How to start a business

An LLC (Limited Liability Company) is a business structure that provides its owners (called members) with limited personal liability protection while allowing flexible tax treatment and simpler management compared to a corporation. An LLC can be member-managed or manager-managed.

No, but an LLC provides important liability protection that a sole proprietorship or general partnership does not. It separates your personal assets from business debts and lawsuits. For most small business owners, forming an LLC is a worthwhile step.

For most business owners, forming an LLC in your home state is the most practical choice. States like Wyoming, Delaware, and Nevada are popular for specific situations — such as strong privacy protections or no state income tax — but they also require foreign qualification if you operate elsewhere. See our guide on the best state for an online business LLC.

A single-member LLC without employees may not technically require an EIN for federal taxes, but you will need one to open a business bank account, hire employees, or elect S-Corp tax status. It is generally advisable to get an EIN for any LLC.

The fee to file Articles of Organization varies by state, ranging from around $50 (Kentucky, New Mexico) to $500 (Massachusetts). Most states charge between $50 and $200. Annual maintenance fees and registered agent costs add to the ongoing expense. View our complete LLC Formation Cost by State breakdown.

While not required by all states, an operating agreement is highly recommended. It outlines the ownership structure and operating procedures of the LLC.