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LLC Formation Process
The process of forming an LLC is the same across states, with only slight variations.
In every US state, you need a unique business name and a registered agent.
Before incorporating as a non-resident, decide whether to use a virtual address. See this chapter.
When forming an LLC, you have three options:
- Do it yourself: not recommended for beginners
- Use a service: ideal for most people
- Hire a professional: only necessary for very specific requirements
Although I don't recommend the DIY route for beginners, let's overview it to understand the process better.
The United States is a federal republic, and LLCs are governed by state laws. Each state has its own rules for LLCs.
Step 1: Choose a Name
The first step is to choose a legal business name that is distinct and not already in use in your chosen state.
States require an LLC name to include "Limited Liability Company," "L.L.C.," or "LLC." You cannot use certain keywords like "corporation."
Your company name can differ from your product name.
Check whether the name is already in use in your chosen state.
For Delaware, use the official website to search registered entities. Consult this if you're planning an LLC in Delaware.
Conduct a trademark search to avoid infringing on existing trademarks.
Keep the name unique. If you expand into other states, you might need a DBA ("Doing Business As") registration if someone else uses your name. That can be complex and costly.
Although not required, check whether the .com domain is available. You could use another TLD like .net, .app, or .dev, but .com is the most common. Consider registering the domain before formation—company names become public and bots may register domains to resell at a premium.
Some states let you reserve an LLC name for a fee, preventing others from registering it during the reservation period. Availability, fees, and reservation periods vary by state.
Step 2: Registered Agent
A registered agent is mandatory. This person or service accepts official documents (lawsuits, summons, or subpoenas) on behalf of your company.
Read more about registered agents here.
Step 3: Operating Agreement
An operating agreement is like a constitution for a business. It lays out the basic rules for how the business will be set up, who the owners are, what their rights and responsibilities are, how disputes will be handled, what happens if the company shuts down, and a variety of other possible topics.
Delaware and Wyoming don't mandate having an operating agreement. Having a well-drafted operating agreement is particularly important for multi-member LLCs.
Step 4: File Forms
To launch an LLC, you must file initial formation documents under your chosen state's laws.
In the case of Delaware, it's a Certificate of Formation, which can be downloaded from here, and duly filled out and filed with a state filing fee of $110.
Fees and forms vary by state.
Post-Formation Steps
These steps generally apply to most states, although the details may vary.
After forming an LLC, one important step remains.
Step 5: Apply for an EIN
An EIN, or Employer Identification Number, is a unique number assigned by the IRS to identify a business for tax purposes.
It's mainly used for:
- Filing taxes
- Opening a business bank account
- Hiring employees
- Applying for licenses or permits
US residents can apply online for free. Non-US residents must apply by mail or fax.
Fill out IRS Form SS-4 correctly and send it to the IRS. You'll receive an EIN assignment letter within a few days.
BOI Report
As of March 2025, Beneficial Ownership Information (BOI) reporting is no longer required for US LLCs owned by non-residents, which was the case before. Check this official news release and FAQ for more information.
Conclusion
Forming an LLC isn't rocket science, but it's wise to use a service to handle the process, since mistakes on any forms can be costly to fix later.
Disclaimer: All content here is for general informational purposes only and not intended as legal, tax, or financial advice. Always consult a qualified professional before taking any action. Use at your own risk; the author assumes no liability.