If you’re thinking an LLC is a better fit for your growing business, you should familiarize yourself with the steps to make the change. You can DIY your LLC formation, use an online formation service or hire an attorney. For most business owners an online service can be a strong option for saving time and stress over completing and filing paperwork.

The process for starting an LLC for those who already have a small business and new business owners is the same with a couple nuances.

Step 1: Check if Your Business Name is Available

The first thing you’ll need to do is see if the name your proprietorship has been operating under is available as an LLC name in your state. You’ll want to perform an LLC name search on your state’s secretary of state webpage. If it’s available, you’ll need to follow your state’s instructions about designation terms (e.g., adding “LLC” or some variation) to your name.

Step 2: Get a Registered Agent

All LLCs throughout the US are required to have a registered agent. This is an individual who is responsible for receiving important legal and financial documents on behalf of the LLC. You can choose to be your own agent, or you can hire a registered agent service to take on the task.

Step 3: File Paperwork with the State

Next, you’ll need to file your LLC’s organizational documents with the appropriate state agency, usually the secretary of state. This document is often called the “articles of organization” or “certificate of formation.” While called different things, they contain the same general information:

• Name and address of your LLC
• Purpose of your LLC
• Name and address of your registered agent
• Management structure (member-managed or manager-managed)

After filing your organizational documents, you should apply for required business licenses under your new company. Depending on the type of business you have, you probably needed one for your sole proprietorship as well. This might be transferable to your LLC, or you may need to apply for a new license. For more information about how to start an LLC in your state, see our state-specific guides below.

Step 4: Draft Your LLC Operating Agreement

While not required in every state, it is good practice to create an operating agreement to govern your LLC. This document is a contract between the member(s) and the LLC that details the big-picture and day-to-day operations of the business.

This is a great place to include details about voting rights, transfer of ownership conditions and accounting information. An operating agreement that details the financial accounting of the business will help keep your LLC’s liability protection strong if it ever faces a legal challenge.

Step 5: Get an EIN

Lastly, after forming an LLC you should consider getting an EIN (employer identification number). It’s essentially a Social Security number for your business that you can get for free through the IRS. You’ll need one if you plan to hire employees or if your LLC has more than one member. If your sole proprietorship becomes a single-member LLC you won’t be required to have one — but you might benefit from getting one if you plan on doing any of the following:

• Hiring employees
• Opening a business bank account
• Doing business with vendors