states have an online name-availability search.

Naming tips:

• Keep it simple, professional, descriptive (or distinctive — both work)
• Search trademark database (uspto.gov) to make sure you’re not infringing
• Reserve the domain (yourbusiness.com) before filing — names get taken
• For multi-state operations, check name availability in every state you’ll register in

Many states allow you to reserve a name for 60-120 days before filing. Useful if you want to lock in the name while you finalize the rest.

#Step 3: File articles of organization

The “articles of organization” (or “certificate of formation” in some states) is the document that creates the LLC. It’s typically 1-2 pages and includes:

• LLC name + address
• Registered agent (person or company who receives legal documents on the LLC’s behalf)
• Management structure (member-managed vs. manager-managed)
• Effective date
• Filing fee (varies by state — TX is $300, DE is $90, CA is $70, FL is $125)

Filing methods:

• Direct with the state Secretary of State (cheapest, $50-$300)
• LegalZoom / ZenBusiness / Northwest ($79-$299 + state fee, faster + some extras)
• Through an attorney ($500-$1,500 + state fee, useful for complex operating agreements)

Registered agent decision:

• You can be your own registered agent (free, but your home address becomes public record)
• Use a professional service ($75-$200/yr) if you don’t want your address public OR you travel and can’t reliably receive legal mail
• Most attorney-firm formations include first-year registered agent service

After filing, the state returns a stamped articles of organization (usually within 1-7 business days). Keep this document — it’s your proof of formation.

#Step 4: Get an EIN

The Employer Identification Number is the LLC’s federal tax ID. You need it to:

• Open a business bank account
• File the LLC’s tax return
• Hire employees
• File the S-corp election

Apply at irs.gov/ein. Free, takes 10-15 minutes online. You get the EIN immediately. Save the IRS-issued EIN confirmation letter (CP575G).

Most owners try to apply for an EIN before the LLC is formed — don’t. The IRS application asks for your LLC’s legal name and state-issued formation date. You need the articles of organization first.

#Step 5: Draft an operating agreement

The operating agreement is the contract between the LLC’s members (owners) and the LLC itself. It governs:

• Ownership percentages
• Profit / loss allocation
• Management decisions
• Voting rights
• Capital contributions
• Distribution policy
• Buyout / exit provisions
• Dissolution procedures

Most single-member LLC owners think they don’t need one. They do. Even a single-member operating agreement:

• Reinforces the corporate veil (limits piercing)
• Establishes how the business operates
• Required by some banks for account opening
• Required for S-corp election if you plan to file one

For multi-member LLCs, the operating agreement is non-negotiable. Disputes between members get expensive fast without a written agreement.

Templates exist (LegalZoom, Northwest, attorney templates online). For most single-member LLCs, a template is sufficient. For multi-member LLCs with serious capital or non-equal contributions, hire an attorney.

#Step 6: Open a business bank account

Once you have:

• Articles of organization
• EIN
• Operating agreement

…you can open a business bank account. This is non-negotiable for maintaining limited liability protection. Commingling personal and business funds destroys the corporate veil — courts pierce the LLC and reach your personal assets.

Bank recommendations:

• Relay for most small businesses (multi-account architecture, free wires, Kick integration)
• Bluevine for owners who want yield on operating balances
• Chase / BoA if you need physical branch banking and don’t mind monthly fees

See our Relay vs. Bluevine comparison for the full breakdown.

#BOI / FinCEN reporting — no longer required for U.S. LLCs

#Common post-formation decisions

After steps 1-6, three more decisions usually come up in the first 30-90 days:

A. S-corp election timing. If your net business income is or will be over ~$80K, file Form 2553 to elect S-corp tax treatment. See our S-corp election article for the mechanics.

B. State sales tax registration. If you sell taxable goods or services, register with the state sales tax authority. Threshold and rules vary widely.

C. Local business licensing. Some cities require a business license. Some don’t. Check with your city’s business-services department.

#Common pitfalls

1. Using a “DBA” instead of an LLC. A DBA (doing business as) is just a name registration — no liability protection. If you want liability protection, you need the actual LLC.

2. Not opening a separate bank account. Commingling funds = piercing the corporate veil = lost liability protection.

3. Skipping the operating agreement. Especially in multi-member LLCs. Disputes get expensive without one.

4. Choosing the wrong state for the wrong reason. Wyoming or Nevada LLCs for non-residents = paying double fees + dealing with foreign-LLC registrations in your home state.

5. Filing S-corp election too early. S-corp election requires payroll. If your net income is under ~$80K, S-corp election creates more cost than savings. Wait until the math works.

#What we do when you engage

For a business formation engagement, our standard workflow:

1. Discovery call — confirm LLC is the right structure (vs. sole prop, partnership, or C-corp); model whether S-corp election will be needed in year 1
2. State filing — articles of organization filed in your state of operation
3. EIN application — done correctly (responsible party, business activity code, fiscal year)
4. Standardized operating agreement template — we’re not attorneys and don’t draft custom legal docs, but you’ll walk away with a defensible template you can use as-is or clean up with an attorney later
5. Business bank setup — usually with Relay (online business banking that plays well with our bookkeeping workflow)
6. Bookkeeping setup — chart of accounts, bank feed connected, separation-of-funds discipline locked in from day one
7. 1-hour LLC Mastery consultation with our senior tax advisor — what to do, what to avoid, year-one compliance rhythm, and where the eventual S-corp election conversation fits
8. Registered agent service — first year free; $300/year thereafter (for Texas entities, the $300 also covers your annual PIR filing)
9. S-corp election (if applicable) — Form 2553 filed in same engagement

Pricing: $2,250 for the full LLC formation engagement above. $4,000 for LLC + S-corp election + payroll setup. See business formation pricing for the full breakdown.

If you need ongoing support after the formation engagement (advisory, bookkeeping, tax prep), that’s a separate engagement we can talk through.

#Common questions

Can I form an LLC online myself? Yes. LegalZoom, ZenBusiness, Northwest, and direct-with-the-state options all work for simple cases. The mistake most DIY filers make is stopping after step 3 (articles of organization) and missing steps 4-7.

How long does formation take? 1-7 business days for the state filing in most states. Some states (Texas, Florida, California) have expedited options for $25-$50 extra. EIN is immediate via online application. Bank account opening adds another 1-3 business days.

How much does an LLC cost? First year: $100-$600 depending on state filing fee + registered agent + initial filings. Ongoing: $50-$400/yr for state annual report + registered agent renewal. Texas: also pay franchise tax PIR (no-tax-due threshold protects small LLCs from owing).

Do I need an attorney to form an LLC? For single-member LLC with template operating agreement: no. For multi-member with custom terms, equity structures, or complex buyout provisions: yes.

Can I move my LLC to another state later? Yes. “Domestication” or “conversion” — the legal process to transfer LLC from one state to another. Most states allow it; some don’t and you have to dissolve + re-form. Costs $200-$500 plus filing fees.

What if I form an LLC but never have business activity? You still owe state annual fees + franchise tax (where applicable) every year regardless of activity. Dissolve it if you’re not going to use it.

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If you’re considering forming an LLC (or you formed one and realized you didn’t finish steps 4-6), the Discovery call is the right next step. We handle the full formation as part of the Business Formation service.