An LLC is a hybrid business entity that combines the tax benefits of a partnership with the limited personal liability of a corporation. Each state has laws about creating and registering an LLC, and an LLC must be organized under the laws of a state in which it plans to conduct business. While most state laws are generally similar, there are practical considerations to choosing where to organize your LLC.
Establish a presence in the state in which you seek to register since, as with corporations, an LLC cannot be organized under state law without having a registered agent and a physical address in the state. The physical address need not be a place where you conduct a significant amount of business, but it cannot be a P.O. box. The registered agent must be available at the address during normal business hours. Hire a registered agent service if you don't have a person or place to meet these criteria.
Choose an available name, one that is not already registered for business in the state and which is not so similar to an existing name that it is likely to cause consumer confusion. States generally require an LLC's registered name to include the words "limited liability company" or an abbreviation. The state conducts a check of registered names when you submit your Articles of Organization to determine whether your name is available, but you can usually conduct a preliminary search on your own and reserve a unused name for a limited period.
Draft and file the Articles of Organization, which in most states is the only document needed to register an LLC. In addition to the name of the company, the name of the registered agent and the physical address, the document usually also includes the names of the initial members and managers, the purpose of the organization and its duration. File this document with your state's secretary of state or similar office.
Draft an Operating Agreement. Though many states do not require an LLC file a copy of its Operating Agreement, some do. Even if not, many require LLCs to maintain a current copy of the agreement if one exists. The operating agreement is like a contract between LLC members that outlines their respective rights and responsibilities. An operating agreement generally outlines each member's percentage ownership of the company, and the procedure for transferring ownership or adding new members.