Want to know the easiest way to start an LLC in 2022? Here’s everything you need to know on how to set up an LLC whether you’re just starting out your business or have no money.
If you’re a small business owner, a freelancer, or you’re just starting out your business enterprise, an LLC may be the perfect fit for taking on some risk and owning a company. LLCs provide a business structure that combines the benefits of corporations and sole proprietorships in the form of liability protection and pass-through taxation.
In short, you receive some forms of protection offered to corporations, as well as lower taxes experienced by partnerships and sole proprietorships.
What is an LLC
A Limited Liability Company or an LLC is a U.S. business structure that provides a limited liability protection similar to corporations while also providing the flexibility of a sole proprietorship or partnership.
LLCs are popular because they provide an easier way of starting and growing a business with fewer regulatory requirements than other business entity types. With an LLC, you can easily run the day-to-day operations of your business without having to worry about legal issues.
Who should form an LLC
LLCs are especially popular among small sole proprietors who want to limit their personal liability as much as they can. If you have a small business and you’re running as a sole proprietor or in a partnership, forming an LLC may be of interest to you.
You can create an LLC for any type of business. Real Estate, freelance writing, etc. However, for professionals, some states may require you to create a Professional LLC (PLLC).
An LLC can be formed with any business size, whether you’re a single owner or with multiple co-owners.
What is needed to start an LLC
Different states may have different requirements for forming an LLC. However, the most common requirements are the following:
- Business name
- Purpose
- Detailed account of how the business will be managed
- Business address
- Name and address of the registered agent
- Payment of fees
When to start an LLC
- If you’re at the point of starting a business, consider forming an LLC
- For sole proprietors: If you’re in a sole proprietorship business and you’re seeing that your business may take on some risk of liabilities in the future, you should consider starting an LLC
- If you’re a small business corporation that wants to avoid getting into double-taxation issues as your business grows, converting into an LLC is an attractive choice
Starting your LLC
Here’s a step-by-step guide to starting an LLC in 2022:
1. Name your LLC
Different states have different rules for naming LLCs. Most states have two basic requirements:
- Must be a unique name, meaning it should not have the same name as another registered LLC company in your state
- Your business LLC name should end with an LLC designator, like an abbreviation of “LLC” or “LC”
- Should not have phrases or words that may confuse it as an entity of the government like “IRS,” “Police Department,” etc.
- Should not have protected words like “hospital,” “bank” or “college” unless you have a reason
If you’re not planning on starting your LLC in the near future, you can reserve your company’s LLC name for a short period of time until you begin filing the legal requirements.
2. Choose a registered agent
LLCs require a registered agent. The registered agent is an individual or business entity who takes care of the legal documents for a business such as:
- Receiving tax forms
- Notice of lawsuits
- Government documents for your business
Consider your registered agent as your middle person who communicates papers and legal documents with the state.
3. File articles of organization
You must submit articles of formation with your state’s corporate filing office, which is usually the Secretary of State, in order to form your LLC. Certain states (including Delaware, Mississippi, New Hampshire, New Jersey, and Washington) use the phrase “certificate of formation.”
The document can also be called a “certificate of organization” in two additional states such as Massachusetts and Pennsylvania.
The articles of organization can typically be filed online or by downloading a form from your Secretary of State’s website. Provide your LLC name, address, and phone number as well as other basic information like how it will operate internally.
This includes who is responsible for managing certain tasks among others things. The average filing fee ranges from $100 – $200 depending upon where you live in America.
4. Form your management structure: Decide on member vs. manager management
LLCs usually assign managers within their members but they can also opt for other people outside their organization to manage the LLC. This may be similar to a corporation’s board of directors. You can either be the one managing your LLC or you are one of the members.
Either way, everyone has a voice in how things will be run in the LLC. The managers vote on key issues such as taking out loans and purchasing real estate- so they can keep watch over what is happening with their investment.
5. Create an LLC operating agreement
Despite being a non-requirement for most states, you should still create an operating agreement for your LLC. The operating agreement defines how your LLC will be managed and run. It also designs the ownership split and how its owners can be added or removed.
If someone files a lawsuit against your LLC or its owners, this document can also aid you in getting out of it. For example, it can protect the LLC from being accountable for personal debts.
Without an operating agreement, the laws of the state will govern how your LLC operates. And this means it could end up making the LLC liable to owners’ debts.
6. Comply with tax and regulatory requirements
The next step is complying with your state’s tax requirements and other regulatory aspects. These include the following:
- EIN
You don’t need to apply for an EIN if you are not planning to hire employees or if you’re a single-member LLC. With that, you may use your Social Security number of your LLC for paying federal taxes.
But if you are planning to expand in the future or if you’re a multiple-member LLC, you definitely should obtain an IRS Employer Identification Number (EIN). You may apply online for your EIN by completing an online EIN application.
- Business licenses
When starting a new business, it’s important to remember that your state may need you to process business licenses and other important requirements in order for the LLC to operate legally. Permits or registrations may be needed depending on where it’s located – so make sure that these requirements are met before launching.
- Sales and employer taxes
If you will be selling goods and collecting sales tax, or if you have employees, you will need to register with the appropriate state taxing authority. You can find more information on LLC tax registration rules in this guide: LLC Tax and Annual Filings Requirements: 50 State Guide.
7. File annual reports
In most states, LLCs are required to file an annual report. This report usually costs money, and the fees can be significant. For example, it can be as high as $800 per year in California.
8. Out-of-state LLC registration
If you want to do business in a state that is different from the state where your LLC was formed, then you need to register your LLC in that state. You will also need to appoint a registered agent for the service of the process.
How to start an LLC online (Easiest way)
LLC online filing services simplify the process of starting an LLC. The service provider you choose will do all of the paperwork and procedural steps to start a limited liability company for you. Imagine taking off all the burdensome tasks of filing and getting the legal documents right, you’ll also be able to save time and money if ever you make mistakes the first time.
Using an LLC filing service online can also accelerate the process of getting an EIN for your company.
Where to start an LLC: Filing options online
There are tons of filing options online where you can get your LLC formation done without paying high attorney fees. Here are some of the best LLC filing options you can check out:
How to Set Up an LLC Online
Watch this video:
Here’s how you can set up an LLC online through Bizee:
- Go to Bizee LLC Registration.
- Select the State where you would like to form your LLC.
- Select the package that works best for you. ( We highly recommend the Gold package as Bizee takes care of all the necessary requirements you need to seamlessly form your LLC).
- Fill up your Contact Information and Mailing Address.
- Select your State Filing Time. You have an option to select the 4-week filing time or their expedited filing option with only 5 days to file everything.
- Fill up your Company information (LLC Name, Designator, Business Type, Number of Members, Business Purpose).
- Choose your Management Method – either Member Managed or One Manager Managed.
- Fill up your Company Address Information – you can either choose a Professional Business Address & Virtual Mail Service provided by Bizee ($29/month) or you can use your own address.
- Enter in the Members and their individual ownerships.
- Set up your EIN number or Tax number creation.
- Select your Physical Street Address – you’ll have the option to choose the physical address assigned by Bizee for privacy purposes.
- Select your Principal Business Activity.
- Set up your Business Banking Account.
- You’ll be offered a free Consultation or tax strategy.
- Upon filling up everything, you’ll be asked to provide your payment information to pay for their services.
- Done!
What does it cost to set up an LLC?
There are many different fees and costs associated with this process, so it’s important to be aware of them all before you make any decisions.
Let’s break down all of the different costs associated with starting an LLC, so you can make the best decision for your business.
Filing fees:
State filing fees cover both the legal services and the filing fee itself. For legal services, you may expect to pay around $50 depending on the state. An additional $50 to $800 accounts for the filing fee and is usually where the bulk of LLC startup costs will go to.
You may want to hire an attorney or seek help from legal services to reduce the possibility of improper filing, leading to more fees and wasted time.
Articles of organization costs:
Another thing you’ll need to do when starting an LLC is to file the Articles of Organization with your state. The cost of the filing fee will vary depending on your state, but it’s typically around $100. You’ll also need to pay annual fees to keep your LLC registered, which will vary depending on your state as well.
Company bank account costs:
Another cost you’ll need to consider is the cost of setting up a company bank account. This can be a bit pricey, as most banks will charge you between $50 and $100 to open an account. You’ll also need to factor in the cost of business insurance, which is typically a few hundred dollars per year.
LLC maintenance fees:
Last but not least, you’ll need to pay ongoing LLC maintenance fees. These fees go towards things like keeping your LLC registered with your state and making sure that your paperwork is up to date. The cost of these fees will vary depending on your state, but they typically range from $50 to $200 per year.
Taxes:
The typical taxes paid by LLCs as part of their maintenance costs are:
- Franchise Tax
- Annual Report Fees
Franchise Tax:
LLCs can be taxed in many different ways, depending on the state. In some cases, they may have to pay a yearly tax that is often called franchise fees. The franchise tax is usually a flat tax but can change according to what your annual earnings are.
Annual/Biennial Report:
This is a report that includes the name, address, and ownership of the LLC. The annual report fee varies depending on the state.
Is It Expensive to Start an LLC?
Overall, the cost of starting and maintaining an LLC can range anywhere from a few hundred dollars to a few thousand dollars per year. But this is a small price to pay for the legal protection and peace of mind that an LLC can provide.
Below is an estimate of how much you’d expect to pay for your LLC depending on the state.
| State | Startup Cost | Maintenance Costs |
| Alabama | $200+ | Annual Privilege License |
| Alaska | $250 | $200 Biennially |
| Arizona | $50 + Publishing Requirement | No yearly fees |
| Arkansas | $50 | $150 per year |
| California | $70 | $20 Biennially + Annual Franchise Tax |
| Colorado | $50 | $10 per year |
| Connecticut | $120 | $20 per year |
| Delaware | $90 | $300 Annual Franchise Tax |
| District of Columbia | $220 | $300 Biennially + Annual Franchise Tax |
| Florida | $125 | $138.75 per year |
| Georgia | $100 | $50 per year |
| Hawaii | $50 | $15 per year |
| Idaho | $100 | No Annual Fee |
| Illinois | $150 | $250 – $300 per year |
| Indiana | $95 | $50 Biennially |
| Iowa | $50 | $30 – $45 Biennially |
| Kansas | $160 | $50 – $55 per year |
| Kentucky | $40 | $15 – $30 Annually + Annual Entity Tax |
| Louisiana | $100 | $30 per year |
| Maine | $175 | $85 per year |
| Maryland | $100 | $300 per year |
| Massachusetts | $500 | $500 per year |
| Michigan | $50 | $25 per year |
| Minnesota | $155 | Annual Partnership Tax |
| Mississippi | $50 | No Yearly Fee |
| Missouri | $50 | No Yearly Fee |
| Montana | $70 | $20 per year |
| Nebraska | $100 + Publishing Requirement | $10 – $13 Biennially |
| Nevada | $75 | $125 per year |
| New Hampshire | $100 | $100 Annual + Annual Enterprise Tax |
| New Jersey | $125 | $50 per year |
| New Mexico | $50 | No Annual Fee |
| New York | $200 + Publishing Requirement | $9 Biennial + Annual Filing Fee |
| North Carolina | $125 | $200 per year |
| North Dakota | $135 | $50 per year |
| Ohio | $99 | Annual Commercial Activity Tax |
| Oklahoma | $100 | $25 per year |
| Oregon | $100 | $100 per year |
| Pennsylvania | $125 + Publishing Requirement | No Annual Fee |
| Rhode Island | $150 | $50 per year |
| South Carolina | $110 | No Annual Fee |
| South Dakota | $150 | $50 per year |
| Tennessee | $300 Minimum | Annual Franchise & Excise Tax |
| Texas | $300 | Yearly Fee |
| Utah | $70 | $20 per year |
| Vermont | $125 | $35 per year |
| Virginia | $100 | $50 per year |
| Washington | $180 – $200 | $60 per year |
| West Virginia | $100 | $25 per year |
| Wisconsin | $130 – $170 | $25 per year |
| Wyoming | $100 – $102 | $50 or 0.02% value of assets per year |
Can you start an LLC with bad credit?
If you have a bad personal credit score, then it may be more suitable to form a separate legal entity such as an LLC or corporation. This allows you to separate your personal tax identification number from your business’.
What you want to do is use your LLC business to open a company bank account and start building credit for your business. Whether you have great personal credit or not, business credit allows you to protect your individual assets from debts and liabilities.
How to Start an LLC Bank Account
You will need to open an LLC bank account under your LLC name and operating agreement. Consider the following documents needed:
- Business tax ID
- Date when your business was formed
- Country and state where it was legally formed
- Country and state of primary business operation
- Legal business name and DBA (“doing business as”) name if applicable
- Personal information about the business owner and controlling manager.
Conclusion
Forming an LLC is one of the best decisions you can make as a startup business especially if you want to protect your personal assets. An LLC perfectly combines the pass-through taxation of a sole proprietorship or partnership and the protection of a corporation. With an LLC, the owner’s personal assets can be protected from business debts and lawsuits.
We hope this article has guided you on how to start an LLC in the US in 2024. Want to learn more about starting and growing your business from experts? Subscribe to our newsletter (we promise we won’t spam you!)
