How to Form an LLC: A Step-by-Step Checklist From Name to Bank Account

Forming an LLC is not hard, but it is a sequence. Skipping a step or doing them out of order creates cleanup later. Below is a practical checklist that applies broadly. Details such as fees, form names, and publication rules vary by state, so treat this as a map and confirm specifics with your state's filing office.

Step 1: decide whether an LLC fits

Before you file, confirm that an LLC is the right vehicle. For many owner-operators it is. If you expect investors, or you want a corporation for stock options, read LLC vs S-corp vs C-corp. If you are a licensed professional, your state may require a professional LLC or professional corporation.

Step 2: choose the state

Most small businesses form in the state where they operate. Forming elsewhere (such as Delaware or Wyoming) may seem attractive, but you generally still need to register in your home state, which adds cost. See forming in Delaware or your home state and foreign qualification basics.

Step 3: pick a name and check availability

Search your state's business entity database for name availability. Most states require the name to include "LLC," "L.L.C.," or "Limited Liability Company," and prohibit names that are too similar to an existing entity or that suggest a regulated business (like a bank). Also check federal and state trademark databases and domain names. If you want to operate under a different name, see DBA and trade names. Some states let you reserve a name for a fee and a limited period.

Step 4: appoint a registered agent

Every state requires a registered agent with a physical address in the state who can receive legal papers. You can serve as your own agent if you have a permanent address and are available during business hours, or you can hire a commercial service. See registered agent guide.

Step 5: file the formation document

The document is usually called Articles of Organization (or a Certificate of Formation in some states). It generally includes the LLC's name, the registered agent and address, the principal office, and sometimes whether management is by members or managers and the names of organizers. Filing is typically done online with a fee. Some states require additional steps, such as publication of notice (New York) or an initial report. Once the state approves, you have a legal entity. Save the stamped or approved document.

Step 6: draft and sign the operating agreement

The operating agreement is the internal contract that governs ownership, management, distributions, and what happens when someone leaves. Many states do not require you to file it, but you should have one, even if you own the LLC alone. See operating agreement guide, the single-member operating agreement article, and multi-member operating agreement clauses.

Step 7: obtain an EIN

An Employer Identification Number identifies your LLC to the IRS. Apply directly with the IRS; it is free, and the online application issues the number immediately during operating hours. Beware of third-party sites that charge for the same service. Multi-member LLCs and any LLC with employees need one, and single-member LLCs often obtain one for banking and privacy. See getting an EIN.

Step 8: decide on tax classification

By default, a single-member LLC is disregarded and a multi-member LLC is taxed as a partnership. If you want S-corp or C-corp treatment, file the appropriate election. Timing matters. See S-corp election guide and when to elect S-corp status.

Step 9: open a business bank account

Bring the formation document, EIN letter, and operating agreement. Open an account in the LLC's name and use it for all business activity. See business bank account setup and separating personal and business finances. Contribute your initial capital by deposit and record it as a contribution, not a loan, unless you intend and document a loan.

Step 10: licenses, permits, and registrations

Depending on the business, you may need:

Local business license or tax registration from your city or county.
State sales tax permit if you sell taxable goods or services. See sales tax nexus basics.
State employer registrations for withholding and unemployment if you hire.
Professional or occupational licenses.
Industry-specific permits (health, building, alcohol, and others).
Zoning approval for a home business.

Requirements vary widely, and operating without them can result in fines.

Step 11: insurance

Talk to an insurance professional about liability, professional coverage, property, auto, workers' compensation (once you have employees), and cyber coverage. Ensure the LLC is the named insured. See liability protection limits of an LLC.

Step 12: set up bookkeeping

Choose accounting software, set up your chart of accounts, and connect bank feeds. Record your capital contribution. Decide who will reconcile accounts monthly. See bookkeeping systems for small business.

Step 13: calendar recurring obligations

Add to your calendar:

Annual report and fee deadlines. See annual reports and franchise taxes.
Registered agent renewal.
Estimated tax due dates. See estimated taxes guide.
Sales tax and payroll filing dates.
Business license renewals.
Beneficial ownership reporting status. See beneficial ownership reporting.

Step 14: keep a records binder

Save formation documents, EIN letter, operating agreement, licenses, insurance, bank account information, and any state correspondence in one place (digital is fine). Buyers, lenders, and your tax professional will ask for these.

Common formation mistakes

Forming and then never using the LLC. Continue to run business through your personal account.
Skipping the operating agreement. Default state rules may not fit your plans.
Missing the annual report. Some states dissolve LLCs administratively for failing to file.
Buying a formation package with unnecessary add-ons. Compare fees to what the state charges directly.
Not updating contracts and invoices with the LLC's name.
Paying a fee-charging site for an EIN.
Choosing a state for perceived advantages without checking where you actually need to register.
Ignoring tax deadlines for elections.

Timeline

For a simple LLC, the steps above can happen in days: name and filing first, EIN and bank next, licenses and insurance as needed. Elections and bookkeeping systems deserve deliberate setup during the first month. If you would like help sequencing formation with tax planning, AE Tax Advisors can assist, and a discovery call is where to start.