How to Form an LLC in 2026: Steps, Costs and Timeline
To form an LLC, you file a short document called articles of organization with your state, pay a filing fee and name a registered agent. Forming, starting and creating an LLC all mean the same thing. The Small Business Administration says the total cost to register is less than $300 in most cases.
The filing itself takes minutes online. The real work comes after: the yearly state fees, your tax setup and the habits that keep your personal assets protected.
What is an LLC and should you form one?
Form an LLC before your first sale if your business works in customers' homes, serves food, signs a lease or has any real chance of a lawsuit. A limited liability company, or LLC, is a business structure created under state law. It keeps your personal assets, like your car, house and savings, out of reach if the business faces debts or lawsuits, according to the SBA.
An LLC is not a tax break by default. You still pay the same income tax and self-employment tax a sole proprietor pays. What you buy with the filing fee is a legal wall between you and the business. If you sell crafts on weekends with low risk, a sole proprietorship can work for now. Compare both in LLC vs. sole proprietorship.
How do you form an LLC step by step?
Seven steps take you from idea to a working LLC. The first four happen with your state. The last three set up the paperwork and money side.
1. Pick your state
Form your LLC in the state where you run the business. If you form in one state and operate in another, the SBA says you may need to file for foreign qualification and pay taxes and annual report fees in both. For a local shop, forming out of state almost always costs more, not less.
2. Choose a name
Your name must include "LLC," "L.L.C." or "Limited Liability Company," and it must be different from names already on file. That's the rule in New York, and the SBA notes that most states won't register a name someone else already holds. Search your state's business database first, then check the federal trademark database. If you want to sell under a different brand name, register a DBA. See how a DBA works.
3. Name a registered agent
Every LLC needs a registered agent in its state before it files. The agent receives official papers and legal documents for the business and must be located in the state where you register. You can usually be your own agent, but your address becomes part of the public record, so many owners pay a registered agent service instead.
4. File articles of organization
Articles of organization list the LLC's name, address, members and registered agent. File them online with your Secretary of State whenever the state offers it, since online filing is usually faster. Pay the filing fee by card at the same time.
5. Write an operating agreement
Write one even if you are the only owner. An operating agreement sets the rules for decisions, money and what happens if an owner leaves. The SBA recommends one even where the state doesn't require it, and New York requires it within 90 days of filing. You keep it with your records; you don't file it with the state.
6. Get a free EIN
Apply for an Employer Identification Number, or EIN, the federal tax ID for your business, after the state approves your LLC. The IRS issues it online in minutes and never charges a fee, so skip any website that asks you to pay. The IRS also warns that applying before the state filing can delay your application.
7. Open a business bank account and get licensed
Open a separate account in the LLC's name and run every sale and expense through it. Mixing business and personal money makes it harder to show the LLC is separate from you, which is the whole point of forming one. Then check your city and county for licenses and permits, and read how to separate business and personal finances for the day-to-day habits.
How much does it cost to form an LLC?
Budget for the filing fee and for at least one year of ongoing state fees. The filing fee gets the attention, but the yearly costs decide what the LLC costs you. Here are local examples, not nationwide rules:
| State | Filing fee | Ongoing cost | Watch out for |
|---|---|---|---|
| California | $70 | $20 Statement of Information every 2 years and an $800 annual tax | Statement of Information due within 90 days of filing |
| Florida | $125 ($100 filing plus $25 registered agent designation) | $138.75 annual report | $400 late fee if you file the annual report after May 1 |
| New York | $200 | Publish a notice in 2 newspapers for 6 weeks, then file a $50 Certificate of Publication | Your LLC's authority is suspended if you skip publication for 120 days |
Suppose you form an LLC in California. The first year costs at least $890: the $70 filing fee, the $20 Statement of Information and the $800 annual tax, due by the 15th day of the 4th month after you file. California charges that $800 every year until you cancel the LLC, even if the business earns nothing. Check your own state's Secretary of State site for current fees before you file.
How long does it take to form an LLC?
Plan for about a week if you file online in a state like California, which processes online filings in 5 days or less and paper forms in 10 or more days. The EIN comes the same day once the state approves you. The slowest part is usually New York's publication step, which runs 6 weeks in the newspapers before you file the certificate.
How is an LLC taxed?
By default, the IRS does not tax the LLC itself. A single-member LLC is a "disregarded entity," so its profit goes on your personal return, usually on Schedule C, and an LLC with two or more members files as a partnership, according to the IRS. Either way, you pay income tax on the profit.
In practice, the bigger number is self-employment tax. The IRS sets it at 15.3% for Social Security and Medicare, and you owe it once your net earnings from self-employment reach $400. Set aside part of every sale for quarterly estimated payments so April doesn't surprise you.
An LLC can also elect to be taxed as a corporation with Form 8832, or as an S corporation with Form 2553. That election can lower self-employment tax once profits are steady, but it adds payroll and bookkeeping, so run the numbers with a tax professional before you file either form.
Do you need to file a beneficial ownership report in 2026?
No. FinCEN, the Treasury bureau that collected beneficial ownership information, or BOI, issued a final rule that took effect on August 14, 2026. It exempts every company formed in the United States, and U.S. owners no longer have to report or update anything, according to FinCEN. Some state pages and older guides still mention the 2024 requirement, so trust the FinCEN page over them.
Watch for scams that use the old rule. FinCEN never charges a fee for BOI, and letters that mention a "Form 4022" or "Form 5102" are fake. If a letter demands payment for an LLC report, don't pay it.
What mistakes should you avoid when forming an LLC?
| Mistake | Why it costs you | Do this instead |
|---|---|---|
| Paying a website for your EIN | The IRS issues EINs for free | Apply directly on IRS.gov |
| Forming in another state to save money | You may pay fees and taxes in 2 states | Form where you operate |
| Skipping the operating agreement | Disputes and bank questions have no written answer | Sign one, even as a single owner |
| Mixing personal and business money | It weakens the line between you and the LLC | Use a separate business account |
| Missing state deadlines | Florida charges a $400 late fee; California adds a $250 penalty for a missed Statement of Information | Put every due date on your calendar the day you file |
How do you get paid once your LLC is set up?
Your LLC already carries fixed costs, like California's $800 a year, so keep the cost of each sale low. JIM supports sole proprietors and LLCs with one owner on the account in all 50 states, and corporations aren't supported. If you run a one-owner LLC, Tap to Pay on JIM turns your phone into a card reader at 1.99% per sale, with no monthly fees and instant payouts. See every rate on the JIM pricing page, and use the guide to starting a business for the steps around your LLC.
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