How To Form an LLC by State

Frequently Asked Questions

• How Do I Form an LLC?

  • The exact process of forming an LLC varies by state. But a few general principles apply:

    Once you've decided an LLC is the right business structure for you, you'll choose a business name and file articles of organization with your local secretary of state's office. Some states call them certificates of organization or certificates of formation.

    Most states also require entrepreneurs to choose a registered agent during this process. The registered agent accepts legal documents on behalf of the business, including the service of process.

    Most states also require some kind of annual report for an LLC to remain in good standing with the government. Different states require different information to be in these reports, but most require at least an up-to-date company name and address and contact information for your registered agent.

    Not all states require an operating agreement for an LLC, but it's a good idea to have one.

• Where Should I Register My LLC?

  • Generally, you'll want to register your business in the state where you reside. Otherwise, you'll be considered a foreign LLC. Registration in your home state is much more straightforward, but it's possible that high taxes in your state could be a hurdle for your new business. In that case, you might consider registering in a different state.

    Some states are considered especially favorable for LLCs. For example, many businesses choose to register as LLCs in Wyoming because it has no personal or corporate income tax. Meanwhile, Nevada offers strong privacy protections for business owners and has no franchise tax or corporate taxes. You've probably heard that a large number of businesses register in Delaware - that's because its filing and franchise fees are very low and its laws extremely favorable to businesses.

• How Much Does It Cost to Form an LLC in Different States?

  • LLC costs vary widely from state to state. In most states, a business owner forming an LLC must pay a state filing fee as well as an annual fee (or sometimes a biennial fee).

    The following states require a one-time filing fee and no additional fees:

    • Arizona
    • Idaho
    • Minnesota
    • Mississippi
    • Missouri
    • New Mexico
    • Ohio
    • South Carolina
    • Texas

    LLC filing fees vary by state. In New York, for example, business owners pay a $200 initial filing fee but only $9 every two years after that. Michigan requires a $50 filing fee and an annual fee of $25. Tennessee is one of the more costly states - business entities registered as LLCs pay a $300 filing fee and a $300 annual fee.

    In these states, you can register your LLC for $150 or less:

    • Arkansas
    • Colorado
    • Hawaii
    • Louisiana
    • New Hampshire
    • New Jersey
    • North Carolina
    • Rhode Island
    • Wisconsin

• Do I Have to Register My LLC With the IRS?

  • Not exactly. Once you've registered your business entity as an LLC in your state, you'll probably apply for an Employer Identification Number (EIN) from the Internal Revenue Service. EINs allow businesses to open bank accounts, apply for business licenses, and hire employees.

    Depending on the elections you make when completing state registration, the IRS will either consider your domestic limited liability company as a corporation, a partnership, or a part of your personal tax return.