A limited liability company (LLC) is one of the most popular business structures for small businesses and side hustles — and for good reason. It protects your personal assets from business debts and lawsuits, offers flexible tax treatment, and is relatively simple and inexpensive to set up. Here's how to do it.
Most people form their LLC in the state where they do business. Search your state's business registry to make sure your desired name is available. Most states require the name to include "LLC" or "Limited Liability Company."
This is the main formation document. It includes your LLC's name, address, registered agent, and basic structure. Filing fees range from $50 to $500 depending on the state. You can usually file online.
An Employer Identification Number (EIN) is like a Social Security number for your business. You need it to open a business bank account, hire employees, and file taxes. You can get one instantly on the IRS website.
While not required in every state, an operating agreement defines ownership percentages, profit distribution, management structure, and what happens if a member wants to leave. It's essential for multi-member LLCs and recommended for single-member ones.
The liability protection of an LLC depends on maintaining a clear separation between business and personal finances. Use a separate bank account, don't commingle funds, and keep records of all business transactions.
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