How To Establish An LLC Yourself - ELIZABETHSTAPLETON.COM (2024)

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If you are working for yourself or running your own business, you may hear the term LLC thrown around. Generally, as people telling you your business should be an LLC. But what is an LLC and how complicated is it establish an LLC?

First, LLC stands for Limited Liability Company; I’ll explain more in a sec. Second, it’s easy to set up an LLC yourself, you don’t have to hire a lawyer, but you certainly could if it would make you feel better.

What is an LLC?

As I already mentioned, LLC stands for limited liability company. What that means is that if somebody goes after your business, like in a lawsuit, your personal assets are protected. You won’t be held personally accountable for the company’s debts or liabilities.

So why the limited part? Well, it can vary by state, but generally unlike a corporation, if a member of the LLC dies or files for bankruptcy the LLC has to be dissolved.

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Additionally, an LLC acts differently in that it allows for flow-through taxation. Meaning the money is only taxed once. The money/income flows through to the LLC owner or member, and they pay the usual income tax and other taxes that apply.

Unlike a corporation which is taxed on its revenues then pays you and you are also taxed, resulting in double taxation.

How to Establish an LLC

If you want to establish an LLC, then your state’s Secretary of State website is going to be your best friend. Though to be honest, not all secretary of state websites are created equal. It can sometimes be tough to locate, so I’ve linked to the various state’s websites below.

But before we get to that, let me walk you through the general steps to creating an LLC.

Make Sure Your Desired Business Name is Available

Once in the Corporations section, run a search on the name you want to use for your business. If it is already being used, you are almost guaranteed to have your LLC application turned down. Though there can be some exceptions.

Find Out If You Can Apply Online or If You Have to Do So by Mail

Most states allow you to submit the documents necessary to establish an LLC online. However, you will want to find out the correct process.

While reading up on the process, you will also likely learn what documents you will need to submit to establish your LLC.

It is typically an Articles of Organization or Certificate of Organization.

Complete Your Articles of Organization

Again depending on the state, these may be called Certificate of Organization or some other name.

The Certificate of Organization usually asks for:

the name of the company,
location,
name of the owner,
and name and contact information for an agent.

It may also require you to describe your business briefly. If you are struggling with what to write as a description, you can use the corporation’s search to find similar businesses and see what they wrote.

Submit Your Articles of Organization with the Required Fee

A fee is almost always required to register an LLC.

However, the cost of the fee varies greatly by state.

Some states it may be as low as $45, others can be as high as $500. This fee is typically recurring annually so make sure you set aside this amount during the year so you can renew your registration.

Wait

Depending on the state, how long you have to wait to find out if your registration has been accepted can vary, especially if you had to submit it via snail mail. Though I’ve seen same day responses for LLC registrations submitted online.

Why Do I Always Hear About Delaware?

One of the reasons big companies register in Delaware is because Delaware offers Series LLCs which I won’t get into today. I will say that if you are a new business owner, then unless you actually live in Delaware, there is no need to establish an LLC in Delaware.

If you do register in Delaware, you will likely still be required to register as a foreign LLC in your home state. Meaning you just have to pay more in registration fees each year.

That’s It

While you can certainly hire a lawyer, as you can see, you can establish an LLC in your state without too much difficulty. Just make sure to read up on your Secretary of State’s website.

State by State

Alabama | Secretary of State Corporations Website| Filing fee = $100

Alaska | Secretary of State Corporations Website| Filing fee = $250

Arizona | Secretary of State Corporations Website | Filing fee = $50

Arkansas | Secretary of State Corporations Website| Filing fee = $45

California | Secretary of State Corporations Website | Filing fee = $70

Colorado | Secretary of State Corporations Website| Filing fee = $50

Connecticut | Secretary of State Corporations Website| Filing fee = $120

Delaware | Secretary of State Corporations Website | Filing fee = $90

Florida | Secretary of State Corporations Website | Filing fee = $120

Georgia | Secretary of State Corporations Website| Filing fee = $100

Hawaii | Secretary of State Corporations Website | Filing fee = $50

Idaho | Secretary of State Corporations Website| Filing fee = $100

Illinois | Secretary of State Corporations Website | Filing fee = $400

Indiana | Secretary of State Corporations Website| Filing fee = $100

FAQs

What is the cheapest way to form an LLC in California? ›

What's the cheapest way to start an LLC? The cheapest way to start Limited Liability Companies is to file the formation documents yourself. You'll also save money by being your own Registered Agent, and using our free LLC Operating Agreement template.

How much to register an LLC in California? ›

The standard filing fee for this document is $70, a one-time charge that's essential for officially registering your LLC. California offers a faster processing option for entrepreneurs eager to expedite the process. For an additional $150, you can have your Articles of Organization processed within two days.

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What are four benefits of owning an LLC? ›

Benefits of forming a Limited Liability Company (LLC)

Separate legal identity. ...
Limited liability. ...
Perpetual existence. ...
Flexible management structure. ...
Free transferability of financial interests. ...
Pass-through taxation.

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What are good LLC names? ›

Here are 75 LLC name examples:

Shimmering Beauty.
The Career Coach.
Phoenix LLC.
ExeCuteIve.
Roll It Up.
Joyous.
Mentor LLC.
Squeaky Clean.

More items...

Do you have to pay the $800 California LLC fee every year? ›

Every LLC that is doing business or organized in California must pay an annual tax of $800. This yearly tax will be due, even if you are not conducting business, until you cancel your LLC.

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Is the first year of an LLC free in California? ›

Do you have to pay the $800 California LLC fee the first year? You have to pay the Franchise Tax for your first year of operation by the 15th in the fourth month after you form the LLC with the state. Every year after that, the tax is due on the 15th of the fourth month of your tax year — April 15 for most businesses.

Do I need an EIN for my LLC? ›

An LLC will need an EIN if it has any employees or if it will be required to file any of the excise tax forms listed below. Most new single-member LLCs classified as disregarded entities will need to obtain an EIN. An LLC applies for an EIN by filing Form SS-4, Application for Employer Identification Number.

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How do I start an LLC in California myself? ›

To form an LLC in California, go to bizfileOnline.sos.ca.gov, log in, select Register a Business under the Business Entities Tile, Articles of Organization - CA LLC and follow the prompts to complete and submit.

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How long does it take for an LLC to be approved in California? ›

California LLC Approval Times

Mail filings: In total, mail filing approvals for California LLCs take around 3 weeks. This accounts for the 8 business day processing time, plus the time your documents are in the mail. Online filings: In total, online filing approvals for California LLCs take 8 business days.

Should I start an LLC for my side hustle? ›

"Yes — you have the legal protection of the LLC in case something goes sideways in your business (i.e., someone sues you or you can't pay your bills). It also separates your business from your personal finances so you can take business tax deductions."

What are three things that LLCs are not required to do? ›

LLCs are not required to do three things: hold annual meetings, keep minutes, or file written resolutions. When it comes to operating flexibility, Limited Liability Companies (LLCs) enjoy certain advantages over other business structures.

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What words cannot be used in an LLC name? ›

In California, your LLC's name may not contain the words:

Bank.
Trust.
Trustee.
Incorporated.
Inc.
Corporation.
Corp.
Insurer.

More items...

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Should I name my LLC after myself? ›

Should I name my LLC after myself? You can name your LLC anything you want, as long as it complies with your state's LLC naming guidelines. Naming an LLC after yourself comes with the benefit of being able to easily use that name to sell any products or services you want in the future without brand confusion.

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What not to name your LLC? ›

Check that your name isn't misleading

Plus, some words cannot legally be used in your business entity name. While rules vary by state, terms that indicate an entity type different from an LLC generally are not allowed. These include “corporation” and “Inc.,” as well as “limited partnership.”

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Why is California LLC fee so high? ›

Since most businesses need to generate at least $250,000 in gross receipts just to break even, the California LLC will have to pay a higher franchise tax than a California corporation, even if the LLC is operating at a real loss. By contrast, no California corporation is subject to a gross receipts tax.

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Can I file an LLC on my own in California? ›

If your LLC only has one owner, you can form a single-member LLC in California. Note that single-member LLCs in California have the same filing requirements as multimember LLCs.

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What are the disadvantages of a California LLC? ›

What Are Some Disadvantages of an LLC?

California's Franchise Tax. The biggest disadvantage you should be aware of when forming an LLC in California is the annual tax that every business must pay in order to operate within the state. ...
Large Profits. ...
Small Profits. ...
LLCs Are a Risk to Investors.

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Is it better to be a sole proprietor or LLC in California? ›

The advantages of an LLC can include that potential tax savings can pay for formation costs, liability protection, privacy (if formed anonymously), and being seen as more professional. The only possible disadvantage with an LLC is the added complexity compared to sole proprietorships.

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