Affiliate Disclosure: Some of the links that follow are affiliate links. This means that my company may receive a commission for any purchases you make on the linked websites.
Starting your own business can be both exciting and overwhelming. If you're an aspiring entrepreneur looking to replace your day job with your dream business, starting an LLC is a smart first step. Starting an LLC can provide you with the structure needed to succeed.
An LLC provides liability protection, tax advantages, and credibility—but where do you start? If you're unsure about the legal steps to take for starting an LLC, don't worry. This guide will walk you through everything you need to know to start your LLC the right way in 2025. Understanding the process of starting an LLC is crucial for any entrepreneur.
How to Start an LLC in 2025: A Step-by-Step Guide for Entrepreneurs
Essential Steps for Starting an LLC
Starting an LLC can be particularly beneficial for small business owners who want to limit their personal liability while enjoying the advantages of a flexible business structure.
When considering starting an LLC, it's important to weigh the costs and benefits against your business goals and needs.
Starting an LLC not only protects your personal assets but also enhances your credibility in the market.
Why Form an LLC?
If you're considering the option of starting an LLC, here are some of the reasons it may be the right move for your new entrepreneurial venture.
An LLC (Limited Liability Company) is one of the most popular business structures for small business owners. It provides personal liability protection, meaning your personal assets (like your home and savings) are shielded from business debts and lawsuits. An LLC also offers flexibility in taxation and requires less paperwork than a corporation.
Who Should Form an LLC?
Not every business needs an LLC, but if you fall into one of these categories, it might be the right move for you:
- Freelancers and consultants
- Online influencers and content creators
- Coaches and course creators
- E-commerce store owners
- Anyone building a personal brand
- Business owners who want liability protection
Key Questions to Ask Before Setting Up an LLC
Before you file for an LLC, ask yourself:
- How serious am I about my business? If you're planning to turn your business into a full-time career, an LLC is a great starting point.
- Is my business making money? If you're generating income, an LLC can help protect your earnings.
- Is my business high-risk? If there’s a chance you could be sued, an LLC helps protect your personal assets.
- Do I want to project a professional image? Customers and clients often take LLCs more seriously than sole proprietorships.
- Should I talk to a lawyer? If you have questions, consulting with an attorney can prevent costly mistakes.
When starting an LLC, it's essential to ask the right questions to ensure you're making the best choice for your business.
Should You Use a Lawyer, a Filing Service, or DIY Your LLC?
There are several ways to form an LLC:
- Hire a lawyer – This is the best option if you want to ensure your LLC is set up correctly and legally, but it comes at a higher cost.
- Use an online service – Services like Rocket Lawyer or LegalZoom can simplify the process at a moderate cost.
- DIY – If you're comfortable researching your state’s requirements, you can file on your own for the lowest cost. However, mistakes could cost you later.
Steps to Forming an LLC
1. Choose Your State
Most business owners form their LLC in their home state. However, if you do business in multiple states, you may need to register as a foreign LLC elsewhere. If you are tempted to form your LLC in a state such as Wyoming or Delaware, even if you don't live there, read this post on why this is a bad idea.
2. Pick a Business Name
Your LLC name must be unique and include an identifier like “LLC” or “Limited Liability Company.” Run a name search through your state’s business registry to ensure availability.
3. Choose a Registered Agent
A registered agent is required to receive legal documents on behalf of your LLC. You can serve as your own agent, but using a registered agent service offers privacy and convenience, not to mention it protects you from potentially defaulting in a lawsuit.
4. Decide on a Business Address
Some states require a business address. If you work from home and want to keep your address private, consider using a virtual business address (if allowed in your state).
5. Member-Managed vs. Manager-Managed
Starting an LLC is a significant step that can influence your business's future and success.
Decide if your LLC will be managed by its members (owners) or by a designated manager. Most small businesses opt for member management, but in some states the default election is a manager-managed LLC.
6. File Your Articles of Organization
This document officially forms your LLC. You’ll need to file it with your state’s business agency and pay a filing fee (fees vary by state).
7. Create an Operating Agreement
Even if your state doesn’t require it, an operating agreement is crucial. It outlines ownership, responsibilities, and operational procedures.
- For multi-member LLCs – This document is essential and should be reviewed by a lawyer.
- For single-member LLCs – Still necessary to maintain liability protection and avoid “piercing the corporate veil.”
8. Apply for an EIN
By choosing the right method for starting an LLC, you can streamline the process and ensure compliance with regulations.
An EIN (Employer Identification Number) is like a Social Security number for your business. You’ll need it to open a bank account, hire employees, and file taxes. Apply for free through the IRS website.
9. Open a Business Bank Account
Keeping personal and business finances separate is crucial for liability protection. A business bank account helps you manage finances and maintain your LLC’s legal status.
Filing your Articles of Organization is a crucial part of starting an LLC and sets the foundation for your business.
Creating an Operating Agreement is an essential step when starting an LLC, as it clarifies the operational structure of your business.
10. Obtain Necessary Business Licenses
Depending on your industry and location, you may need state or local business licenses. Research your state’s requirements to stay compliant.
11. File Your Beneficial Ownership Information (BOI) Report
Starting in 2025, most LLCs must file a BOI report with the Financial Crimes Enforcement Network (FinCEN). This report helps prevent financial crimes and ensures transparency in business ownership.
12. Stay on Top of Ongoing Requirements
Many business owners forget that LLCs have annual filing requirements. Missing deadlines can lead to fines or administrative dissolution. Keep track of:
- Annual reports (varies by state)
- State franchise taxes (if applicable)
- Renewing business licenses
How This Process Transforms You as a Business Owner
By completing these steps, you’ll gain:
- Legal protection – Your personal assets will be separate from your business liabilities.
- Credibility and professionalism – Clients and investors take registered businesses more seriously.
- Confidence in your business – With the legal structure in place, you can focus on growth without worrying about compliance issues.
Final Thoughts
Starting an LLC in 2025 is a smart move for entrepreneurs who want to protect their personal assets, project a professional image, and build a strong foundation for their business. The process of starting an LLC might seem overwhelming, but taking it step by step—or seeking professional help—ensures that your business starts on the right foot.
If you need assistance forming your LLC, here is my preferred vendor. Bizee has made the LLC formation process as easy, quick, and stress-free as possible. You only pay the state fee.
If you have additional questions, reach out to get personalized legal guidance and ensure your business is set up for success! You may also want to consider one of our monthly legal membership plans.
Understanding ongoing requirements is vital for maintaining your LLC status after starting an LLC.
Starting an LLC is not just a legal formality; it represents a commitment to your business's growth and sustainability.
