Creating an LLC is one of the best ways to start your entrepreneurial journey and get the right legal structure in place for your new business.
The question might arise in your mind - "should I set up an LLC by myself, or should I hire someone?" The good news is — yes, you can form an LLC yourself. And if you choose to take help of a trusted incorporation service, you’ll still need to pay your state filing fees (they’re unavoidable!), but you can save on the costs of having your LLC filed (if you choose Incfile - we set up your LLC for free)
Here's a complete comparison between the top two incorporation services in the market today.
Now, setting up an LLC yourself is a fair amount of work but we've broken it down for you in six easy steps below so you can get started as soon as you're ready. And if you're still unsure of whether an LLC is the best entity for your business or not, we recommend that you go through everything you need to know about LLCs.
Six Steps to Forming an LLC for Free
1. Get a Business Name
You’ll need to decide on a name for your LLC that’s not used by another business in the state. Each state does have specific business naming rules, and we have a guide to choosing the right name where you can also search to see if the name you're choosing is unique. As a general rule of thumb, your LLC name:
Other than the name, you will also need an official address for your LLC (note that LLC address requirements do vary by state).
- Must be unique (meaning, not already taken by another business)
- Must end with some version of Limited Liability Company," "Limited Company," or the abbreviation "LLC" to indicate that it is indeed an LLC
- Is easy to understand and free of ambiguity
- Meets the state law requirements in which you're going to or are already operating as a business
2. Appoint a Registered Agent
All LLCs are required to have a Registered Agent — a person or business who receives official notifications and correspondence about your business. You can choose to be a Registered Agent yourself, appoint another LLC manager as a Registered Agent or use a professional Registered Agent service. You will need to provide details of your Registered Agent in your company formation document.
At Incfile, all of our business formation packages provide a free Registered Agent service for the first year.
If you're uncertain about whether you should be your own registered agent or not, take your time to read all about registered agents before you dive deeper into business formation.
3. Get a Copy of Formation Document From the Secretary of State Website
You’ll need to get a copy of the official company formation document from the company formation agency in your state. Depending on the state you’re filing in, this document is known as your “Articles of Organization,” “Certificate of Formation” or something similar. We’ve got a complete guide to forming your LLC in each state, where you’ll find links to the relevant websites. You can normally download the relevant document as a Word file or fillable PDF, and some states will allow you to file directly online. Review the document to find out what other information you might need to provide.
If you’re forming an LLC with other people, you’ll need to gather and provide information about them, including their name, address and their ownership in the new business. You’ll also need to provide details like your business name and address, details of your Registered Agent, the purpose of your business and the name of the incorporator.
4. Explore Other LLC Formation Options
Some states will allow you to file a special type of LLC. For example, you might choose to set yourself up as a Professional LLC or a Series LLC. See more details on what's allowed in our state-by-state guide.
5. LLC Operating Agreement
It is not required by law in many states that you create an operating agreement for LLC formation but it's a good practice, especially if you're going to start an LLC with other members. Typically, an LLC operating agreement should indicate:
- Responsibilities of all LLC members
- Interest percentage of each member
- Distribution of any profits and losses
- Voting rights of each member
- Management of the LLC
- Selling and buying of members' interests
It also outlines how the management structure changes after a member leaves and how their profits are redistributed. If you are a single-member LLC, you can easily create an operating agreement on your own. If you're unsure of whether you need an operating agreement in the first place or not, seek help of an attorney. It will be worth the expense, especially if you're going for a multi-member LLC.
6. Fill Out and File the Formation Document
Once you have the formation document, you just need to fill it in, check it for accuracy and file it with the state agency. You will need to pay your state's fee to have your LLC formed, and usually wait a certain amount of time (although some states let you pay for expedited filing). Briefly, this is what you'll be required to fill:
- Your business name
- Your business address in the state of formation and primary conduct
- The objective of your business
- How your LLC will be managed
- Registered agent information
Congratulations — Your LLC Is Formed
Once you’ve filed the formal document with the state, you’ll need to wait for a notification that your LLC has been officially formed. Your state formation agency will normally provide this by mail.
What to Do After You’ve Formed Your LLC
Now that your LLC is a legal business entity, there are a few other areas you’ll need to take care of.
Get an Employee Identification Number From the IRS
You will need an Employee Identification Number (EIN) from the IRS. You'll use this when you’re filing and paying taxes and when you’re providing information on employees. You can get this from the IRS yourself, or we can get an EIN on your behalf.
Decide If You Want to Do Business Under a Different Name
Some businesses choose to trade under a different name from their official, legal name. This is known as an “assumed,” “fictitious” or "doing business as" name. You need to file the relevant form with your company formation agency, or we can file your assumed name for you. If you’re happy to do business under your legal business name, you don’t need to file this form.
Research and Apply for Business Licenses and Permits
Most businesses will need official licenses and permits to operate. These requirements may come from your city, county, other municipality or official bodies for your sector or industry. You will need to check on all the compliance and requirements you need to meet.
The Small Business Administration has a helpful guide to federal permits, and you can contact your local and state governments to understand your local requirements. If you don’t have time to navigate the complex world of business permits and licenses, we can help.
File a Regular Business Report and Pay a Fee
Most state governments require you to file a regular report on your business every year, although this does vary. This annual report contains high-level information on your business, and you are required to file it and pay a fee to remain in good standing. You can learn about your ongoing filing requirements here.
Other Areas to Consider
Finally, here are a few other areas you can explore:
- Prepare, file and pay your self-employment, state, sales and federal taxes
- Choose if you want to be taxed as an S Corporation to reduce your self-employment tax liability by filing IRS Form 2553
- Trademark your business or brand name to protect it from infringement
We hope you’ve found this guide to filing your LLC for free to be useful. Remember that if you need any assistance with any part of setting up your business, just get in touch — we’d be happy to help.