When I started my business I spent $700 with a 'business formation specialist' to do something that would have taken me 90 minutes on my state's website. If you are forming your first LLC, do not pay LegalZoom or one of the upsell mills. Walk through the steps below and you will be set up correctly for less than the cost of a single bounce house rental.
This is general business guidance, not legal advice. Talk to a CPA and a small business attorney in your state before you make tax elections (especially S Corp). Filing fees, deadlines, and rules vary by state.
Why an LLC and not a sole prop or corporation
A sole proprietorship is what you are by default if you start renting bounce houses without filing anything. The problem is your personal assets (house, car, savings) are exposed if a kid gets hurt and the family sues. An LLC creates a legal wall between you and the business. A full corporation (C Corp) is overkill for a single owner rental business and creates double taxation. The LLC is the sweet spot for almost every operator under $500k in revenue.
Order of operations (do these in this order)
- Step 1: Pick a name and check availability on your state's Secretary of State website.
- Step 2: Pick a registered agent (yourself or a service).
- Step 3: File the Articles of Organization with your state.
- Step 4: Get your EIN from the IRS (free, takes 10 minutes online).
- Step 5: Write a basic Operating Agreement.
- Step 6: Open a business bank account.
- Step 7: Get any local business licenses or sales tax permits.
- Step 8: Get insurance under the LLC name.
Step 1: Pick your name
Search your state's business name database (every Secretary of State has one, usually free). The name has to include 'LLC' or 'Limited Liability Company' at the end. Avoid restricted words like 'bank' or 'university'. Pick a name that ages well, names with the city in them get awkward when you expand to neighboring towns. Also check the matching .com domain and Instagram handle before you commit.
Step 2: Pick a registered agent
A registered agent is the person or company that receives legal notices for your LLC. You can be your own registered agent in most states if you have a physical address (not a PO Box) and you are available during business hours. The downside: your home address goes on public record. Most operators in their first year list themselves to save the $100 to $300 a year a service charges, then upgrade to a service like Northwest Registered Agent or your state's local CPA office once revenue is rolling.
Step 3: File the Articles of Organization
This is the actual filing that creates your LLC. Every state has a portal. You fill out a one or two page form with your business name, registered agent, address, and member info, then pay the state filing fee. Filing fees vary wildly:
| State | Filing fee | Annual report fee |
|---|---|---|
| Texas | $300 | Franchise tax (often $0 under $1.23M revenue) |
| Florida | $125 | $138.75/yr |
| California | $70 | $800/yr franchise tax (every LLC, every year) |
| Georgia | $100 | $50/yr |
| North Carolina | $125 | $200/yr |
| Ohio | $99 | None |
| Pennsylvania | $125 | $70 every 10 years |
| Illinois | $150 | $75/yr |
| Michigan | $50 | $25/yr |
| Arizona | $50 | None |
Always form your LLC in the state where you actually operate, not Delaware or Wyoming. Operators get talked into 'Delaware LLCs' by online services and end up paying double fees and registering as a foreign LLC in their home state anyway. Form it where you live.
Step 4: Get your EIN
An EIN (Employer Identification Number) is your business's social security number. You need it to open a bank account, file taxes, and hire anyone. It is free directly from the IRS at irs.gov/ein. Takes 10 to 15 minutes online. Avoid every third party site that wants to charge you $79 for this, they are all reselling the same free IRS form.
Step 5: Write an Operating Agreement
Most states do not require an operating agreement for a single member LLC, but you want one anyway. It is the document banks and partners ask for, and it protects your liability shield in court. A basic single member operating agreement covers ownership percentage, how profits and losses are distributed, what happens if you die or sell, and how decisions get made. Free templates from your state's Small Business Development Center are good enough for most operators.
Step 6: Open a business bank account
This is the step that makes your LLC real. Bring your filed Articles of Organization, your EIN letter from the IRS, and a copy of your operating agreement to the bank. Open a checking account and a savings account in the LLC name. From this day forward, every dollar the business earns goes into the business account, every business expense comes out of it. Mixing personal and business funds (called 'piercing the corporate veil') is the single fastest way to lose your liability protection in court.
Bluevine, Mercury, Relay, and Novo all offer free business checking with no minimum balance. Local credit unions are usually the best fit if you want a real banking relationship for future equipment loans.
Step 7: Local licenses and sales tax
Most cities require a general business license ($25 to $200 a year). Most states charge sales tax on rentals and require you to register for a sales tax permit (free). A few states do not tax rentals, check our sales tax guide for the breakdown. Your city or county may also require a home occupation permit if you store inflatables in your garage and run the business from home.
Step 8: Insurance under the LLC name
Once your LLC is formed and you have a business bank account, get your commercial general liability policy issued in the LLC name (not your personal name). This is the final piece of the liability shield. See our 2026 insurance cost guide for current carrier pricing.
S Corp election (do this later, not now)
Once your business clears about $50,000 in net profit a year, ask your CPA about electing S Corp tax status for your LLC. It can save you 7 to 15 percent on self employment taxes. Do not elect S Corp in your first year, it adds payroll requirements and accounting cost that does not pay off until you have meaningful profit. Read our LLC vs S Corp comparison for the full breakdown.
Bottom line
From the day you decide to form your LLC to the day you have a business bank account is usually 5 to 10 business days. Total cost in most states runs $150 to $400 in filing fees plus your insurance. Skip the formation services, do it yourself on the state portal, and use the money you saved on your first 4 stake hammers and a real anchor kit.