Key takeaways
- 1Form your LLC in the state where you actually do business. Forming in Delaware or Wyoming while operating at home usually means paying two states and keeping two registered agents.
- 2State filing fees vary widely: $70 to file in California, $125 in Florida and $300 in Texas, before yearly fees such as California’s $800 annual tax.
- 3An EIN from the IRS is free, and an operating agreement costs nothing to write but protects you if the business is ever challenged.
- 4Since FinCEN’s rule changes in 2025 and 2026, LLCs formed in the US do not have to file a beneficial ownership (BOI) report.
In this guide
- Step 1: Pick the state to form in
- Step 2: Check the name and appoint a registered agent
- Step 3: File articles of organization and pay the fee
- Worked example: first-year cost in three states
- Step 4: Write an operating agreement and get an EIN
- Step 5: Decide how the LLC is taxed
- Step 6: BOI, bank account, licenses and annual reports
- Frequently asked questions
Step 1: Pick the state to form in
An LLC is created under the law of one state. For most small businesses the right choice is the state where you live and work. That is where you have customers, staff, an office or a home workspace, and that is where the state will expect you to register anyway.
Delaware and Wyoming are popular online because of their courts, privacy rules or low fees. Wyoming charges $100 to file and a yearly license tax of $60 for most small LLCs. Delaware charges a flat $400 annual tax on every LLC. Those advantages mostly matter to larger companies with investors, or to owners with no physical presence anywhere in the US.
The trap is foreign qualification. If your Delaware or Wyoming LLC does business in your home state, your home state treats it as a "foreign" LLC and requires it to register there too. You then pay registration and yearly fees in both states and keep a registered agent in both. A California seller with a Delaware LLC still owes California’s $800 annual tax, plus Delaware’s $400.
Step 2: Check the name and appoint a registered agent
Your LLC’s name must be distinguishable from other businesses already registered in the state, and most states require it to end with "LLC", "L.L.C." or "Limited Liability Company". Search the name on your Secretary of State’s business search page before you file. Some states let you reserve a name for a small fee if you are not ready to file yet. A state name approval is not a trademark, so a quick federal trademark search is also worth doing.
Every LLC must name a registered agent: a person or company with a physical street address in the state who accepts lawsuits and official state mail for the business during normal business hours. You can usually be your own agent if you live in the state, but your address then goes on the public record. A P.O. box does not count. Our guide on registered agents covers the options and costs in detail.
Step 3: File articles of organization and pay the fee
The document that creates the LLC is usually called articles of organization. Texas and Delaware call it a certificate of formation. It is short: the LLC’s name, its registered agent and address, whether it is run by its members or by managers, and the organizer’s signature. Most states accept it online and approve it within days.
The filing fee is a one-off charge, but most states also charge something every year. Those yearly fees are what make one state far more expensive than another over time.
| State | Filing fee | Yearly charge | Notes |
|---|---|---|---|
| California | $70 (online) | $800 annual tax | Plus a $20 Statement of Information within 90 days, then every two years |
| Texas | $300 | $0 for most small LLCs | No franchise tax due at or below $2.65 million revenue (2026), but a Public Information Report is still required |
| Florida | $125 | $138.75 annual report | Report due January 1 to May 1; a $400 late fee applies after May 1 |
| Wyoming | $100 | $60 minimum license tax | $60 applies to most small LLCs; higher only with large Wyoming assets |
| Delaware | See state schedule | $400 annual tax | Due by June 1; $200 penalty plus interest if late |
Worked example: first-year cost in three states
Here is what the state alone charges a single-owner LLC in its first two years in California, Texas and Florida. It assumes you act as your own registered agent and file everything yourself online, so there are no service fees. California’s $800 annual tax is due in the first year: the exemption for LLCs formed in 2021 to 2023 has ended.
- Texas costs the most to file but the least to keep, as long as revenue stays at or below the no-tax-due threshold.
- California is the most expensive state in the table by far, and the $800 is owed every year until you formally cancel the LLC, even if it makes no money.
- These are state fees only. Add any registered agent service, local business licenses and, in a few states such as New York, a newspaper publication requirement.
| Cost | California | Texas | Florida |
|---|---|---|---|
| Filing fee | $70 | $300 | $125 |
| Initial report or statement | $20 | $0 | $0 |
| Annual tax or report, year 1 | $800 | $0 | $0 (first report due the next year) |
| Total, year 1 | $890 | $300 | $125 |
| Yearly fees, year 2 | $800 | $0 | $138.75 |
| Total over two years | $1,690 | $300 | $263.75 |
Step 4: Write an operating agreement and get an EIN
An operating agreement sets out who owns the LLC, how profits are split, who makes decisions and what happens if a member leaves or dies. You do not file it with the state, and most states do not require one, though New York requires LLCs to adopt one within 90 days of filing. Write one anyway, even as a single owner. It shows a bank and a court that the LLC is a real, separate business, which helps protect your personal assets.
Next, apply for an employer identification number (EIN) on IRS.gov. It is free and the online application gives you the number straight away. A single-member LLC with no employees can technically use the owner’s Social Security number for income tax, but you will need an EIN to hire staff, and most banks ask for one before they open a business account. Ignore websites that charge for an EIN; the IRS does not.
Step 5: Decide how the LLC is taxed
An LLC is a legal structure, not a tax status. By default the IRS taxes a single-member LLC like a sole proprietorship, on Schedule C of your personal return, and a multi-member LLC like a partnership. Profit is subject to income tax and self-employment tax (15.3% on most of it) either way. Forming the LLC does not change your federal tax by itself.
You can later elect to have the LLC taxed as an S corporation or a C corporation. An S corporation election can save self-employment tax once profit is high enough to pay yourself a reasonable salary, but it adds payroll and a separate return. Run your numbers first, and plan to pay quarterly estimated tax from your first profitable quarter, since no employer is withholding it for you.
Free toolSelf-employment tax calculatorStep 6: BOI, bank account, licenses and annual reports
Beneficial ownership (BOI) reporting to FinCEN no longer applies to LLCs formed in the US. FinCEN exempted US companies in an interim rule in March 2025 and made that permanent in a final rule effective August 14, 2026. Only companies formed outside the US and registered to do business here still report, and only about their non-US owners. Be wary of letters or emails demanding a BOI filing fee from a US LLC.
Open a separate business bank account with your approved articles, EIN and operating agreement, and run every business payment through it. Mixing personal and business money is the most common way owners weaken the liability protection the LLC gives them.
Then check what your city and county require. Many need a general business license, and some trades need a state license or permit, as do businesses that collect sales tax. Finally, put the state’s yearly report or tax deadline in your calendar. Missing it can cost late fees and, eventually, administrative dissolution of the LLC.
- Bank account: approved articles of organization, EIN letter, operating agreement and photo ID.
- Licenses: city or county business license, any trade license, and a sales tax permit if you sell taxable goods.
- Yearly: the state report or tax, your registered agent’s details kept current, and quarterly estimated tax payments.
