How to start an LLC

A practical checklist for choosing a state, filing formation documents, and keeping an LLC in good standing.

1. Choose where the LLC should be formed

For most small businesses, the best state is usually the state where the business actually operates. Forming elsewhere can add foreign registration, registered agent, and annual reporting costs.

2. Compare upfront and recurring fees

Look beyond the initial filing fee. Annual reports, franchise taxes, publication requirements, and registered agent costs can matter more over time.

3. File the formation document

Most states call this document the articles of organization or certificate of formation. The filing creates the LLC at the state level.

4. Create an operating agreement

An operating agreement records ownership, management rules, member duties, and how money moves through the company.

5. Keep the LLC in good standing

Track annual report deadlines, state taxes, address changes, and registered agent requirements.