A Limited Liability Company (LLC) is a business structure that combines the limited liability protection of a corporation with the flexibility and tax benefits of a partnership. It shields personal assets from business debts and lawsuits, offering a balance between simplicity and protection.

How do I start an LLC?

To start an LLC, follow these steps: 1) Choose a unique business name; 2) Appoint a registered agent; 3) File Articles of Organization with your state's Secretary of State; 4) Create an operating agreement; 5) Obtain an Employer Identification Number (EIN) from the IRS; 6) Comply with state-specific requirements, such as publishing notices or obtaining licenses.

Do I need a registered agent for my LLC?

Yes, most states require LLCs to designate a registered agent. This individual or service must have a physical address in the state and is responsible for receiving legal documents and official correspondence on behalf of the LLC.

What is an operating agreement?

An operating agreement is a legal document that outlines the ownership structure, member roles, and operating procedures of an LLC. While not always mandatory, it's highly recommended to prevent disputes and ensure clear governance.

Do I need an EIN for my LLC?

Yes, obtaining an Employer Identification Number (EIN) from the IRS is essential for tax purposes, opening a business bank account, and hiring employees. It's a unique identifier for your LLC.

Can I form an LLC on my own?

Absolutely. Many entrepreneurs choose to form an LLC themselves by following their state's guidelines. However, services like BusinessAnywhere.io can simplify the process by handling paperwork and ensuring compliance.

How to Start an LLC

Q: How much does it cost to start an LLC?

The cost to start an LLC varies by state, typically ranging from $50 to $500. Additional expenses may include registered agent fees, name reservation fees, and costs for obtaining necessary licenses or permits.

Rick Mak
Updated on May 12, 2025

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Complete Guide for Digital Entrepreneurs

There are over 33 million small businesses in the United States, making up 99.9% of all US firms. This entrepreneurial spirit drives economic growth and innovation nationwide. If you’re ready to join these ranks of business owners, forming a Limited Liability Company (LLC) is likely your best option—offering robust protections and flexibility that other business structures simply don’t provide. Learning how to start an LLC is a critical first step in your entrepreneurial journey.

This comprehensive guide walks you through everything you need to know about how to start an LLC, from initial planning to ongoing compliance. As remote work and digital entrepreneurship continue to reshape the business landscape, BusinessAnywhere.io remains committed to helping digital nomads, location-independent professionals, and online business owners establish legal entities that support their mobile lifestyle.

What Is an LLC and Why Should Digital Entrepreneurs Choose This Structure?

A Limited Liability Company (LLC) represents a hybrid business structure that combines the best elements of corporations and partnerships/sole proprietorships. According to the U.S. Small Business Administration, this business entity provides significant advantages for digital entrepreneurs and remote business owners:

Key Benefits of Forming an LLC

Personal Asset Protection: Perhaps the most critical benefit—LLCs create a legal separation between you and your business. If your business faces lawsuits or accumulates debt, your personal assets (home, savings accounts, vehicles) generally remain protected.
Tax Flexibility: LLCs offer numerous tax advantages with options to be taxed as a sole proprietorship, partnership, S-Corporation, or C-Corporation depending on what’s most advantageous for your situation.
Reduced Paperwork: Compared to corporations, LLCs involve less administrative burden and fewer formalities, making them ideal for digital entrepreneurs who value simplicity.
Credibility Boost: Operating as an LLC rather than a sole proprietorship signals legitimacy to potential clients, partners, and customers—particularly important for online businesses.
Location Independence: For digital nomads and remote workers, LLCs can provide a stable business structure regardless of where you physically operate.
Simplified Compliance: Annual reporting requirements for LLCs are typically less rigorous than those for corporations.

For most digital entrepreneurs, freelancers, and remote business owners, this combination of liability protection with operational simplicity makes an LLC the optimal choice for structuring your business.

How Much Does It Cost to Start an LLC?

The cost of forming an LLC varies significantly depending on your state of formation and whether you handle the process yourself or hire professional assistance. Here’s a breakdown of potential expenses:

State Filing Fees

State filing fees range from a low of $50 (in states like Arizona, Colorado, and New Mexico) to $500 or more (in Massachusetts and Illinois). The national average is approximately $100-$200 for initial filing fees. According to the National Association of Secretaries of State, these fees help fund the business registration infrastructure in each state.

Additional Formation Costs

Beyond basic filing fees, consider these potential expenses:

Registered Agent Service: $100-$300 annually (BusinessAnywhere.io offers this service for just $147/year)
Operating Agreement Creation: $0-200 (DIY vs. professional assistance)
Business Licenses and Permits: Varies by industry and location
Publication Fees: Required in some states like New York and Arizona ($40-$2,000)
Name Reservation Fee: $10-$50 if you want to secure your name before filing
Expedited Filing: $50-$500 if you need faster processing
Annual Fees/Franchise Taxes: $0-$800+ depending on state
EIN Application: $0 (if done yourself directly with the IRS)

Cost-Saving Tips for Digital Entrepreneurs

Research state fees thoroughly before deciding where to form your LLC
Consider forming in your home state to avoid foreign qualification requirements
Utilize free resources from your Secretary of State’s website
Take advantage of BusinessAnywhere.io’s free business registration service
Handle simple filings yourself rather than paying a formation service

For remote workers and digital nomads, carefully weighing formation costs against ongoing compliance requirements can help optimize your LLC formation strategy.

Step-by-Step Guide: How to Start an LLC

Let’s break down the process of how to start an LLC into manageable steps that anyone can follow:

Step 1: Choose a Business Name

Your LLC name is more than just a legal requirement—it’s a foundational element of your brand identity. When selecting a name:

Check state requirements:
- Must contain “Limited Liability Company,” “LLC,” or acceptable variation
- Cannot include restricted words without proper licensing (e.g., “Bank,” “Insurance”)
- Must be distinguishable from other registered businesses in your state
Verify availability:
- Search your Secretary of State’s business database
- Check domain name availability for web presence
- Research social media handle availability
- Consider trademark databases to avoid infringement
Secure your name:
- Reserve the name with your state (optional but recommended)
- Purchase relevant domain names
- Secure social media handles

For digital entrepreneurs, ensuring consistency across online platforms is particularly important for building a cohesive brand.

Step 2: Select a Registered Agent

Every LLC must designate a registered agent—an individual or company authorized to receive legal documents and official correspondence on behalf of your business.

Requirements for Registered Agents:

Must have a physical street address (not P.O. Box) in the formation state
Must be available during normal business hours
Must be 18 years or older
Can be yourself, a friend/family member, or a professional service

Why Use a Professional Registered Agent Service?

While you technically can serve as your own registered agent, for digital entrepreneurs and remote workers, this presents several challenges:

Privacy concerns: Your home address becomes public record
Geographic limitations: You must maintain a physical presence in your state of formation
Reliability issues: You must be available during all business hours
Professional image: Receiving legal documents in front of clients could be awkward

BusinessAnywhere.io’s registered agent service ($147/year) provides a professional solution that:

Maintain your privacy
Ensure reliable document handling
Support your location-independent lifestyle
Include document scanning and forwarding

For digital nomads and those working remotely, a professional registered agent service is practically essential for maintaining compliance while preserving mobility.

Step 3: File Your Articles of Organization

The articles of organization (sometimes called a certificate of formation or certificate of organization) is the document that officially creates your LLC when filed with the state.

What to Include in Your Articles:

LLC name (as registered)
Principal place of business
Purpose of the business (general or specific)
Registered agent information
Management structure (member-managed or manager-managed)
Names and addresses of initial members/managers
Duration of the LLC (usually perpetual)
Organizer’s signature and date

Filing Options:

Online filing: Most states offer electronic submission (fastest option)
Mail submission: Traditional paper filing (slower processing)
In-person filing: Available in some jurisdictions (immediate processing)
BusinessAnywhere.io’s free business registration service: We handle the paperwork while you focus on growing your business

Processing times vary by state, ranging from immediate approval to several weeks. Expedited processing is available in most states for an additional fee.

Step 4: Create an Operating Agreement

While not legally required in every state, creating an operating agreement is strongly recommended for all LLCs, especially those with multiple members.

Why Every LLC Needs an Operating Agreement:

Defines ownership percentages and profit distribution
Establishes management structure and decision-making procedures
Creates clear procedures for adding/removing members
Outlines dissolution process if the business ends
Protects your LLC status by demonstrating separation from personal affairs
Prevents defaults to state rules that may not align with your preferences
Resolves disputes by providing clear guidelines

Key Components to Include:

Basic LLC Information: Name, purpose, principal address
Membership Details: Names, capital contributions, ownership percentages
Management Structure: Member-managed vs. manager-managed
Voting Rights: How decisions will be made and votes allocated
Profit and Loss Allocations: How money flows to members
Meeting Requirements: Frequency, notice periods, quorum requirements
Membership Changes: Processes for transfers, additions, withdrawals
Dissolution Procedures: Circumstances and processes for ending the LLC

BusinessAnywhere.io offers professional operating agreement creation for just $97—ensuring your agreement is comprehensive and legally sound.

Step 5: Obtain an Employer Identification Number (EIN)

An Employer Identification Number (EIN), also called a Federal Tax ID Number, functions as your business’s Social Security Number for tax purposes. The Internal Revenue Service (IRS) requires this number for tax filing and business identification.

When an EIN is Required:

LLCs with employees
LLCs with multiple members
LLCs taxed as corporations
LLCs that need to open a business bank account

Benefits of Having an EIN (Even When Not Required):

Separates personal and business finances
Simplifies tax filing
Facilitates business banking
Establishes business credit
Prevents identity theft by reducing use of your SSN

Obtaining an EIN is free through the IRS website, with immediate issuance for most online applications. You can also apply by mail using Form SS-4.

Step 6: Register for State and Local Taxes

Depending on your business activities and location, you may need to register for various state and local taxes.

Common Tax Registrations:

Sales and Use Tax: For businesses selling taxable goods or services
Employer Taxes: If you’ll have employees
Professional Taxes: Industry-specific in some jurisdictions
Local Business Taxes: County or city-specific requirements

Understanding your tax obligations is essential for avoiding penalties and maintaining compliance.

Step 7: Open a Business Bank Account

Maintaining separate finances is essential for preserving your liability protection and simplifying accounting.

Documents Typically Required:

Articles of Organization (filed and approved)
EIN confirmation letter from the IRS
LLC Operating Agreement
Business license (if applicable)
Personal identification for all signatories

Benefits of Dedicated Business Banking:

Maintains liability protection by separating personal and business finances
Simplifies tax preparation and expense tracking
Enhances professionalism with clients and vendors
Builds business credit separate from personal credit
Facilitates digital payments and recurring transactions

Many banks offer special business checking accounts for new LLCs with minimal fees and digital-first features ideal for remote entrepreneurs.

Step 8: Obtain Necessary Licenses and Permits

Beyond forming your LLC, you may need additional licenses or permits to operate legally.

Common Requirements:

General Business License: Required in many localities
Professional License: For regulated professions (consultants, real estate, etc.)
Home Occupation Permit: For home-based businesses
Sales Tax Permit: For selling taxable goods/services
Health Department Permits: For food/beverage businesses
Zoning Permits: Ensuring compliance with local land use regulations

Digital entrepreneurs should research both physical location requirements and virtual business regulations that may apply to their operations.

Maintaining Your LLC: Ongoing Compliance Requirements

Forming your LLC is just the beginning. Maintaining compliance requires ongoing attention to several key areas:

Annual Reporting

Most states require annual or biennial reports to maintain your LLC in good standing.

Due dates: Typically based on formation date or calendar year
Filing methods: Usually online through Secretary of State portal
Required information: Basic company details, registered agent confirmation
Fees: Range from $0-$800+ depending on state

Tax Filings

LLCs must file various tax returns depending on their classification:

Single-member LLCs: Schedule C with personal tax return (Form 1040)
Multi-member LLCs: Partnership return (Form 1065)
S-Corporation election: Form 1120-S
C-Corporation election: Form 1120

Self-Employment Taxes

For LLCs taxed as pass-through entities (the default), members must pay self-employment tax on business income.

Current rate: 15.3% (12.4% Social Security + 2.9% Medicare)
Social Security threshold: Applies to earnings up to the annual cap
Medicare portion: Applies to all earnings without limit, with an additional 0.9% on higher incomes

According to the Tax Foundation, for digital entrepreneurs seeking to minimize self-employment tax, considering an S-Corporation election may be beneficial once business income reaches certain thresholds.

Recordkeeping Requirements

Maintaining proper records is essential for preserving your liability protection:

Financial separation: Distinct business bank accounts and credit cards
Meeting minutes: Formal documentation of major decisions
Membership changes: Records of ownership transfers or adjustments
Asset documentation: Clear records of business property
Tax records: Maintain for at least seven years

Digital entrepreneurs should implement cloud-based document management systems to maintain these records securely while supporting remote work.

Special Considerations for Digital Nomads and Remote Entrepreneurs

Location-independent business owners face unique challenges when forming and maintaining an LLC:

State Selection Strategy

When choosing where to form your LLC, consider:

Home state advantages: Simplicity and avoiding foreign qualification
Tax-friendly states: Wyoming, Nevada, Florida (no personal income tax)
Virtual-friendly regulations: States with minimal physical presence requirements
Annual fees: Some states with low formation fees have high maintenance costs

Research from the Tax Policy Center shows significant variations in business taxation across states, making this an important consideration for digital entrepreneurs.

Multi-State Operations

If you operate in multiple states (common for digital businesses):

Foreign qualification: Registering your LLC in additional states where you conduct business
Nexus considerations: Understanding when your activities create tax obligations
Registered agent requirements: Needing representation in each state of operation

International Considerations

For globally mobile entrepreneurs:

Tax residency: Understanding how your location affects business taxation
Banking challenges: Maintaining US business accounts while abroad
Mail and document handling: Systems for receiving physical correspondence
Time zone management: Planning for state filing deadlines across time zones

BusinessAnywhere.io’s suite of services is specifically designed to address these unique challenges faced by digital entrepreneurs operating across state lines and international boundaries.

Advanced LLC Strategies for Digital Entrepreneurs

As your business grows, consider these advanced strategies:

Tax Classification Optimization

While LLCs default to pass-through taxation, you can elect different tax treatment:

S-Corporation election: Can reduce self-employment taxes on distributions
C-Corporation election: May benefit high-income businesses with specific needs

Consult with a tax professional to determine the optimal classification for your situation.

Multi-Entity Structures

Some digital entrepreneurs benefit from creating multiple related entities:

Asset protection LLCs: Holding valuable intellectual property
Operating LLCs: Conducting day-to-day business activities
Management LLCs: Providing services between related entities

State Domicile Strategies

Strategic formation state selection based on:

Privacy laws: States like Wyoming and Nevada offer enhanced privacy
Asset protection: Some states provide stronger charging order protection
Tax advantages: Zero income tax states for certain business types

Step-by-Step Guide: Taking Action Today

Ready to form your LLC? Follow this actionable plan:

Research your state’s requirements (1-2 hours)
Choose and verify your business name (1-2 hours)
Select a registered agent (consider BusinessAnywhere.io’s service)
Prepare your formation documents (2-4 hours or use our free service)
File with the state (submission time: 15-30 minutes)
Create an operating agreement (3-5 hours or $97 with BusinessAnywhere.io)
Apply for your EIN (15 minutes online)
Open a business bank account (1-2 hours)
Implement accounting system (2-4 hours to set up)
Calendar compliance deadlines (30 minutes)

Most entrepreneurs can complete this process in 1-2 weeks, with state processing time being the primary variable.

FAQ: Common Questions About Starting an LLC

What’s the difference between an LLC and a sole proprietorship?

An LLC provides liability protection that separates your personal assets from business debts and liabilities. A sole proprietorship offers no such protection—your personal assets are at risk for business obligations. Additionally, LLCs can be taxed in various ways and may appear more professional to clients and partners.

Can I form an LLC if I’m not a US citizen or resident?

Yes, most states allow non-US citizens to form LLCs. However, you’ll need a US address for your registered agent and may face additional documentation requirements. BusinessAnywhere.io can help international entrepreneurs navigate these requirements successfully.

How long does it take to form an LLC?

Processing times vary by state:

Expedited filing: 1-3 business days (additional fees apply)
Standard online filing: 5-10 business days
Mail filing: 2-4 weeks
States with longer processing: 4-8 weeks (CA, NY, etc.)

Do I need an operating agreement if I’m the only member?

While not legally required in most states, a single-member operating agreement is still highly recommended. It helps establish your LLC as a separate entity from yourself (reinforcing liability protection), provides clear rules for business operations, and can be essential if you need business financing or plan to add members later.

Can I form an LLC in a state where I don’t live?

Yes, you can form an LLC in any state, regardless of where you live. However, if you’re physically operating in a different state, you may need to register as a foreign LLC there as well. Digital businesses have more flexibility in this regard.

What’s the difference between a member-managed and manager-managed LLC?

In a member-managed LLC, all owners (members) participate in day-to-day operations and decision-making. This is the most common structure for small businesses. In a manager-managed LLC, members appoint specific individuals (who may or may not be members) to manage operations while the members take a more passive role, similar to shareholders.

How do LLC taxes work for digital nomads?

LLC members must report business income on their personal tax returns. For US citizens, worldwide income is taxable regardless of where you live. However, the Foreign Earned Income Exclusion may allow qualifying digital nomads to exclude a portion of foreign earned income. State tax obligations depend on your domicile and where business is conducted.

State-Specific LLC Formation Resources

Each state has unique LLC formation requirements, fees, and procedures. For state-specific guidance on starting your LLC, consult detailed guides for these states:

View our complete state-by-state LLC formation guide for information on all 50 states.

Conclusion: Your Path to Entrepreneurial Success

Forming an LLC is a significant step in your entrepreneurial journey—one that provides crucial legal protection and business legitimacy while offering flexibility for growth. For digital entrepreneurs and remote business owners, an LLC structure creates a stable foundation from which to operate globally.

By following the steps outlined in this guide, you can confidently establish your LLC and focus on what matters most: building and growing your business. Remember that compliance requirements continue after formation, so developing systems to maintain your LLC’s good standing is essential for long-term success.

Ready to Take the Next Step?

BusinessAnywhere.io makes LLC formation simple for digital entrepreneurs and remote business owners. Our comprehensive services include:

Free business registration in all 50 states
Professional registered agent service ($147/year)
Custom operating agreement creation ($97)
Compliance monitoring to ensure your LLC remains in good standing

Sign up today to begin your LLC formation process with BusinessAnywhere.io—the preferred partner for location-independent entrepreneurs.

About Author

Rick Mak

Rick Mak is a 30-year veteran businessman, having started, bought, and/or sold more than a dozen companies. He has bachelor's degrees in International Business, Finance, and Economics, with masters in both Entrepreneurship and International Law. He has spoken at hundreds of conferences around the world during his career on entrepreneurship, international tax law, asset protection, and company structure. Business Anywhere Editorial Guidelines

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