Starting a business means being ready to answer numerous questions. “What are the requirements for an LLC?” is specifically important. This is because LLCs, or Limited Liability Companies, are the most popular business structure in the U.S., but only if formed correctly. This means following a long list of legal, financial, and administrative processes to form an LLC. This guide is for entrepreneurs starting out, freelancers, or non-residents planning to access the U.S. market. This guide will break down the requirements so you know what to expect.
Understanding What Are the Requirements for an LLC
To start and maintain a Limited Liability Company, a business owner must take the appropriate legal steps to obtain and retain the necessary documents and registrations. These requirements are for both the state and the country. At the state and federal levels, business owners must meet these requirements: have a unique business name, have a registered agent, file formation documents with the state, obtain a federal tax ID, and have a compliance plan to keep the LLC.
Knowing these legal requirements minimizes the risk of paying for unnecessary delays in obtaining the LLC and of future legal issues if the owner fails to comply.
Why Knowing LLC Requirements Matters Before You Start
Even one skipped requirement can cause the business to fall apart. Each state has very strict rules to operate, and if one of the requirements, such as having a registered agent to maintain compliance, is broken, the company can be dissolved from the books if the necessary annual reports are ignored, and the business cannot operate as a legal banking entity without an EIN.
Doing some research on the requirements for starting an LLC will save you time and help you make sure you have a solid legal foundation for your business. This will also allow you to create a solid budget, as you will see the costs associated with the requirements and the time required to complete each one.
General Requirements for an LLC in Every State
No matter what state you are in, you should make sure to have:
- An original business name that adheres to state naming guidelines
- A registered agent that has a physical address in the state where the business has been registered
- Your formation papers filed with the Secretary of State
- A registered business number with the IRS
- An operations manual (required in some states, recommended in most)
- Your state and local business licenses
These are the most important requirements for an LLC and should be your top priorities when starting one.
Choosing a Unique Business Name That Meets LLC Requirements
When choosing business names for an LLC, make sure the names are unique compared to all existing companies registered in the state of formation. Names are unique if they can easily pass a Secretary of State name check. The following is a list of the most common business name requirements for different states:
- The name must either have “LLC” or the spelled-out “Limited Liability Company” in it
- “Insurance,” “Bank,” and “University” are examples of restricted names that can only be used with special licensing or approvals
- The business name cannot be considered deceptively similar to any registered business in that state
- States typically allow for reserving names for 60 to 120 days
If an LLC is to be registered under a name under which the business will not be conducted, then a DBA must be filed.
Registered Agent: A Requirement You Cannot Skip
A registered agent must be named for every LLC. This agent will receive all legal, governmental, and tax-related documents for the business. The agent must be:
- Located within the state of formation at a physical address (no P.O. boxes)
- Available during standard business hours
It is common for business owners to utilize professional services for registered agents due to the uncertainty regarding physical offices in the state of formation.
Filing the Articles of Organization
The Articles of Organization document creates your LLC and needs to be submitted to the Secretary of State of your selected state. Things that need to be included are as follows:
- LLC name
- Name and address of registered agent
- Business address
- Names of members or organizers
- Business purpose (many states allow accepting a statement of general purpose)
The filing fee range for LLC formation varies from state to state:
| State | Filing Fee |
| Wyoming | $100 |
| Delaware | $90 |
| New Mexico | $50 |
| Florida | $125 |
| California | $70 |
| Texas | $300 |
The processing time will vary by state. Some states allow expedited filing for a fee.
Do You Need an Operating Agreement for Your LLC?
An operating agreement sets the internal rules for how your LLC will be run: how all losses and profits will be divided, and how members join or depart. An operating agreement is required in New York, California, Missouri, Maine, and Delaware.
The liability protection in your operating agreement extends to states where it is not required. In a single-member LLC, it helps to keep you and the business separated.
EIN and Tax Registration Requirements for an LLC
An LLC, or Limited Liability Company, requires obtaining an Employer Identification Number, or EIN, which is the federally issued identification number to file business taxes. You need an EIN to:
- Open a business bank account
- Hire employees
- File federal or state taxes
- Apply for a business line of credit
The IRS website allows U.S. residents to apply for an EIN as quickly as possible, and it is available at no cost. Applicants get the receipt number instantly. Non-residents will have to either fax or mail their application or use a service to complete the request. For payroll taxes and other business activities, many states require a separate tax registration.
State-Specific LLC Requirements: How They Differ
The treatment of LLCs can vary widely by state. The differences between the following popular states show how your requirements may vary:
| Requirement | Wyoming | Delaware | New Mexico | Florida |
| Operating agreement required | No | Yes | No | No |
| Annual report required | Yes | Yes | No | Yes |
| State income tax | None | None for out-of-state LLCs | Yes | None |
| Publication requirement | No | No | No | No |
| Franchise tax | None | $300/year | None | None |
Your budget, where you plan to operate, and how you value privacy will determine the best state for you.
LLC Requirements for Non-Residents Forming a U.S. Business
A non-resident does not need a visa, a Social Security Number, or to be physically present to form an LLC in any U.S. state. It is, however, necessary to consider the following requirements:
- A registered agent is required, and it must be a U.S.-based address
- EIN applications via fax or mail may require a professional service
- An ITIN may be needed for tax filing purposes
The most popular states in this regard, due to their low costs and privacy protections, are Wyoming, Delaware, and New Mexico.
While the process is simple, the required documentation can be time-consuming and may require professional support.
Licenses and Permits: Additional Requirements for an LLC
There are other regulatory steps besides forming your LLC. Depending on your industry and location, you may need some of the following:
- A general business license from your city or county
- A state-level professional license (this depends on your industry, such as real estate, healthcare, or construction)
- If you sell taxable goods or services, you will need a sales tax permit
- If you work from home, you will need a home occupation permit
- If your industry is regulated (alcohol, firearms, or transportation), you will need a federal license
Determining which licenses you need is a local government and industry-specific question.
Ongoing Compliance Requirements After Forming Your LLC
Meeting all of the requirements to open your LLC is only the first step. It will remain in good standing if you continue to do the following:
- Complete and submit a report to your state every year or every other year
- If applicable, you will need to pay the franchise tax
- Beneficial Ownership Information reporting is mandatory for all businesses
- You must always have a registered agent
- When your business changes, you will need to update the operating agreement to reflect those changes
Failure to do any of the above will result in late fees or, in some cases, in the business being dissolved.
Common Mistakes When Meeting LLC Requirements
With the best of intentions, new business owners often make mistakes, such as:
- Selecting a state for formation based solely on cheap fees and ignoring where they are actually doing business
- Not doing an operating agreement, as their state does not legally require it
- Mixing business and personal finances right out of the gate, which weakens liability protection
- Not remembering to file reports yearly and losing standing
- Not seeing local requirements for business licenses and permits
Each of these mistakes comes down to a lack of planning and awareness of the LLC requirements specific to your situation.
Meet Every LLC Requirement with Confidence Using EasyFiling
Filing an LLC should not be difficult or confusing. If you know the requirements and do them in the correct order, it is an easy process. If you want help with that process, EasyFiling takes care of the entire LLC filing process, including registered agent, EIN filing, and compliance for U.S. and non-U.S. resident business owners.
