How to Form an LLC in Texas 5 Simple Steps

Use A Professional Service

A professional service will handle the entire formation process on your behalf, allowing you to focus on the other needs of your new business.

4.7 out of 5 starsIncFile ($49 + state fee) for basic & quick LLC formation.

3.6 out of 5 starsLegalZoom ($79 + state fee) for the most popular LLC service available.

Form An LLC

Step 1) Verify & Secure Your Brand Name

Choose a Business NameTo secure and register your brand name it must be unique, not too similar to another registered name, and shouldn’t contain any restricted wording.

To check availability, conduct a Business Entity Search through the state. To avoid potential trademark issues, we suggest conducting another quick search using the TESS System through the U.S. Patent Office.

Keep in mind your LLC name should contain the words ‘Limited Liability Company’ or ‘Limited Company’. The abbreviations "L.L.C." or "LLC" are also acceptable. If needed, file an Application for Reservation of an Entity Name form with the TX Sec. of State that’s good for 120 days.

Quick Note: Before you commit 100% to a name, you may also want to check that there’s a decent URL available for your business. Use Weebly to search your options. If there’s a quality domain name for purchase, we advise buying it right away.

Step 2) Appoint A Registered Agent

Choose a Registered AgentIn Texas, a Registered Agent is essential. Their job is to receive and help process all critical business documents like tax forms, state filings, notifications, etc. The requirements for the job include:

  • Being a legal individual TX resident, or a legal business entity registered in TX
  • Having a physical street address.

You can hire an outside professional service and pay up to $160/yr, or get an agent for free when you have a service like IncFile form an LLC for you.

 

Step 3) File The Certificate Of Formation

Register an LLCDownload, fill out, and file a Certificate of Formation with the Texas Sec. of State as soon as you have verified your brand name and are ready to set up shop. You can also file online at the Texas Secretary of State Website.

Basic information for the public record includes:

  • Name and address of the Texas LLC;
  • Name and address of the Registered Agent;
  • Name and address of the governing individual(s);
  • Name and address of the LLC organizer;

LLC Filing Fee: $300

 

Step 4) Draft An Operating Agreement

Create an Operating Agreement

Creating an LLC operating agreement is the only way for you and your members to fully define your roles and lock down your LLC’s management and ownership structure. Having this document in place will also give you all something to return to if a dispute or lawsuit arises.

Your operating agreement should outline the following:

  • each member’s responsibilities
  • how new members will be admitted
  • how existing members may transfer or terminate their membership
  • how profits and dividends are to be distributed

From there, you can add as many provisions as you want, provided they are not in conflict with Texas business law. To access a free operating agreement and learn more about how this document works in Texas, click here.

 

Step 5) Get an EIN

Get an EIN for Your LLC

The Employer Identification Number (EIN), or Federal Tax Identification Number, is essentially a social security number for your company. State and federal agencies use this number to track your business activity.

 

Your EIN will come in handy when it’s time to:

  • Open a business bank account
  • File Federal and State taxes
  • Hire employees

We think the best way to get an EIN is by using the free online application on the IRS website. We prefer this method because it’s the most efficient, but if you’d prefer to apply via phone, fax or mail, read through our guide to find out how.

Maintain Your LLC's Personal Asset Protection

Best Business Bank Account

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.

You can protect your business with these two steps:

1. Opening a business bank account:

  • Separates your personal assets from your company's assets, which is necessary for personal asset protection.
  • Makes accounting and tax filing easier.

2. Getting a business credit card:

  • Helps you separate personal and business expenses.
  • Builds your company's credit history, which can be useful to raise capital later on.

Reduce the Liability of Your LLC

  • Business insurance helps you manage risks and focus on growing your business. The most common types of business insurance are:

Stay Compliant

Small Business TaxesPaying state and federal taxes can be much simpler with help. Variables such as the type of your business and your location will determine what kind of licenses you will need and what fees you will need to pay.

To get started, we suggest you find the district office of the Small Business Administration closest to your business. You should also bookmark the Sec. of State’s SOSDirect site. These resources will help you research the steps required for your business. If you need help with this step, consider a resource such as the Business License Research packages that can handle the legwork for you.

Reduce Administrative Burden

There will be many demands on your time once you start your business. With that in mind, it’s a good idea to streamline your workflow and reduce administrative overhead from the get-go. The two most important business tasks to get help with are:

1) Accounting

Getting your books in order right up front will save you headaches in the future. At the very least, you can have a professional setup your bookkeeping and accounting for you. This will save you money and time in the long run.

There are all in one services that will do your bookkeeping/invoicing/tax filing for you all for one monthly fee. Mazuma ($95/month) is a reliable all in one tax service.

2) Employee Payroll

If you have employees, a payroll service will save you a lot of time and also save you from having to become an expert on state compliance or employee tax withholdings and filings.  

Gusto is a reliable and good payroll service for small businesses.

Need Help Forming an LLC?

How To Form An LLC Online

If you’ve got too much on your agenda to worry about all the paperwork and state-requirements, there are a handful of LLC formation services that can take care of everything for you.

Here are the two most popular:

IncFile ($49 + state fee) = Best Price & Overall Value

LegalZoom ($79 + state fee) = Best For Brand Recognition

Note that this guide for forming a Texas LLC isn’t a legal document or legal advice. It’s for informational purposes and the information above is subject to change. For specific legal questions regarding how to form an LLC in Texas, consult with a business attorney.