An LLC separates your personal assets (car, house, savings) from your business liabilities. If the business is sued, your personal assets are generally protected. It is a popular structure for small businesses.
⚠️ Important Considerations
- You may need specific business licenses (city/county) in addition to the LLC.
- Some states have high annual franchise taxes (e.g., California is $800/year minimum) even if you make no money.
- You must keep business and personal finances separate ('piercing the corporate veil').
Step-by-Step Guide
1. Choose a Name
Search your state's Secretary of State database to ensure the name is unique and available. The name must include "LLC" or "Limited Liability Company."
2. Choose a Registered Agent
This is a person or service designated to receive legal mail (lawsuits) for the business. You can be your own agent if you have a physical address in the state.
3. File Articles of Organization
Submit this simple form to the Secretary of State with the filing fee ($50-$200 typically). This legally creates the entity.
4. Create Operating Agreement
An internal document outlining ownership percentages and rules. Not filed with the state, but crucial for banks and legal protection.
5. Get an EIN
Apply for an Employer Identification Number (Tax ID) for free on the IRS website. Do not pay for this—it's free directly from the IRS.