After helping 1,200+ entrepreneurs form LLCs across all 50 states, I can tell you exactly what matters and what’s just expensive noise.
Here’s the truth: Forming an LLC takes five steps, costs $30-350, and can be done in an afternoon. Everything else is either upselling, fear-mongering, or lawyers justifying their fees.
But here’s the other truth: Mess up those five steps, and you’ll create headaches that last years. Skip the wrong detail, and your “liability protection” becomes worthless paper. Choose the wrong state because some guru said so, and you’ll pay double fees forever.
Let me show you exactly how to form an LLC—the right way, in the right state, without the usual BS.
What an LLC Actually Does (And Doesn’t Do)
What it does: Separates your business from your personal life legally. If someone sues your business, they can’t take your house (usually).
What it doesn’t do: Magically save taxes, make you look professional, or protect you from personal guarantees on loans.
An LLC is insurance, not magic. It’s a legal firewall between your business mistakes and your personal assets. That’s it. That’s the product.
The Only 5 Steps That Actually Matter
Step 1: Pick a Name That Won’t Get Rejected
Step 2: Choose Your Registered Agent
Step 3: File Your Articles of Organization
Step 4: Create an Operating Agreement
Step 5: Get Your EIN
That’s it. Everything else is either optional, state-specific, or someone trying to sell you something.
Step 1: Choose Your LLC Name (Without Overthinking It)
Your LLC name needs three things:
- Uniqueness – Can’t match existing businesses in your state
- Proper ending – Must include “LLC” or similar
- No restricted words – Can’t imply you’re a bank, university, etc.
The name check process:
- Search your state’s business database
- Check for exact and similar matches
- Remember: “Tech Solutions LLC” and “Tech Solution LLC” are too similar
Jake’s naming reality: Your LLC name doesn’t matter as much as you think. You can do business under a DBA if you want a different public name. I’ve seen “ABC Holdings LLC” build million-dollar brands. Stop obsessing.
Common rejections:
- Too similar to existing names
- Missing LLC designation
- Using restricted words (Bank, Insurance, University)
- Including your name wrong (“Jake Lawson’s LLC” vs “Jake Lawson LLC”)
Step 2: Choose Your Registered Agent (The $100 Question)
Every LLC needs a registered agent—someone available during business hours to accept legal documents.
Your three options:
Option 1: Be Your Own Agent (Free)
Pros: Saves $100-300/year Cons: Your address becomes public, must be available 9-5, can’t travel freely Best for: Home-based businesses that don’t mind public addresses
Option 2: Use Family/Friends (Free but Risky)
Pros: Still free Cons: Awkward if they mess up, reliability issues Best for: Nobody (seriously, don’t do this)
Option 3: Hire a Service ($100-300/year)
Pros: Professional address, never miss documents, privacy Cons: Annual cost Best for: Most businesses
The registered agent truth: For most people, paying $125/year for a service beats having your home address on Google forever.
Step 3: File Your Articles of Organization (The Birth Certificate)
This is the document that actually creates your LLC. Every state calls it something slightly different:
- Articles of Organization (most states)
- Certificate of Formation (Texas, Delaware)
- Certificate of Organization (several states)
- Articles of Formation (who knows why)
What you’ll need:
- LLC name
- Principal address
- Registered agent info
- Organizer signature (that’s you)
- Filing fee ($30-350)
Filing options:
- Online: Available in 45+ states, usually instant or within days
- Mail: Still required in some backwards states, adds 1-2 weeks
- In-person: For masochists and people who miss the DMV
State filing fees (the painful truth):
- Cheapest: Kentucky ($40), Missouri ($50), Michigan ($50)
- Most expensive: Massachusetts ($500), Illinois ($150), Alabama ($200)
- Average: $132
Processing times:
- Instant approval: Most online filings
- Standard: 5-10 business days
- Expedited: 1-2 days (costs $25-1,000 extra)
- Wyoming/South Dakota: Still using mail like it’s 1995
Step 4: Create Your Operating Agreement (Your Business Prenup)
Your operating agreement is the most important document nobody talks about. It’s your business prenup, constitution, and rulebook rolled into one.
What it covers:
- Who owns what percentage
- How profits get distributed
- What happens if someone wants out
- What happens if someone dies
- How decisions get made
- Literally everything that matters
Single-member LLC? I still need one. It proves your LLC isn’t just you playing dress-up.
Multi-member LLC? Absolutely critical. Without it, state default rules apply, and they’re terrible.
What happens without one:
- State default rules apply (usually awful)
- No proof of ownership percentages
- No exit strategy
- Courts treat your LLC like a sole proprietorship
- Partners fight, businesses die
Jake’s template strategy: Download a free template, customize the percentages and basic terms, have everyone sign it, put it in a drawer. You don’t file it anywhere. It’s internal.
Step 5: Get Your EIN (Your Business’s SSN)
An EIN is your business’s Social Security number. You need it for:
- Opening bank accounts
- Hiring employees
- Filing taxes
- Looking legitimate
How to get one:
- Online (with SSN): 15 minutes, free, instant
- Fax/Mail (without SSN): 1-3 months, still free, painful
- Third-party services: $50-200, unnecessary unless you’re foreign
Critical rule: One business = One EIN. Forever. Don’t get multiple EINs. It creates IRS nightmares.
The State Selection Reality Check
Where you SHOULD form your LLC: Where you actually do business. Period.
Where you SHOULDN’T form your LLC:
- Delaware (unless you’re raising VC money)
- Nevada (unless you live there)
- Wyoming (unless you live there)
- Any state you don’t do business in
The out-of-state LLC myth: Forming in another state doesn’t avoid your home state’s taxes or laws. You’ll need to register as a foreign LLC in your home state anyway. Now you’re paying two states instead of one.
Real example:
- California resident forms Wyoming LLC: $60/year
- Must register as foreign LLC in California: $800/year
- Total: $860/year + two registered agents
- Should have just formed in California: $800/year
After Formation: The Stuff That Actually Matters
Get a Business Bank Account
Requirements:
- EIN letter
- Articles of Organization
- Operating Agreement
- Your ID
Pro tip: Credit unions are easier than big banks.
Annual Reports (The Recurring Bill)
Most states require annual or biennial reports:
- Average cost: $50-100/year
- Expensive outliers: California ($800), Delaware ($300)
- Due dates: Varies wildly by state
Business Licenses (Maybe)
Usually don’t need:
- Online businesses
- Consultants
- Most service businesses
Usually do need:
- Restaurants
- Construction
- Professional services
- Retail stores
Tax Reality for LLCs
Default taxation:
- Single-member LLC = Sole proprietorship
- Multi-member LLC = Partnership
What this means: The LLC doesn’t pay taxes. You do, on your personal return.
S-Corp election: Don’t even think about it until you’re netting $75,000+/year. The paperwork and payroll requirements aren’t worth it before then.
Common Formation Disasters I’ve Seen
The Multiple EIN Mess: Guy got 3 EINs for the same business. IRS confusion lasted years.
The Operating Agreement Disaster: Partners had verbal agreement. One died. Widow claimed 50%. Lawsuits ensued.
The Wrong State Waste: Formed in Nevada, lived in New York. Paid double fees for five years before fixing.
The DIY Legal Zoom: Paid $500 for what should have cost $150. Still had to fix everything.
The Name Change Nightmare: Didn’t check name availability. Got rejected. Had to redo everything.
Your Formation Timeline
Day 1:
- Choose name (30 minutes)
- Check availability (10 minutes)
- Choose registered agent (20 minutes)
Day 2:
- File Articles online (30 minutes)
- Pay fee
- Wait for approval
Day 3-10:
- Get approval email
- Apply for EIN (15 minutes)
- Draft Operating Agreement (1 hour)
Week 2:
- Open bank account
- Order business cards (if you care)
- Start doing business
Total active time: 3-4 hours Total cost: $50-500 depending on state
DIY vs. Hiring a Service
Do it yourself if:
- You’re comfortable with forms
- You have 3-4 hours
- You want to save $100-200
- You’re forming in your home state
Hire a service if:
- Your time is worth >$50/hour
- You hate paperwork
- You’re forming in multiple states
- You want someone to blame
Avoid services that:
- Charge more than $200 above state fees
- Push unnecessary add-ons
- Won’t tell you total costs upfront
- Have terrible reviews
The LLC Reality Check
An LLC is a tool, not a magic bullet. It provides:
- Basic liability protection
- Tax flexibility
- Professional structure
- Banking simplicity
It doesn’t provide:
- Complete protection from lawsuits
- Automatic tax savings
- Instant credibility
- Business success
Your Action Plan
This week:
- Decide on your LLC name
- Check name availability
- Choose registered agent option
- File your Articles
- Get your EIN
Next week:
- Draft Operating Agreement
- Open bank account
- Set annual report reminder
- Start operating
This month:
- Get any required licenses
- Set up bookkeeping
- Understand your tax obligations
- Actually run your business
The Bottom Line
Forming an LLC is simple:
- 5 steps
- $30-350 in state fees
- 3-4 hours of work
- 1-2 weeks total time
Everything else is noise, upselling, or edge cases that probably don’t apply to you.
Form in your home state, follow the five steps, keep good records, and get back to building your business. The LLC is just paperwork that protects you while you do the real work.
Need More Unfiltered LLC Truth?
If you want straight talk about LLCs without the legal jargon or formation service sales pitches, check out llciyo.com. We’ll tell you exactly what you need (and don’t need) for your specific situation.
Remember: The best LLC is a formed LLC. The perfect LLC you never file protects nothing. Stop overthinking, start filing.
Jake Lawson has helped over 1,200 entrepreneurs form LLCs in all 50 states. He’s fixed more formation mistakes than he can count and still believes most people overthink this process by approximately 300%. When he’s not explaining why you don’t need a Delaware LLC, he’s probably telling someone to stop waiting for the “perfect” business name.