How to Start an LLC: The Step-by-Step Guide for Solopreneurs

Starting an LLC protects your personal assets from business liabilities while giving you tax flexibility to optimize earnings as you grow. The formation process is simpler than you think, and once established, your LLC shields your home and savings from business debts or lawsuits.

Are you leaving money on the table by operating as a sole proprietor? Every month you delay forming an LLC, you're missing out on liability protection that shields your personal assets from business debts and lawsuits. Plus, the tax flexibility to optimize your earnings as your business grows!

Learning how to start an LLC doesn't require corporate complexity or stacks of paperwork.

Once formed, your LLC requires ongoing compliance. This includes annual reports and business licenses. Lettuce automates your entire LLC formation and ongoing compliance, so you can focus on growing your business instead of managing paperwork.

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Why Form an LLC? The Benefits for Solopreneurs

Your personal assets deserve protection, and an LLC delivers exactly that. When you form an LLC, you create a separate legal entity that shields your home, savings, and personal property from business debts or lawsuits. This protection gives you the confidence to pursue bigger opportunities without putting your family's financial security on the line.

Even better: once your revenue reaches $80K+, you can elect S-Corp tax status on top of your LLC to save $8,000+ annually in self-employment taxes, getting both liability protection and maximum tax savings.

Key benefits of forming an LLC:

• Liability protection: Separate your personal assets from business debts and lawsuits
• Tax flexibility: Start with simple pass-through taxation, then elect S-Corp status later to reduce self-employment taxes
• Professional credibility: Gain legitimacy without complex corporate requirements
• Growth flexibility: Adapt your structure as you scale without rigid formalities

An LLC strikes the perfect balance between credibility and simplicity, giving you the protection and professionalism of a larger business while keeping paperwork manageable.

Lettuce gets all your information in 10 minutes and kicks off the LLC formation process. The platform handles everything from business name registration to EIN acquisition automatically, so you can start protected immediately.

The LLC Formation Process: Step-by-Step

Forming your LLC comes down to three essential actions: filing Articles of Organization with your state, designating a registered agent to handle legal documents, and creating an operating agreement that outlines how your business operates.

Let's break down each step so you know exactly what to expect and how to complete your LLC formation efficiently.

Step 1: File Your Articles of Organization

The Articles of Organization are the foundational legal document that officially creates your LLC. Think of it as your business's birth certificate. This filing establishes your LLC's legal existence and provides the liability protection and tax flexibility that make LLCs attractive to solopreneurs.

What you need to file:

• Unique business name: Must be available and different from other businesses registered in your state
• Registered agent information: Name and address of your designated registered agent
• Principal business address: Your LLC's main location
• Filing fee: Ranges from $50 to $500, depending on your state

State requirements vary significantly. Some allow online filing with same-day approval, while others require paper submissions with processing times of several weeks. Each state has specific rules about name availability, registered agent qualifications, and required disclosures that can trip up first-time filers.

How Lettuce Helps: Lettuce automates the entire filing process by validating your chosen business name against state databases, ensuring your registered agent meets all requirements, and handling state-specific filing details so nothing slips through the cracks.

Step 2: Designate Your Registered Agent

Every LLC needs a registered agent; it's not optional. A registered agent is your business's official point of contact for legal papers and government correspondence, including lawsuits, state notices, and tax documents. Every state requires LLCs to maintain a registered agent with a physical address in the state where the LLC is formed.

Your two options:

• Serve as your own agent: Saves upfront costs but makes your home address public record and requires you to be available during all business hours.
• Hire a professional service: Protects your privacy and ensures reliable document receipt without disrupting your schedule.

Note that self-service comes with serious downsides. Your home address becomes searchable online, you must be available during business hours for time-sensitive documents, and missing critical deadlines can jeopardize your LLC's good standing.

How Lettuce Helps: Lettuce provides registered agent service at no additional cost, protecting your privacy while ensuring compliance. You get a professional business address on public records, guaranteed receipt of all legal documents, and automatic forwarding so you never miss essential deadlines.

Step 3: Create Your LLC Operating Agreement

Your LLC operating agreement acts as the internal rulebook that defines how your business operates, even when you're the only member. This document establishes your ownership structure, management authority, and operational procedures, creating a binding contract between you and your business entity.

While most states don't require operating agreements, they protect your limited liability status and prevent your LLC from resembling a sole proprietorship in the eyes of creditors or courts.

Why you need an operating agreement:

• Protects liability shield: Reinforces the legal separation between you and your business
• Simplifies banking: Banks require this document when opening business accounts to verify legitimate business operations
• Clarifies operations: Documents decision-making authority, profit distributions, and management procedures
• Professional credibility: Demonstrates you're running a legitimate business entity

Your operating agreement should include ownership percentages, voting rights, capital contributions, profit distribution methods, and dissolution procedures—all tailored to your single-member structure.

How Lettuce Helps: Lettuce provides a complete LLC operating agreement that establishes your legal structure and operating procedures, meeting all state requirements for formal documentation. No additional cost, no legal fees.

LLC Formation Costs and Timeline

Understanding LLC formation costs and timelines helps you budget properly and set realistic expectations for when your business will be operational. Let's break down what you can expect to pay and how long the process takes.

How Much Does It Cost to Start an LLC?

State filing fees represent your biggest upfront expense when forming an LLC, ranging from $35 in Montana to $500 in Massachusetts. Most states charge between $50-$200, with a national average of around $132.

Additional formation costs to budget for:

• Registered agent service: $100-$300 annually (required in all states)
• Operating agreement: $100-$500 if using a service, $750+ if drafted by an attorney
• Business licenses: $50-$500+, depending on your industry and location
• EIN acquisition: Free when filing directly with the IRS
• Expedited processing: $50-$200+ if you need faster state approval

These costs add up quickly; a typical DIY formation runs $500-$1,000+ in the first year when you factor in all required services and documentation.

How Lettuce Helps: Lettuce eliminates $500+ in first-year formation expenses by covering state filing fees, including registered agent service at no additional cost, and providing operating agreement templates. You get everything bundled into one system: EIN acquisition, business name registration, and ongoing compliance tracking with zero filing fees.

How Long Does It Take to Get Your LLC Approved?

Processing times vary significantly by state and filing method. Some states process online LLC filings within 1-3 business days, while others require 4-6 weeks for standard processing. Online filings consistently process faster than mail submissions across all states.

Typical state processing timelines:

• Fast states: 1-3 business days (Florida, Arkansas, Delaware)
• Average states: 1-2 weeks (California, Texas, Georgia)
• Slower states: 4-6 weeks (Maine, Vermont, New York)
• Expedited options: Same-day to 2-day processing available in most states for additional fees ($50-$300+)

Most states offer expedited processing if you need faster approval, though these fees come on top of regular filing costs, turning weeks into days when timing matters for your launch.

How Lettuce Helps: Lettuce monitors your filing status automatically and notifies you the moment your LLC receives approval. The platform handles all state-specific requirements, so you know exactly when you're ready to start operating without tracking paperwork yourself.

Why Single-Member LLCs Work for Businesses-of-One

Most solopreneurs start with a single-member LLC because it provides complete liability protection while keeping operations simple. The IRS treats your single-member LLC as a "disregarded entity," meaning business income flows directly to your personal tax return on Schedule C. This is just like a sole proprietorship, but with the crucial advantage of protecting your personal assets from business liabilities.

Why single-member LLCs work for solopreneurs:

• Simple taxation: Report business income on Schedule C of your personal tax return; no separate business return required.
• Complete liability protection: Your personal assets stay protected from business liabilities.
• Easy S-Corp election: Convert to S Corp tax status when your revenue reaches $80K annually without changing your legal structure.
• Flexible growth path: Start simple, scale smart, potentially saving $8,000+ annually in self-employment taxes.

Maintaining your liability protection requires keeping business and personal finances completely separate. This includes dedicated business bank accounts, business credit cards, and meticulous record-keeping to avoid "piercing the corporate veil."

How Lettuce Helps: Lettuce provides integrated business banking and automated bookkeeping that categorizes every transaction, tracks business expenses, and maintains the financial separation that preserves your legal protection. When you're ready to optimize taxes with an S-Corp election, Lettuce handles Form 2553 filing, sets up automated payroll, and manages all compliance requirements.

Maintaining Your LLC: Ongoing Compliance Requirements

Getting your LLC approved is just the starting line. Staying compliant means keeping up with ongoing deadlines and paperwork that vary by state and business type. Your business license requirements depend on your location and industry, while annual reports keep your state records current and your business in good standing. Miss these filings, and you're looking at late fees, administrative dissolution, or even losing your business name entirely. Let's break down what you need to stay compliant and how to avoid costly penalties.

Business Licenses: What You Need and When

Your licensing needs differ from state to state and depend on what you do and where you operate. Most businesses need a general business license(sometimes called authority to conduct business) to operate legally, plus industry-specific licenses if you're in regulated fields like healthcare, construction, or food service.

Common business license requirements:

• General business license: Required by most states, cities, and counties to operate legally ($50-$200 annually)
• Professional licenses: Required for regulated professions like contractors, real estate agents, or healthcare providers
• Industry-specific permits: Food service permits, liquor licenses, signage permits, depending on your business type
• Home occupation permits: Required in many localities if you operate from home
• Sales tax permits: Required if you sell physical products in states with sales tax

Costs vary widely by location and industry. Some states charge as little as $5 for annual renewals, while others charge $200+ annually. Businesses in heavily regulated industries may need multiple permits that push annual costs past $500.

How Lettuce Helps: Lettuce identifies which licenses your business needs based on your location and industry, then automatically tracks renewal deadlines so you never miss a filing or face late penalties.

Annual Reports: Keeping Your LLC in Good Standing

Your annual report updates your registered agent, business address, and key contact information with the state each year, keeping your business legally compliant and protecting your liability shield. Most states require annual or biennial filings with fees ranging from $7 to $200, though some states, like Florida, charge $138.75.

Why annual reports matter:

• Maintains good standing: Keeps your LLC legally active and compliant with state requirements.
• Protects your business name: Filing on time prevents your business name from becoming available to others.
• Avoids penalties: Late filings trigger fees ($400 in Florida) and can lead to administrative dissolution.
• Preserves liability protection: Good standing status is essential for maintaining your legal shield.

Missing annual report deadlines triggers serious consequences. Some states impose immediate late fees, while others will dissolve your LLC after 1-2 years of non-filing. Administrative dissolution means losing your business name, good standing status, and facing reinstatement fees to reactivate your LLC.

How Lettuce Helps: Lettuce's AI monitors your state-specific filing requirements and deadlines, automatically submitting your annual reports before they're due. No calendar reminders, no scrambling for information, no late fees. Your LLC stays in perfect standing while you focus on growing your business.

Your Complete LLC Compliance Checklist

Your LLC compliance checklist just got a whole lot simpler. This breakdown turns every requirement into manageable steps, so you can focus on growing your business while keeping everything above board.

Formation (One-Time)

✓ File Articles of Organization: Makes your business official with your state.
✓ Obtain your EIN: Get your federal tax ID from the IRS.
✓ Designate a registered agent: Required point of contact for legal documents.
✓ Create an operating agreement: Protects your limited liability status.
✓ Open a business bank account: Separates business and personal finances.
✓ Get required business licenses: Based on your industry and location.

Ongoing (Annual/Quarterly)

✓ File annual reports: Update state records and maintain good standing.
✓ Renew business licenses: Keep all permits current.
✓ Pay quarterly estimated taxes: Stay current with IRS and state tax obligations.
✓ File annual business tax returns: Form 1120-S if you're an S-Corp.
✓ Maintain separate finances: Keep business and personal expenses distinct.
✓ Update registered agent if needed: Notify the state of any changes.

How Lettuce Helps: Lettuce automates every item on this checklist — from instant EIN acquisition and Articles of Organization filing to AI-powered annual report tracking and automated quarterly tax payments.

When It's Time to Move On: How to Close an LLC

Sometimes your business journey takes you in a new direction. Whether you're pivoting to a different venture, retiring, or simply ready for change, properly dissolving your LLC protects you from ongoing fees, tax obligations, and potential legal issues that persist long after you stop operating.

The LLC dissolution process:

1. Vote to dissolve: Get formal approval from all LLC members (even if you're the only one).
2. File Articles of Dissolution: Submit official paperwork to your Secretary of State.
3. Settle business affairs: Notify creditors and customers, pay outstanding debts, and cancel licenses and permits.
4. Close accounts: Shut down business bank accounts, credit cards, and merchant services.
5. File final tax returns: Submit Schedule C (single-member), Form 1065 (partnership), or Form 1120-S (S-Corp).
6. Cancel your EIN: Close your business account with the IRS.
7. File final state documents: Some states require a termination document after everything is wrapped up.

Skipping formal dissolution can result in ongoing annual fees and tax obligations, continued personal liability exposure, risk of business identity theft, and potential damage to your personal credit and future business ventures.

How Lettuce Helps: Lettuce guides you through the complete dissolution process, tracking all state requirements, preparing final tax returns, and coordinating with the IRS to close your business account properly, ensuring a clean exit with zero loose ends.

LLC FAQs for Solopreneurs

Ready to level up from sole proprietor to LLC owner? These answers will help you make confident decisions about your business structure and formation process.

How much does it cost to start an LLC in my state?

State filing fees range from $50 to $500, depending on where you form your LLC For instance, California charges $70, while Delaware charges $90. According to the SBA, total registration costs are typically less than $300, but additional services like registered agent fees can add $100-300 annually. With Lettuce, you skip the state fees entirely and get registered agent service included, saving you hundreds in first-year costs.

How long does it take to get an LLC approved?

Processing times vary significantly by state. Some approve LLCs in 1-3 business days, while others take 4-6 weeks. States that offer online filing typically process applications faster than those requiring paper submissions. Lettuce monitors your application status and automates all the documentation, so you'll know immediately when your LLC is approved and ready for business.

What should I include in my LLC operating agreement?

Your operating agreement should cover ownership structure, profit and loss distribution, voting rights, and procedures for adding or removing members. According to the SBA, most operating agreements are 5-20 pages and should also include management duties, meeting procedures, and buy-sell provisions. Even single-member LLCs benefit from having an operating agreement to protect their limited liability status and make banking easier.

What is a registered agent for an LLC, and do I need one?

A registered agent is your LLC's official contact for legal documents and state correspondence; every state requires one. This means if you're sued or receive official notices, they'll be delivered to your registered agent's address, not your home. You have the option to serve as your own registered agent, but using a professional service protects your privacy and ensures you never miss important legal notices or compliance deadlines.

Do I need a business license after forming my LLC?

Most LLCs need a general business license plus industry-specific licenses, depending on your work. Requirements vary by state and locality. License costs range from $50 to several hundred dollars annually, and some industries require multiple permits. Lettuce identifies which licenses your business needs based on your location and industry, then tracks renewal deadlines automatically so you stay compliant.

How do I file my LLC's annual report?

Annual reports update your LLC's information with the state and typically cost $20-$200 to file, with due dates varying by state. Missing the deadline can result in late fees or administrative dissolution of your LLC. Lettuce's AI tracks your annual report deadlines and files automatically, so you never risk losing your good standing status.

What's the difference between a single-member LLC and a sole proprietorship?

The biggest difference is liability protection. An LLC separates your personal assets from business debts and lawsuits, while a sole proprietorship offers no protection. According to the IRS, single-member LLCs are treated as "disregarded entities" for tax purposes, meaning you still report income on your personal return but gain legal protection and credibility. LLCs also give you the option to elect S-Corp status later to save thousands in self-employment taxes.

Can I form an LLC and elect S-Corp status at the same time?

You need to form your LLC first, then file IRS Form 2553 to elect S-Corp tax treatment; you can't do both simultaneously. The S-Corp election must be filed within two months and 15 days of the start of the tax year you want it to take effect. Lettuce manages both your LLC formation and S-Corp election seamlessly, timing everything perfectly so you don't miss any deadlines.

Do I need a lawyer to start an LLC?

Most solopreneurs can form an LLC without a lawyer since the process involves straightforward forms and standard requirements. The SBA registration guide provides clear steps, and many states offer online filing systems that walk you through each requirement. Lettuce provides expert-level formation service, from filing your Articles of Organization to creating your operating agreement, so you get comprehensive formation without the attorney fees.

Start Your LLC the Lettuce Way

Starting an LLC gives you the liability protection and tax flexibility every solopreneur needs, without the corporate complexity you don't want. The real challenge isn't just formation. It's managing annual reports, license renewals, and compliance deadlines year after year without letting anything slip through the cracks.

Lettuce handles everything: Articles of Organization filing, registered agent designation, operating agreement creation, and automated compliance tracking for every deadline that follows. You save 10+ hours monthly with enterprise-level automation designed specifically for businesses-of-one.

Ready to start your LLC with zero paperwork and zero missed deadlines? Get started with Lettuce today!