Registering your business as a formal legal entity is one of the biggest milestones for an entrepreneur. On average, around 5.1 million businesses are formed every year in the US, and many of them are LLCs.

Forming an LLC doesn’t have to be an overwhelming or complicated process. Below, we’ll cover what you should know about forming an LLC for your business—and making your LLC status work for you.

What’s in this article?

• What is an LLC?
  
• What are the benefits of forming an LLC?
  
• How to form an LLC step-by-step
  
• How Stripe Atlas can help
  

What is an LLC?

An LLC (limited liability company) is a type of business structure in the US that, in most cases, protects its owners from being personally responsible for the company’s debts or legal issues. It combines the legal protection of a corporation with the simplicity and flexibility of a sole proprietorship or partnership. You can form an LLC by registering your business with your state, which usually requires filing a simple form and paying a fee.

What are the benefits of forming an LLC?

In many cases, forming an LLC for your business brings significant benefits. These include:

• Protecting your personal assets
  An LLC establishes your business as a legal entity that is distinct from you as its owner. Forming an LLC protects you personally from liability in matters concerning your business, from paying taxes to getting sued.

• Creating clear agreements with business partners
  If you co-own your business with partners, the process of setting up an LLC will prompt you to have a number of important, practical conversations. Who’s responsible for what aspect of the business? What happens if someone decides to leave the business? How are profits shared? Even if you think you and your partners are aligned, it’s a good idea to put these decisions in writing, which you’ll do as part of the LLC formation process.

• Securing and legally protecting your business name
  You’ll choose a business name, formally register that name, solidify a business entity around it, and make it legally your name.

• Improving credibility with lenders and investors
  If you’re planning on taking out loans or raising outside investment capital to power business growth, being a registered LLC makes you more legitimate in the eyes of potential lenders or investors, compared to fundraising as an individual.

How to form an LLC step-by-step

Below are the key steps to forming an LLC. The specific rules and regulations for forming and running an LLC will vary, depending on the state.

1. Conduct an LLC name search

Before officially forming your LLC, you’ll first need to decide on the name you’ll use. While deciding on a name is in part a creative exercise, there are several technical issues you’ll need to consider:

• Restricted words: Most states have lists of restricted words that can’t appear in LLC names. Be sure to check your state’s list before committing to a name.
  
• Trademarks: Your business name can’t infringe on any existing trademarks. Business owners can research potential names using the Trademark Electronic Search System (TESS), a database of registered trademarks and prior pending trademark applications maintained by the US Patent and Trademark Office.
  
• Name availability in your state: You also need to check whether the name is currently being used in your state. The best way to check name availability is to conduct an LLC name search. You can do this by searching for the name in your state’s business entity database, which can usually be found on your state’s Secretary of State website. If the name you have in mind is in use by another LLC or corporation, you’ll likely need to make some changes to your desired name or choose a different one.
  

2. Register the DBA name

The name you officially register for your business might be the same name you operate under, but it’s also common for businesses to operate using a “doing-business-as” (DBA) or “trade” name. This is a public-facing name that’s different from the name the LLC is registered under. For example, the official name you’re filing for your business could be Jack’s Snacks LLC, but you’re planning to run a sandwich shop called Jack’s Sandwich Supreme.

If you’re planning to operate your business using the same name you’re registering for your LLC, you can ignore this step. But if you’re doing business under a different name, you’ll likely need to register a DBA name in addition to filing your articles of organization. Not every state requires this, so check with your state to find out its policies. Registering a DBA name will usually cost around $10–$100, depending on your state or county.

3. Register a domain name

After you’ve confirmed that your desired business name isn’t in conflict with any trademarks and is free to use in your state, it’s a good time to claim your online presence by registering a domain name (or a few of them) for your business website. Even though registering a domain name is not required in order to form an LLC, registering your domain early helps protect your brand online and ensures that no one else claims the web address you want. Your domain name will be the foundation of your digital presence and used for your website, email, marketing, and more. Even if you don’t plan to build your website right away, claiming your domain ensures it’s yours when you’re ready. Many domain names cost just $10–$20 per year, depending on the registrar and your domain name extension (such as .com or .co).

4. File articles of organization

In most states, you can complete articles of organization by downloading and submitting a simple document online. The exact information required in this document will vary from state to state, but all of them will require a few basic details:

• Your business name
  
• The address where your business will be registered (which may or may not be where your physical business is located)
  
• Your name and the names of any other officers
  

You’ll submit the form, along with any required filing fees, to the Secretary of State’s office for the state in which you’re filing. Registering an LLC, including the business name, typically costs anywhere between $50 and $500, depending on which state you’re filing in. The Small Business Administration (SBA) has a list of links to business offices for each state. This is a great place to start learning what’s required to file articles of incorporation in your state.

5. Assign a registered agent

Most states require LLCs to appoint one person as a registered agent. This agent serves as the official point of contact to receive things like service of process notices, compliance-related documents, and communications from any government agencies. This person acts and communicates on behalf of the business and is sometimes one of the LLC’s members listed in the articles of incorporation.

You can assign a registered agent by filling out a simple form, which is typically available on your state’s website. Depending on your state, you’ll be able to either submit the form online, deliver it in person, or mail it in. A registered agent can be an individual or a business entity. If the registered agent is an individual, they don’t need to be an employee or owner of the LLC (they can even be a family member), but they’ll usually need to meet the following requirements:

• Be least 18 years old
  
• Have a physical address (not a PO Box) in the state where the LLC is registered
  
• Be available during typical business hours to receive any mail or official documents
  

6. Write an operating agreement

An operating agreement is a document that lays out the structure of key business operations and internal decision-making. What an operating agreement looks like can vary across businesses, but most of them include the following items:

• Percentage ownership among members
  
• Members’ powers and responsibilities
  
• Voting rights
  
• Rules about transfer of members’ ownership
  

Not every state requires businesses to create an operating agreement in order to form an LLC. But even if your state doesn’t require it, having an operating agreement can be a good idea for businesses. If your LLC involves multiple members or any complex circumstances, consider using an attorney to help draft the agreement. Depending on how many members are in your LLC, the complexity of your situation, and which state you’re in, having an agreement fully drafted by a lawyer can cost anywhere from around $400 to $5,000.

Entrepreneurs with single-member LLCs might be more likely to create their own document using a template, but it can still be a good idea to have a lawyer review the finished agreement. Once the operating agreement is complete, all members and any managers of the LLC should sign it.

7. Fulfill the publication requirements (if your state requires it)

Some states require new LLCs to publish a public notice in a local newspaper announcing their formation.

For example, in New York, LLCs must publish notices in two newspapers, and it must be done in the county where the LLC is located. The cost can vary significantly depending on the county and publication, from $200 to over $1,500 in some parts of New York City.

To ensure compliance, check with your state’s Secretary of State or business filing office. The office can provide:

• A list of approved newspapers
  
• How many times you need to publish
  
• How to submit proof of publication (often a notarized affidavit or certificate)
  

Failure to meet the publication requirement in these states could jeopardize your LLC’s standing or delay its full formation.

8. Obtain a business license and permits

Depending on the type of business you have and the state in which you’re operating, you might need to obtain additional business licenses and permits after you’ve registered your LLC. These requirements can vary widely depending on:

• Your industry (e.g., food service, child care, construction, retail, healthcare)
  
• Your business activities (e.g., selling products, handling hazardous materials, hiring employees)
  
• Your location (state, county, and even city-level rules can differ)
  

The SBA also maintains a list of state business license offices that you can use to research licensing requirements. Costs of these licenses can range from $0 to several hundred dollars, depending on what’s required and how many licenses you need to obtain or renew annually.

9. Get an Employer Identification Number (EIN)

In order to pay taxes as an LLC, you’ll need to obtain a federal tax ID, known as an employer identification number (EIN). This is your business’s version of a Social Security number. You will use it to pay taxes, open a business bank account, or apply for loans.

You can file for an EIN by filling out a form directly on the IRS website. You’ll be prompted to provide some basic information about your LLC and about why you’re applying for an EIN. Once you submit, you’ll receive your new EIN in minutes. You can also apply for an EIN via physical mail, but it will take you about four weeks to receive your EIN by mail.

10. Register with your state’s department of labor

In most states, if your business has employees, you’ll also need to register with the state’s department of labor. If you’re a sole proprietor or single-member LLC with no employees, then you probably don’t need to do this step. But if you plan to hire even one person, including on a part-time or seasonal basis, you’re required to register.

Registering with the department of labor allows you to:

• Report employees’ wages
  
• Pay state employment taxes
  
• Comply with unemployment insurance and workers’ compensation laws
  
• Meet wage, hour, and labor law requirements
  

You can find your state’s department of labor website here.

11. Open a business bank account

Now that your LLC is a legally distinct entity, it’s important to set up everything the business needs to operate financially. The first and highest-priority step is opening a business bank account to serve as the home base of your LLC’s financial operations.

After opening a business bank account, there are other steps you’ll probably want to take to build your business’s financial foundation, such as getting a company credit card and onboarding with a payments processor like Stripe.

How Stripe Atlas can help

Stripe Atlas sets up your company’s legal foundations so you can fundraise, open a bank account, and accept payments within two business days from anywhere in the world.

Join 80K+ companies incorporated using Atlas, including startups backed by top investors like Y Combinator, a16z, and General Catalyst.

Applying to Atlas

Applying to form a company with Atlas takes less than 10 minutes. You’ll choose your company structure, instantly confirm whether your company name is available, and add up to four cofounders. You’ll also decide how to split equity, reserve a pool of equity for future investors and employees, appoint officers, and then e-sign all your documents. Any cofounders will receive emails inviting them to e-sign their documents, too.

Accepting payments and banking before your EIN arrives

After forming your company, Atlas files for your EIN. Founders with a US Social Security number, address, and cell phone number are eligible for IRS expedited processing, while others will receive standard processing, which can take a little longer. Additionally, Atlas enables pre-EIN payments and banking, so you can start accepting payments and making transactions before your EIN arrives.

Cashless founder stock purchase

Founders can purchase initial shares using their intellectual property (e.g., copyrights or patents) instead of cash, with proof of purchase stored in your Atlas Dashboard. Your IP must be valued at $100 or less to use this feature; if you own IP above that value, consult a lawyer before proceeding.

Automatic 83(b) tax election filing

Founders can file an 83(b) tax election to reduce personal income taxes. Atlas will file it for you—whether you are a US or non-US founder—with USPS Certified Mail and tracking. You’ll receive a signed 83(b) election and proof of filing directly in your Stripe Dashboard.

World-class company legal documents

Atlas provides all the legal documents you need to start running your company. Atlas C corp documents are built in collaboration with Cooley, one of the world’s leading venture capital law firms. These documents are designed to help you fundraise immediately and ensure your company is legally protected, covering aspects like ownership structure, equity distribution, and tax compliance.

A free year of Stripe Payments, plus $50K in partner perks and $2,500 in Stripe credits

Atlas collaborates with top-tier partners to give founders exclusive discounts and credits. These include discounts on essential tools for engineering, tax, finance, compliance, and operations from industry leaders like AWS, Carta, and Perplexity. We also provide you with your required Delaware registered agent for free in your first year. Plus, as an Atlas user, you'll get $2,500 in Stripe product credits for use in their first year after incorporation.

Learn more about how Atlas can help you set up your new business quickly and easily, and get started today.