How to Start an LLC in 2026: Steps, State Costs and Paperwork

Quick answer: To start an LLC, choose your state, check that your business name is available, appoint a registered agent, file articles of organization with the Secretary of State and pay the fee, write an operating agreement, then get a free EIN and open a business bank account. State filing fees in 2026 range from roughly $35 to $500.

Learning how to start an LLC is less complicated than most people expect. For a freelancer, consultant or small trade business, the whole process can be done online in an afternoon, often without a lawyer. What matters is doing the steps in the right order and understanding the ongoing costs, not just the first filing fee. If you are still deciding whether you need an LLC at all, read our comparison of an LLC vs sole proprietorship first, then come back here. Once the LLC is approved, you can bill clients under its name straight away with our free invoice generator.

This guide walks through the 2026 process step by step, shows what LLC formation costs by state, explains the operating agreement, and covers how your new LLC is taxed and how its name should appear on invoices. It is general information, not legal or tax advice.

What an LLC is and why owners choose one

A limited liability company is a business structure created under state law. It combines the liability protection of a corporation with the simpler tax treatment of a sole proprietorship or partnership. According to the SBA guide to choosing a business structure, LLC members are generally protected from personal liability for business debts and lawsuits, while profits can pass through to the owners' personal returns without corporate tax.

Owners usually form an LLC for three reasons:

• Liability protection: a client lawsuit or unpaid supplier bill is aimed at the company, not your house or savings, as long as you keep business and personal finances separate.
• Credibility: larger clients and procurement teams often prefer to contract with a registered entity, and an LLC name looks more established on a proposal or contract.
• Tax flexibility: an LLC can stay a pass-through entity or elect corporate or S corporation taxation later, which our S corp vs LLC guide covers in detail.

The trade-off is paperwork and ongoing fees. Some states charge an annual report fee or minimum tax every year, whether or not the business makes money.

How to start an LLC: the 8 steps

Here is the sequence that works in every state. Names of forms differ (Texas calls it a certificate of formation, most states say articles of organization), but the logic is identical.

1. Choose your state. Form in the state where you live and work. Forming in Delaware or Wyoming and then operating at home usually means registering as a foreign LLC as well, so you pay twice.
2. Pick and check your name. Search your Secretary of State's business database. Most states require "LLC" or "Limited Liability Company" in the name. Also search the USPTO trademark database so you do not build a brand on someone else's mark.
3. Appoint a registered agent. This is the person or company that receives legal papers for the LLC. It must have a physical address in the state. You can be your own agent, or pay a registered agent service.
4. File articles of organization. File online or by mail with the Secretary of State and pay the fee. The form asks for the LLC name, address, registered agent, and whether it is member-managed or manager-managed.
5. Write an operating agreement. It sets ownership percentages, decision-making, how profits are shared and what happens if a member leaves.
6. Get an EIN. Apply online with the IRS; it is free and usually issued immediately. Our step-by-step guide on how to get an EIN covers the form.
7. Open a business bank account. Bring your approved articles, EIN letter and operating agreement. See our guide to a business bank account for freelancers.
8. Handle licenses, tax registrations and annual filings. Register for state sales tax or payroll tax if they apply, get any local licenses, and put your annual report date in the calendar.

LLC formation cost by state

The filing fee is the one cost every LLC pays. The SBA says total registration costs are often under $300. Published 2026 state fee tables put filing fees between about $35 (Montana) and $500 (Massachusetts). The table below shows a selection of states to illustrate the range; fees change, so confirm the current figure on your Secretary of State's website before filing.

State	Formation filing fee (as of 2026)	Ongoing cost to watch
Kentucky	$40	Low annual report fee
California	$70	$800 minimum annual tax from the first year, plus an LLC fee once gross receipts pass set thresholds
Texas	$300 (Form 205, certificate of formation)	Annual franchise tax report, even when no tax is due
Massachusetts	$500	$500 annual report, the highest in the country

Notice how the cheapest filing state is not always the cheapest to run. California's filing fee is modest, but its $800 annual tax applies to almost every LLC registered or doing business there. Budget for the full first-year cost, not just the formation fee.

Other costs to budget for

• Registered agent service: optional if you act as your own agent, otherwise an annual fee.
• Expedited processing: many states charge extra for faster approval.
• Name reservation or DBA: needed only if you want to hold a name before filing or trade under a different name. Our guide on what a DBA is explains when that applies.
• Local business licenses: covered in our guide on how to get a business license.
• Professional help: a lawyer to review a multi-member operating agreement, or an accountant to advise on tax elections.

Worked example: first-year cost of a Texas LLC

Maria is a freelance web developer in Austin. She forms a single-member LLC in Texas and wants to know what the first year will cost before she sends her first invoice.

Item	Cost
Certificate of formation (Form 205)	$300
Registered agent (she acts as her own agent at her home office)	$0
EIN from the IRS	$0
Operating agreement (she adapts a template herself)	$0
Business bank account (no-fee account)	$0
Total first-year formation cost	$300

If Maria had hired a registered agent service at, say, $125 a year and paid $25 for expedited filing, her total would be $300 + $125 + $25 = $450. The same business formed in California would pay a $70 filing fee plus the $800 annual tax, so $870 before any optional extras. That gap is why you should compare total cost, not headline fees.

The operating agreement: what to include

An operating agreement is the LLC's internal rulebook. Most states do not require you to file it, but the SBA strongly recommends having one even for a one-person business. It helps prove the LLC is a real, separate entity, which supports your liability protection, and it answers questions before they become disputes.

A good operating agreement covers:

• Members and ownership percentages, and how much each contributed.
• Whether the LLC is member-managed or manager-managed.
• How profits, losses and distributions are allocated.
• Voting rules for major decisions such as taking on debt or adding members.
• What happens if a member dies, becomes disabled, wants out or is bought out.
• How the LLC is dissolved.

Some states limit an LLC's lifespan or require it to be dissolved and re-formed when membership changes unless the operating agreement says otherwise, according to the SBA. A buy-sell clause avoids that problem.

How a new LLC is taxed

An LLC is a state legal entity, not a federal tax category. The IRS applies default rules:

• Single-member LLC: disregarded for income tax. Profit goes on your Form 1040, usually on Schedule C, and you pay self-employment tax on net earnings, exactly as a sole proprietor would.
• Multi-member LLC: taxed as a partnership, filing Form 1065 and issuing Schedule K-1s to members.
• Elections: either type can elect to be taxed as a C corporation (Form 8832) or an S corporation (Form 2553). An S election can reduce self-employment tax once profit is high enough to justify running payroll.

The IRS page on single-member LLCs also notes that even a disregarded LLC is treated as a separate entity for employment taxes, so if you hire staff, payroll runs under the LLC's own name and EIN. For the filing side, see our sibling guide on how to file taxes for an LLC, and remember quarterly payments: our guide to quarterly estimated taxes explains the deadlines.

Invoicing correctly after you form your LLC

Liability protection depends partly on acting like a company. The simplest daily habit is to invoice in the LLC's name, not yours. Every invoice should show:

• The full legal name exactly as registered, including "LLC".
• Any registered trade name, written as "Smith Design LLC dba Pixel Studio" if you use one.
• The business address and contact details.
• Payment details for the LLC's bank account, never your personal account.
• A unique invoice number. Our invoice number generator creates a clean sequence.

Update your W-9 with clients so 1099s are issued to the LLC's EIN, and update contracts so they are signed by you as a member of the LLC. If you sell taxable goods, add sales tax with the sales tax calculator. A professional layout such as the corporate invoice template works well for a newly formed company.

DIY filing vs an LLC formation service

You do not need a formation service to start an LLC. Every state accepts filings directly from owners, and most have an online portal that walks you through the articles of organization. Formation services bundle the state filing with extras such as a registered agent, an operating agreement template, EIN application help and compliance reminders, and charge a service fee on top of the state fee.

DIY filing makes sense when:

• You are a single-member LLC with a straightforward business.
• You live in the state of formation and can act as your own registered agent.
• You are comfortable following the state's instructions and tracking your own annual report date.

A service or a lawyer is worth considering when you have several members with different contributions, plan to raise investment, are registering in more than one state, or want privacy because acting as your own registered agent puts your home address on the public record. Whichever route you choose, the state filing fee is the same and the LLC's legal protection is identical.

Your first-year compliance calendar

• Week 1: file articles, get the EIN, open the bank account, sign the operating agreement.
• Month 1: register for state taxes and local licenses, and send updated W-9s to clients.
• Each quarter: pay federal and any state estimated taxes.
• State due date: file the annual report and pay any annual tax or fee.

Mistakes that weaken your LLC

• Mixing money: paying personal bills from the business account, or receiving client payments into a personal account, is the fastest way to give a court a reason to ignore the LLC.
• Missing annual reports: states can administratively dissolve an LLC that does not file, which can strip away its protection.
• Signing personally: sign contracts as "Maria Lopez, Member, Lopez Web LLC", not just your name.
• Forming in the wrong state: an out-of-state LLC operating at home usually needs foreign registration and a second set of fees.
• Ignoring licenses: forming the LLC does not license the activity. Check state and local rules for your trade.

Create your first LLC invoice

Knowing how to start an LLC is the first step; getting paid as one is the next. Once your articles are approved and your EIN and bank account are in place, open the invoice generator, enter your LLC's legal name and new payment details, and download a professional PDF in under a minute. US-based businesses can start from the US invoice generator, which is set up for American date and tax formats.