What is an LLC and How Do I Create One?
4 minute read

What is an LLC and How Do I Create One?



A Limited Liability Company (LLC) brings together elements from a partnership, sole proprietorship and a corporation to ensure that business owners are not personally liable for debts or liabilities associated with their company. For example, if an LLC was to file for bankruptcy, the owners of the business– also known as members– do not have to use money from their personal accounts to pay for their company’s debt.

If your business could face a reasonable risk of lawsuit or business debt, then it’s a good idea to consider an LLC. In some cases, liability insurance might not cover a client suing your business after sustaining an injury during training. An LLC only requires one owner, so if you’re the sole owner of your business, you can still form an LLC. Some states do not allow licensed healthcare workers, so be sure to check on your state’s requirements when considering an LLC.

How to Form a LLC

When forming an LLC, each state has its own set of rules and procedures, but there are a few key steps to follow that span across all states.

Step 1: Select a Name for your LLC

Most states do not allow two businesses to have the same name. Make sure to check your business’ name availability in your state before filing your LLC paperwork. You can use this tool to search existing business names and find out if yours is available. It’s also a best practice to do research on other businesses in your area and whether or not any of them are similar to your business’ name– this will help avoid confusion and avoid trademark infringement claims.

Step 2: Select a Registered Agent

Nearly every state requires its LLCs to list a registered agent. Lawsuits, subpoenas and other official documents will be received by this individual, who will then pass it along to the correct person from the LLC.

Who can be a registered agent? Most states allow individuals who are state residents and over the age of 18 to serve as a registered agent, and this includes a member associated with the LLC. If you’re unsure of who to name as your registered agent, there are companies that charge a fee to provide businesses with a registered agent.

Step 3: LLC Operating Agreement

An LLC Operating Agreement is essentially a roadmap that details how your LLC will run. It delves into how profits and losses will be divided between members, how meetings will be structured and how the business will be governed, among other details surrounding the overall operation of your business.

The operating agreement isn’t filed with the state and might not be required by your state, but it’s an important way for you to define your rights as a business owner and minimize future disagreements surrounding your business.

Step 4: Filing Organizational Paperwork With the State

While each state has a different process for forming an LLC, generally speaking, most states require you to file articles of organization that list some of the information listed below:

  • Name and address of the LLC
  • Length of its existence, if not perpetual
  • Name and address of the registered agent
  • Reason behind why the LLC was formed

This is usually signed by the person who is forming the LLC, but some states require that the registered agent also sign the paperwork. In most states, you’ll file the articles of organization with the secretary of state. However, some states require you to file with a specific department that handles business-related filings. All states charge a filing fee, but (you guessed it!) that cost will depend on the state.

Step 5: Obtain a Certificate from the State

You’re almost there! Once all of your documents and files are approved, the state will issue you a certificate confirming that your LLC formally exists–– basically you’re making this thing official with your state’s government, which is a huge step for you and your business! When you receive your official certificate, you can begin obtaining a tax ID number and business licenses and setting up a business bank account.


A big step in getting your business up and running is forming an LLC. It’s not the most glamorous part of owning a business, but it’s an important part of protecting yourself in the unfortunate case of business debt or a lawsuit.

The process for obtaining an LLC looks different for each state, so make sure to double check your state’s requirements. Now you know what an LLC is and the basics of how to obtain one. You’re just a few steps away from forming an LLC and adding another layer of protection to your business!

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