How to Start an LLC: The Complete Step-by-Step Guide

Starting an LLC takes less paperwork than most people expect. The part that goes wrong is almost never the filing itself - it is the decisions made before and after it: which state, who is listed publicly, how the company is taxed, and what has to be filed every year so the structure stays alive.

This guide walks through the whole process in the order you will actually do it, with realistic costs and the details that matter if you are not living in the United States.

What an LLC actually is

A Limited Liability Company is a US business entity that separates your personal assets from the company obligations, while staying flexible on how it is taxed. By default a single-member LLC is a disregarded entity for federal tax purposes: it does not pay corporate tax itself, and profit flows through to the owner. A multi-member LLC defaults to partnership treatment. Either can elect to be taxed as a corporation if that ever becomes useful.

That flexibility is the reason the LLC became the default vehicle for freelancers, agencies, e-commerce sellers and software companies. It gives corporate-level liability protection with far less internal formality than a C-Corp.

Step 1: Choose the state

This is the decision with the longest consequences, and the one most people rush.

• You live and operate in a US state: form there. Registering elsewhere just means you also have to register as a foreign LLC in your home state and pay both.
• You are outside the US with no physical presence there: you are free to choose, and the practical winners are Wyoming, Delaware and New Mexico.
• You plan to raise venture capital: Delaware, and usually as a corporation rather than an LLC.

For a non-resident owner selling services or digital products, the state mostly determines cost, privacy and annual admin. That is why so many end up choosing a Wyoming LLC: low fixed cost, no state income tax and no public member registry.

Step 2: Pick a name that will actually be approved

The name must be distinguishable from existing entities in that state and must include an identifier such as LLC or Limited Liability Company. Words implying banking, insurance or a university are restricted almost everywhere.

Two checks are worth doing before you file: the state business name database, and a quick trademark search at the USPTO. A name that clears the state registry can still be someone else trademark, and that problem surfaces later, usually when a payment processor or a marketplace asks about it.

Step 3: Appoint a registered agent

Every LLC needs a registered agent with a physical address in the state of formation, available during business hours to receive legal and state correspondence. A PO box does not qualify.

If you are abroad, this is not optional and not something to improvise: the agent address is what the state uses to reach you, and a missed notice can end with an administrative dissolution. Commercial agents cost roughly $50-$200 per year depending on the state and provider.

Step 4: File the Articles of Organization

This is the formation document itself. It typically asks for the company name, the registered agent, the principal address, the organizer and, in some states, the members or managers. Filing is done online in most states and the state fee ranges from about $50 to $500.

Approval time varies: Wyoming and New Mexico are usually same day to a couple of business days, Delaware is fast with expedited service, and a few states take a week or more during peak periods.

Step 5: Write the Operating Agreement

Most states do not require it. Write it anyway.

The Operating Agreement defines ownership percentages, how profits are distributed, who can sign, what happens if a member leaves, and how the company is dissolved. For a single-member LLC it also does something practical: it is the document banks, processors and, if it ever comes to it, courts use to see that the company is a real separate entity and not an extension of your personal finances.

Step 6: Get the EIN

The EIN (Employer Identification Number) is the company federal tax number. You need it for banking, payment processors, tax filings and most B2B contracts.

If you have an SSN or ITIN, the online IRS application returns the EIN in minutes. Without either, the application goes on Form SS-4 by fax or mail, and the realistic wait is a few weeks. No SSN is required to own an LLC or to get an EIN for it - that is one of the most persistent myths in this space.

Step 7: Open the business bank account

Mixing personal and company money is the fastest way to weaken the liability protection you just paid for. Open a dedicated account before the first invoice goes out.

Traditional US banks generally want an in-person visit. Fintech providers built for remote founders handle the whole process online with the formation documents, the EIN and your passport. Once that is in place, Stripe, PayPal and similar processors can be connected in the company name.

Step 8: Know what you owe every year

Formation is a one-off. Compliance is not. Depending on the state and your situation, the recurring obligations usually include:

• Annual report or franchise tax to the state (Wyoming: $60 minimum; Delaware LLC: $300 flat).
• Registered agent renewal.
• Form 5472 with a pro forma 1120 for a foreign-owned single-member LLC. The penalty for missing it starts at $25,000, which makes it the single most expensive thing to forget.
• Form 1065 and K-1s for multi-member LLCs.
• Sales tax registrations if you sell physical goods into states where you have nexus.

The full picture of what has to be filed and when is covered in the guide to LLC tax obligations.

What it really costs

Item	Typical cost	Frequency
State filing fee	$50-$500	One-off
Registered agent	$50-$200	Annual
EIN	Free from the IRS	One-off
Operating Agreement	$0-$300	One-off
Annual report or franchise tax	$60-$300	Annual
Bookkeeping and filings	$300-$1,500	Annual

A lean, correctly maintained LLC for a service business realistically costs somewhere between $400 and $1,200 a year after formation. Anyone quoting far less is usually leaving out the tax filings.

The mistakes that cost the most

1. Choosing a state for the marketing, not the facts. If you operate from California, a Wyoming LLC does not remove California obligations.
2. Treating the company account as a personal wallet. This is what pierces the corporate veil in practice.
3. Ignoring Form 5472. A $25,000 penalty on a company with $40,000 of revenue ends the project.
4. Assuming 0% US tax means 0% tax anywhere. Your own country of tax residence has its own rules and they usually apply to you personally.
5. Letting the registered agent lapse. Silent, cheap to avoid, expensive to reinstate.

Is an LLC the right structure for you?

An LLC fits well if you sell services, software, digital products or online goods, want liability separation, and value low administrative overhead. It fits poorly if you need EU VAT numbers for intra-community trade, or if you are raising institutional funding and investors expect Delaware C-Corp paperwork.

If you are weighing a US structure against a European one, the numbers-based comparison in Cyprus or Wyoming LLC is a useful reality check before you file anything.

Next step

The process is: pick the state, clear the name, appoint an agent, file, sign the Operating Agreement, get the EIN, open the account, and calendar the annual filings. Done in that order it is a matter of days, not months.

If you are based outside the United States, the practical route is to open an LLC as a non-US resident with formation, EIN, address and banking handled as one package - see what is included and at what price in the formation packages, or book a free Google Meet to check your case first.

Frequently asked questions

How long does it take to start an LLC? The state filing itself takes from a few hours to a few business days. The realistic end-to-end timeline, including the EIN and a working bank account, is two to six weeks depending on whether you hold an SSN or ITIN.

Do I need a lawyer? Not for a standard single-member LLC. A lawyer is worth it when there are multiple partners with unequal contributions, investors, or IP being contributed to the company.

Can I start an LLC without living in the US? Yes. There is no citizenship or residency requirement to own a US LLC, and no SSN is needed to obtain the company EIN.

Which state is cheapest? New Mexico has the lowest recurring cost because there is no annual report, but Wyoming is usually the better balance of cost, privacy and banking acceptance.

Can I change the state later? Yes, either by domestication into the new state or by forming a new entity and moving the business across. Both are doable, both cost more than choosing correctly the first time.

Does an LLC protect me from everything? No. It does not protect against your own professional negligence, personal guarantees you sign, or unpaid payroll taxes. It protects against ordinary business liabilities when the company is run as a genuinely separate entity.

Keep Reading

• how Delaware and Wyoming really compare for a non-resident LLC
• what belongs in an LLC operating agreement for non-resident owners
• which US address your LLC actually needs