Creating a limited liability company is exciting for a fledgling business, but how long does it take?
Across all 50 states, we analyzed data and found it takes an average of 14 to 21 days to set up an LLC. You need to understand each stage of the formation process to determine how long it will take. Throughout this article, we discuss all the steps to set up your LLC, but we recommend you seek legal advice.
What Is an LLC?
LLC stands for limited liability company. Limited liability companies, or LLCs for short, are legal business structure that protects your personal assets (your residence, vehicles, and finances) if your company faces litigation.
Typically, LLCs operate one business or multiple businesses, but they can also hold assets. LLCs serve a variety of purposes, including holding property, automobiles, watercraft, and aircraft.
Usually, an LLC tax structure is an independent legal entity created for purposes of federal income tax. This means that the LLC does not pay tax on business income. The federal government taxes profits earned by LLC members as income. State and local governments can also impose additional taxes.
If you’re looking to set up your own LLC, it is best to seek legal advice from a trusted attorney or law firm.
Top 7 Steps to Create an LLC
Forming an LLC is easy with our step-by-step guide:
1. Name Your Business
Marketing may influence your business name. You must also make sure your business name complies with state law requirements.
You can’t use a business name that’s already in use by another business in your state. Also, your business name should end with the letters LLC.
Check the website of the state agency for business filings for LLC naming requirements and the availability of the name you want. Ordinarily, that’s the secretary of state.
2. Appoint a Registered Agent
Business law requires LLCs to have a registered agent. LLCs have registered agents who handle official documents (such as subpoenas). Registered agents send these legal documents to the person in charge of the LLC.
You can name yourself as a registered agent or hire an employee (18 or older.) Agents need to be in your state during normal business hours. Or, you can hire a company to serve as your registered agent. Of course, it’ll cost a fee; an annual fee for a registered agent may be more than a hundred dollars.
3. Obtain Your State’s LLC Articles of Organization
Establishing your LLC as a legal entity requires filing a document with your state’s business registration agency.
4. Complete the LLC Article of Organization Form
Every state has its own requirements and procedures for forming an LLC.
Here’s the basic information you need:
- Business name;
- Your business address;
- The business’s purpose;
- How you will manage your LLC;
- The registered agent’s contact information;
- The LLC’s duration.
A business owner or organizer will need to sign the form after that.
You may need to publish your LLC registration notice in the newspaper in some states, such as Nebraska and New York. You must file the articles before publishing the notice.
Visit the website of your state’s business-filing agency to review its LLC naming requirements and find out whether the name you want is available. This is, in most cases, the secretary of state.
5. File the Articles of Organization
Ensure your articles of organization are accurate before submitting them. There will also be a filing fee, which varies by state.
Your LLC will be formally registered once the state approves your formation documents. You can also use it to set up a business bank account and get a tax ID number. Knowing how long it takes to set up an LLC is important when planning your business.
Use bank confirmation letter template to request confirmation of your financial transactions and account details from your bank. This letter template is a convenient and standardized format that can be customized to suit your specific needs.
6. Establish an LLC Operating Agreement
Operating agreements detail the financial, legal, and management rights of LLC members. The agreement can specify how to distribute profits, how members leave the LLC, and what capital members contribute. It contains all relevant information regarding your LLC’s operations.
Operating agreements are not necessary for many states, but you still should draft one. To ensure everyone agrees on their rights and responsibilities, LLCs with more than one member or partner should create one. Even solo entrepreneurs can benefit from outlining the details in writing.
One option for single-member LLCs is to create your own operating agreement. A number of free templates are available online. Hiring an experienced attorney may be well worth the expense in more complex cases such as LLCs with multiple owners.
7. Maintain Your LLC
Creating your LLC is just the start. As soon as your business forms, you need to ensure your state recognizes it. Check your state’s business filing website for details. Filing an annual report and paying an annual filing fee may be necessary for your LLC.
How Long Does It Take for LLC to Be Approved?
If you are setting up a business, you need to know how long it takes for LLC approval. Using GovDocFiling packages, you can file the documents online within minutes, even though each state has its own rules and requirements for setting up an LLC. The LLC time frame for approval varies state by state.
How Long Does the State Take to Process Your LLC Application?
While filing the documents takes mere minutes online, the state takes a while to process your application for an LLC and then to authorize your business. The processing time usually takes three to four weeks. (The time it takes may vary due to COVID-19.) The time it takes to approve your LLC application can vary depending on a number of other factors, too.
Forming an LLC can be a relatively quick process in some states. After receiving your articles of organization, they may approve your limited liability company immediately. In some cases, the turnaround time can be reduced to three business days and sometimes less than one week.
Delaware can process your LLC paperwork within 24 hours, sometimes less. Delaware, in particular, expedites business registrations with a complete package. There are other states, such as Arizona, that can take from four to six weeks to process your documents. Nevertheless, data processing still takes between three to four weeks, as mentioned earlier.
For an additional fee, entrepreneurs often request rush or expedited processing of their applications. It depends on the state’s laws and how much the fee is.
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How Much Does It Cost to Form an LLC?
It costs $40 to $500 to form an LLC. An LLC in the U.S. costs, on average, $132 to form as of 2021.
Please refer to our table below for your state LLC fees.
|State LLC||LLC Filing Fee||LLC Annual/Biennial Fee|
|Alabama LLC||$200||$100 minimum (annually)|
|Alaska LLC||$250||$100 (every 2 years)|
|Arkansas LLC||$45||$150 (annually)|
|California LLC||$70||$800 (annually) + $20 (every 2 years)|
|Colorado LLC||$50||$10 (annually)|
|Connecticut LLC||$120||$80 (annually)|
|Delaware LLC||$90||$300 (annually)|
|Florida LLC||$125||$138.75 (annually)|
|Georgia LLC||$100||$50 (annually)|
|Hawaii LLC||$50||$15 (annually)|
|Illinois LLC||$150||$75 (annually)|
|Indiana LLC||$95||$30 (every 2 years)|
|Iowa LLC||$50||$45 (every 2 years)|
|Kansas LLC||$160||$50 (annually)|
|Kentucky LLC||$40||$15 (annually)|
|Louisiana LLC||$100||$35 (annually)|
|Maine LLC||$175||$85 (annually)|
|Maryland LLC||$100||$300 (annually)|
|Massachusetts LLC||$500||$500 (annually)|
|Michigan LLC||$50||$25 (annually)|
|Montana LLC||$70||$20 (annually)|
|Nebraska LLC||$105||$10 (every 2 years)|
|Nevada LLC||$425||$350 (annually)|
|New Hampshire LLC||$100||$100 (annually)|
|New Jersey LLC||$125||$75 (annually)|
|New Mexico LLC||$50||$0|
|New York LLC||$200||$9 (every 2 years)|
|North Carolina LLC||$125||$200 (annually)|
|North Dakota LLC||$135||$50 (annually)|
|Oklahoma LLC||$100||$25 (annually)|
|Oregon LLC||$100||$100 (annually)|
|Pennsylvania LLC||$125||$70 (every 10 years)|
|Rhode Island LLC||$150||$50 (annually)|
|South Carolina LLC||$110||$0|
|South Dakota LLC||$150||$50 (annually)|
|Tennessee LLC||$300||$300 (annually)|
|Texas LLC||$300||$0 for most LLCs|
|Utah LLC||$70||$20 (annually)|
|Vermont LLC||$125||$35 (annually)|
|Virginia LLC||$100||$50 (annually)|
|Washington LLC||$200||$60 (annually)|
|Washington D.C. LLC||$99||$300 (every 2 years)|
|West Virginia LLC||$100||$25 (annually)|
|Wisconsin LLC||$130||$25 (annually)|
|Wyoming LLC||$100||$60 minimum (annually)|
How Long Is an LLC Good For?
Knowing how long it takes to get a domestic LLC license is the first step, but you also must maintain it. To keep your LLC in compliance and in good standing, you have to pay an LLC fee as long as it’s in business. In most states, this is paid every one or two years. Regardless of the LLC’s earnings or activities, you must pay this fee. The state will dissolve your LLC if you fail to pay the fee. Approximately 90 percent of states follow this rule.
LLCs are primarily formed to protect personal assets. By forming an LLC, you establish a barrier between your business and your assets. The personal assets you own include your residence, vehicles, recreational vehicles, real estate, financial accounts, valuables, and other assets. So, if, for any reason, your business runs into financial trouble, you still have some possession of and liquidity in your personal property.