A Complete Guide to Starting an LLC in the U.S.

Introduction

A Limited Liability Company (LLC) is a preferred business structure for small business owners seeking personal liability protection, operational flexibility, and potential tax advantages. Whether you are launching a new venture or formalising an existing business, forming an LLC can establish a strong and reliable foundation for long-term growth.

This guide covers everything you need to know about LLC registration in the U.S.—including what an LLC is, the different types of LLCs, key advantages, the step-by-step formation process, ongoing compliance requirements, and important factors to consider before getting started.

With Auriga Accounting pvt. ltd. , you can simplify the U.S. LLC registration process and set up your business quickly, efficiently, and in full compliance with regulatory requirements.

What Is an LLC?

A Limited Liability Company (LLC) is a flexible business structure that combines the liability protection of a corporation with the tax advantages typically associated with partnerships or sole proprietorships. It is widely favored by small business owners for its simplicity, legal safeguards, and tax flexibility.

Key Features of an LLC

1. Limited Liability Protection

LLC owners, known as members, are generally not personally responsible for the company’s debts or legal liabilities. This protection helps safeguard personal assets, with financial risk usually limited to the amount invested in the business.

2. Pass-Through Taxation

LLCs benefit from pass-through taxation, meaning the business itself does not pay federal income tax. Instead, profits or losses are passed through to the members, who report them on their individual tax returns and pay taxes at their applicable rates.

Types of LLCs in the U.S.

Below are the most common types of LLCs recognized in the United States:

Single-Member LLC

Owned by one individual or entity
Treated as a disregarded entity for tax purposes and taxed like a sole proprietorship

Multi-Member LLC

Owned by two or more individuals or entities
Generally taxed as a partnership with pass-through taxation

Member-Managed LLC

All members are involved in the daily management and decision-making
This is the default management structure in most states

Manager-Managed LLC

Members appoint one or more managers to handle day-to-day operations
Managers may be members or external professionals
Members typically have limited involvement in daily management

Professional LLC (PLLC)

Formed by licensed professionals such as doctors, lawyers, or architects
Required in states that regulate professional services
Maintains liability protection while complying with licensing rules

Series LLC

Consists of a “parent” LLC with multiple independent series or cells
Each series can have separate assets, members, and liabilities
Not available in all states
Commonly used to separate multiple businesses or assets under one structure

Domestic LLC

An LLC formed and operating in the same state where it was created

Foreign LLC

An LLC registered to operate in a state other than its state of formation

Where to Register an LLC in the U.S.

In the United States, LLC registration is governed at the state level. Businesses must register their LLC with the Secretary of State’s office or the relevant business filing authority in the chosen state of formation. Each state has its own filing requirements, fees, and compliance obligations.

Benefits of Forming a Limited Liability Company (LLC)

Forming an LLC offers several advantages over operating as a sole proprietorship, general partnership, or even a corporation. These benefits make LLCs a preferred structure for many entrepreneurs and small business owners.

1. Limited Liability Protection

LLC members are generally shielded from personal liability for business debts and legal obligations. Creditors typically cannot pursue personal assets—such as homes or personal bank accounts—to satisfy company liabilities.

Note: Liability protection may be lost through “piercing the corporate veil,” often caused by mixing personal and business funds or failing to follow legal formalities.

2. Flexible Ownership Structure

LLCs provide broad flexibility in ownership arrangements:

Members may be individuals, partnerships, trusts, or corporations
No cap on the number of members
Fewer restrictions compared to S corporations, which are limited to 100 shareholders and specific ownership criteria

3. Versatile Management Options

LLCs can adopt one of two management structures:

Member-Managed: Owners directly manage daily operations
Manager-Managed: Appointed managers oversee operations, similar to corporate executives

This flexibility allows businesses to choose a structure that aligns with their operational needs.

4. Pass-Through Taxation

LLCs benefit from pass-through taxation, meaning:

The LLC itself does not pay federal income tax
Profits and losses pass through to members’ personal tax returns
This avoids the double taxation imposed on C corporations

5. Enhanced Business Credibility

Operating as an LLC can improve a company’s professional image. Clients, suppliers, and lenders often view LLCs as more credible and established than informal business structures.

6. Reduced Compliance Burden

Compared to corporations, LLCs generally face:

Fewer reporting and record-keeping requirements
No mandatory board meetings or corporate minutes
Lower ongoing administrative costs

This makes LLCs simpler and more cost-effective to maintain.

Important Considerations Before Forming an LLC

While LLCs offer many benefits, it is important to evaluate potential limitations before choosing this structure.

1. Higher Formation and Maintenance Costs

LLCs typically cost more to establish and maintain than sole proprietorships or partnerships. Expenses may include:

State filing fees at the time of formation
Annual or biennial report fees, franchise taxes, or renewal charges

Tip: Review state-specific requirements through the Secretary of State’s office before registering.

2. Ongoing Compliance Obligations

LLCs must comply with federal and state regulations, including:

Maintaining a registered agent in the state of formation
Filing periodic reports with the state
Meeting federal reporting requirements, such as beneficial ownership disclosures to FinCEN under anti-money laundering laws

Failure to comply may result in penalties or administrative dissolution.

3. Limited Flexibility in Ownership Transfer

Ownership transfers in an LLC are often more restrictive than in corporations:

Corporations issue shares that are generally easier to transfer
LLCs typically require member approval to admit new owners or change ownership percentages, unless otherwise stated in the operating agreement

This can make LLCs less attractive to certain investors or more challenging to scale through equity financing.

Documents Required for LLC Registration

To register a Limited Liability Company (LLC) in the U.S., certain documents must be prepared and submitted to the relevant state authority. Commonly required documents include:

Articles of Organization (also known as Certificate of Formation or Certificate of Organization)
LLC Operating Agreement (internal document; not always required to be filed with the state)
Registered Agent Consent Form (required in some states)
Certificate of Publication (mandatory in select states)
State Filing Fee (varies by state)
Employer Identification Number (EIN) application (filed with the IRS after formation)
Business licenses and permits, depending on the industry and location

How to Start an LLC in the U.S.

Forming an LLC is generally simpler than incorporating a corporation, but it still involves important legal and administrative steps. While requirements vary by state, the following steps outline the standard LLC formation process.

Step 1: Choose a State for LLC Formation

You may form an LLC in any U.S. state, regardless of where you live. However, most businesses choose to form their LLC in the state where they operate to avoid additional fees and compliance burdens.

Forming in another state (such as Delaware or Nevada) may require foreign LLC registration in your home state
State filing fees, taxes, and compliance rules vary significantly
Unless there is a clear strategic advantage, forming in your home state is usually the most practical and cost-effective option

Step 2: Select a Name for Your LLC

Your LLC name must be unique and distinguishable from other registered business names in the state.

Best Practices for Naming Your LLC:

Conduct a name availability search on the Secretary of State’s website
Consider reserving the name if you’re not ready to file immediately
Perform a trademark search via the USPTO to avoid infringement issues
Ensure the name includes an approved designator such as “LLC” or “Limited Liability Company”

A legally compliant and distinctive name strengthens both your brand and legal identity.

Step 3: Appoint a Registered Agent

Every LLC must designate a registered agent in its state of formation (and in any state where it is foreign-qualified).

Role of a Registered Agent:

Receives legal notices, court documents, and government correspondence
Ensures timely delivery of compliance-related communications

Eligibility Requirements:

Must have a physical address in the state (P.O. Boxes not allowed)
Must be available during normal business hours

Why Use a Professional Registered Agent?

Protects privacy by keeping personal addresses off public records
Ensures compliance and timely handling of documents
Ideal for businesses operating in multiple states

Step 4: Draft an LLC Operating Agreement

An Operating Agreement defines how the LLC is governed and operated. While not mandatory in all states, it is strongly recommended.

Why an Operating Agreement Is Important:

Reinforces limited liability protection
Defines ownership percentages and management roles
Establishes profit and loss distribution rules
Outlines procedures for adding members or dissolving the LLC
Overrides default state rules where permitted

For multi-member LLCs, this document is essential to prevent disputes and clarify expectations.

Step 5: File the Articles of Organization

To officially form your LLC, you must file the Articles of Organization with the state—usually through the Secretary of State.

Typical Information Required:

LLC name and business address
Registered agent details
Management structure (member-managed or manager-managed)
Business purpose
Effective date (if applicable)

Once approved, the state issues a Certificate of Formation, which serves as proof of the LLC’s legal existence.

Publication Requirement:
Some states require publication of the LLC’s formation in local newspapers, followed by filing a Certificate of Publication.

Step 6: File a Beneficial Ownership Information (BOI) Report

Under federal law effective from 2024, most LLCs must file a BOI report with FinCEN to disclose ownership and control details.

Who Must File:
Most U.S.-formed or registered LLCs, unless exempt.

Information Required:

Full legal name
Date of birth
Residential address
Government-issued ID

Filing Deadlines:

LLCs formed before Jan 1, 2024: by Jan 1, 2025
Formed in 2024: within 90 days
Formed from Jan 1, 2025 onward: within 30 days

Failure to comply may result in civil and criminal penalties.

Step 7: Obtain EIN, Tax IDs, and Business Licenses

After formation, complete the following registrations:

1. Employer Identification Number (EIN):

Issued by the IRS
Required for banking, hiring employees, and tax filings

2. Sales Tax Registration (if applicable):

Required for selling taxable goods or services

3. Labour Department Registration (if hiring employees):

Unemployment insurance
Workers’ compensation
Payroll taxes

4. Business Licenses & Permits:

Local, state, or federal licenses depending on your business activity

Step 8: Open a Business Bank Account

Maintaining a separate business bank account is essential to protect your limited liability status.

Typically Required by Banks:

EIN
Articles of Organization
Operating Agreement
Owner identification

This step helps maintain clean financial records and strengthens legal protection.

Step 9: Register as a Foreign LLC (If Applicable)

If your LLC operates in states other than where it was formed, you must foreign qualify in each additional state.

This usually involves:

Filing an Application for Authority
Providing a Certificate of Good Standing
Appointing a registered agent in that state

Why Choose Auriga Accounting pvt. ltd. for Your U.S. LLC Formation?

Auriga Accounting pvt. ltd. offers a streamlined and reliable solution for U.S. LLC registration. Our experts manage the entire process—from documentation and state filings to compliance and post-formation support—ensuring accuracy, speed, and peace of mind. With transparent pricing, ongoing assistance, and end-to-end compliance support, Auriga Accounting pvt. ltd. is your trusted partner for launching and growing your U.S. business.

About the Author

Ravi

Ravi simplifies complex legal concepts into practical, actionable insights, helping entrepreneurs meet their compliance requirements and build sustainable, legally sound businesses.