Many small business owners assume they can open an LLC on their own. Some even try, only to learn that starting an LLC has some complicated steps. Others learn that it's simply too time-consuming and too expensive. The truth is that opening an LLC is pretty simple. It does require some work, but it's not difficult to work, and the time and money it takes won't harm your business.

How To Start An LLC

How To Start an LLC - Importance of Operating Agreement

Most new businesses follow what's called an 'in the name' operating agreement. This is where they outline the specific workings of the business, and the person or company that is doing the work will receive limited liability. Because all transactions and rights are in the name of the LLC, business owners must use their name as the company. It may be tempting to go with a name already used by another business, but that doesn't always make sense. If the company you select already has an existing operating agreement, this shouldn't present any problem.

If you're considering starting an LLC, there's another important piece of information you should be aware of - the limited liability protection. An LLC is not considered a pass-through entity, which means that only the owner’s assets are protected if the business goes under. To protect your assets from a catastrophic loss, you need to set up a corporation. This is why incorporating with an LLC is often referred to as 'pass-through'.

How To Start an LLC? Know The Benefits

The benefit of incorporating an LLC is fairly obvious, which you will learn when you study how to start an LLC.

  • Tax advantages and limited liability protection are just two of the many reasons to incorporate. In addition, small business owners can take advantage of business incubators to accelerate growth and develop new ideas. All this is possible, of course, when you work with a qualified professional who can help you understand your options. Whether you're looking for advice on incorporating an LLC or looking for a complete guide to setting up an LLC, you're sure to find the right source with the right expertise.
  • Some people choose to incorporate an LLC because they want to limit their liability. An LLC is an excellent way to accomplish this goal, but it does require some upfront expenses. One of these is filing fees, which can be quite high. Other fees are required if you have to get licensed, and this will cost an additional amount. 
  • Finally, most small business owners have to pay their state and local taxes, which can be another expense unless you use a pass-through entity to help with the filing process. If you're looking to minimize your liability, an LLC might be perfect for you, but you'll have to do a lot of research to find out if it's the best choice for your situation.

How To Start An LLC - Is It Difficult to Start an LLC?

Forming an LLC isn't difficult. If you're looking to get started as a business, consider what type of business name you'd like to use, as well as the other details that will help you set up your LLC. Consider an S-corp, C-corp, D-corp, or an LLC. When you find a business idea that you're interested in operating, consult a qualified attorney to help you know how to start an LLC. The most basic rules of incorporation still apply, so make sure that all of the documents are filed correctly and that you're following all of the other requirements.

The Major Takeaway

One of the key takeaway points about how to start an LLC is that it's important to have a properly filed business structure in place from the very start. You must form an LLC, even if you don't intend to transact any type of business with it. Suppose you do plan to use an LLC. In that case, there are several ways to protect your assets while making an accessible way to let the LLC keep personal finances separate from its business finances. An LLC has the same legal "pass-through" tax status as a sole proprietorship but is not taxed like a corporation. It also can carry cash during operations, but only after deducting expenses like business overhead. Personal and company costs are both passed through to the individual owners of the LLC, who then pay themselves back at the end of the year.


Forming an LLC is pretty easy if you know what you need to do, and the laws are relatively straightforward. If you're unsure about how to begin an LLC, or if you'd rather have some additional guidance, your best bet is to consult with a qualified business lawyer who can give you expert advice on how to begin an LLC. Many online services can help you find a qualified attorney to help you form an LLC. There's no reason to pay for their assistance if you can find the information you need for free.