Many businesses have been opting to form Limited Liability Companies for their enticing advantages and benefits. With an LLC, businesses are ensured of smooth and protected operations. However, setting up this type of company isn’t an easy task, so in this article, our experts will give you all the pertinent details on how to setup an LLC. 

How to Set Up an LLC

What is an LLC?

Before going into detail on how to start or set up an LLC, you must understand what an LLC is first. An LLC is an acronym for “Limited Liability Company,” which is a unique legal entity or type of business structure that free members from any liabilities incurred with its liability protection. These companies combine the features of a corporation, sole proprietorship, and a partnership. This means that members have limited personal liability, and more than one person often runs an LLC. In addition, LLCs are usually cheaper to manage, form, and run.

Steps in Setting up an LLC

To get started forming your Limited Liability Company, you would have to undergo through several procedures. You can simply hire an LLC service company to assist you with the entire process and other requirements. However, that’s not to say that you cannot arrange everything yourself and cut costs. To help you form your company as efficiently as possible, below is a step-by-step guide for owners or LLC members:

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Select a State

This is the first step and one of the most important parts of setting up LLCs. All fifty states in the United States of America allow you to form an LLC. However, each of them has different guiding rules and laws on how your company will run. When you’re selecting states, you want to consider the following:

  •  Taxes: As an LLC business owner, you may be required to pay your (income) tax at one point or the other. However, if you’re not very careful, this tax could become overwhelming and many small business owners have suffered from this predicament. Thus, always consider tax laws before deciding on a state. Some states like Delaware will only charge small business owners very low tax rates each year. Others, like Wyoming, will hardly charge small business owners anything at all. Make your considerations properly because choosing where to form an LLC.
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  •  Business friendliness and viability: Even if the tax rates are cheap with easy-to-compile annual reports, you shouldn’t jump right into it to form an LLC. Check out how business-friendly the state is for LLCs/small businesses. Our experts suggest studying the customer demographic and employment rates. If they your market is not be able to afford your products well enough to keep you in business. Eventually, your profits and losses will be negatively imbalanced in the state.

Therefore, you should know that starting an LLC in your home state is one of the easiest choices you can make. However, if you’ll be operating in other states, you’ll need to get through a foreign registration of your LLC in the state you’re moving to.

Come Up with a Business Name

Your business name is one of the most important parts of your brand. It defines you and helps your customers to identify you in an ocean of businesses across your state and country. Above all else, your business/LLC name must be unique. If your business name is the same or even similar to someone else’s, you could get into a number of issues. It is a good idea to confirm the uniqueness of your name on your state’s website.  Some states require you to also check for reserved names. Apart from that, you also must remember the following when you want to choose a name:

  • Your business name should be easy to spell and remember. That way, people can easily find you on the internet.
  • Your business name should be meaningful. In addition, it should be able to transcend your current services. That way, even if you expand, it’ll still be relevant and useful.

Articles of Organization

LLC articles of organization are alternately known as a Certificate of Organization or a Certificate of Formation. It establishes your company at the state level. Apart from that, it defines the rights, duties, liabilities, and obligations of each LLC member within your organization. To form or set up your LLC, you need to prepare these articles. Later, you can turn them in to your Secretary of State alongside your state filing fees while forming an LLC.

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Choose a Registered Agent

Every LLC in the United States must have a designated registered agent service provider. This individual or organization will be responsible for receiving your government/legal documents, service of process, etc. A registered agent provider is significant in facilitating communication between you and the government.

They also maintain your privacy by handling mails and in ensuring you don’t miss any important legal matters. There are several registered agent service providers across the country but you must choose one that functions in your state.

File Your LLC

After establishing everything above in order, you must file or register your LLC with your state. As potential LLC owners, you can start this process by submitting your articles of organization to your state government. The entire procedure usually costs a state filing fee of about $100, regardless of the state you wish to file in.

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Draft an Operating Agreement

Your Limited Liability Company (LLC) operating agreement is a special document that clearly defines how you will run your company. It also details the rights and responsibilities of every member of your company. You can create an LLC operating agreement yourself or outsource it to an LLC service company. Either way, it will help you:

  • Outline your organizational structure
  • Define how to dissolve the business
  • Determine the capital distribution mode among the owners
  • Address the management structure
  • Explain the process or changing members at any point

Other Requirements

The above are the major things you’ll have to handle if you decide to form or create an LLC. However, there are a few other things our experts believe that you may want to get. They include:

  • Employer Identification Number (EIN): The EIN is a 9-digit number assigned to you by the IRS. When you get an EIN, it will be useful to file your legal LLC/corporation federal tax returns/accounts.
  • Bank account: If you’ll be setting up an LLC/corporation, it goes without saying that you’ll need a company account.
  • An attorney: This isn’t compulsory, should you need legal help you could get an LLC attorney to help you with the formation process. However, it won’t be free.

Advantages of Establishing an LLC

LLCs offer numerous advantages in comparison to their counterparts. A few of them include:

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  • Flexibility: LLCs allow you a significant amount of flexibility with which you can run your business. For example, there’s no limit to the number of members you’re allowed to include.
  • Simplicity: LLC operation is simple and straightfoward. Unlike other forms of business, you don’t need to have multiple shareholder or board of director meetings. Everyone knows their responsibility from the operating agreement.
  • Limited Liability Protection: Any debt your company incurs will not be taken from your personal assets.
If you are decided on building an LLC particularly on real estate, here are our top states to establish LLC for real estate

Important Reminders

When you’re setting up an LLC, our experts advise that you remember the following. First, your preferred state should be as business-friendly as possible, as we previously mentioned earlier. In addition, you cannot afford to leave your trademark unprotected after choosing a business name [1]. Finally, make sure that you acquire appropriate business licenses. If you’re running a pharmacy, for example, you cannot simply stop at acquiring articles of organization. You need to go a step further and get your required license of operations. 

Starting up an LLC is a long process, as well as dissolving it. You can check our page on how you can dissolve a corporation in the state of Illinois here


Do I need a lawyer to set up an LLC?

You don’t need a lawyer to set up an LLC. However, they could come in useful at different points for your business. An example is when you’re trying to sort out issues relating to taxes.

How much do you need to start an LLC?

You don’t need so much money to start up an LLC. If you’re going solo, you may only have to pay a few fees outside your state filing fee and registered agent subscription. If you use an LLC service company, your fees may depend on the services you’re asking for.


Forming or setting up a Limited Liability Company (LLC) entails a great deal of work. However, it may be more difficult if you are not well-versed with the entirety of the process. In this guide, our experts have given intricate details on how to setup an LLC. All that’s left now is for your company to take that first step of establishing a legal or separate entity.

If you are planning to start a business in Illinois, this is how you start a single proprietorship business in Illinois. Read next!

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