Starting an LLC in Texas is Easy
It’s easy to form an LLC in Texas yourself. Just follow these steps:
- Name Your LLC
- Choose a Registered Agent
- File the TX Certificate of Formation
- Create an LLC Operating Agreement
- Get an EIN
Follow our How to Start an LLC in Texas guide below to get started.
To learn how to form a limited liability company in any state, visit our How to Start an LLC guide.
Step 1: Create a Name For Your Texas LLC
Before you register your Texas LLC, you'll need to come up with a name. Your business name needs to be catchy for branding purposes and legitimate for legal purposes.
We go into depth on this topic in our LLC naming guide. We’ll go over the basics below.
Naming Your LLC
First, brainstorm some possibilities. Use our LLC name generator to get the ideas flowing.
Next, make sure your name meets Texas guidelines:
- it must contain the words limited liability company or limited company, or LLC or L.L.C.
- it can't contain restricted words like bank, college, veteran, etc without approval
- it must be distinguishable from any other business entities or DBAs registered in Texas
- full list of Texas naming guidelines
Next, do a Texas LLC name search with the Secretary of State to find out if your name is available in Texas.
If your business name is available and meets guidelines, you’ll be able to register it when you file your Texas Certificate of Formation with the Secretary of State.
Is the URL available? Before you commit 100% to a name, check to see if there’s a good web domain available.
We recommend buying your domain right away because even if launching a business website isn’t on your radar right now, it will be soon.
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Once you register a domain name for your LLC, consider setting up a business phone system to establish credibility and enhance your customer service. Nextiva provides a plethora of useful features and a quick, easy setup. Try Nextiva.
Using a Texas Assumed Name (DBA)
A Texas DBA (doing business as), also known as an assumed name, is any registered name that a business operates under that isn't its legal business name. An assumed name can be used by any type of business, including a sole proprietorship, partnership, or limited liability company (LLC).
Learn how to get a DBA in our Texas DBA guide.
Step 2: Choose a Texas Registered Agent
When you file your Certificate of Formation, you'll need to list a registered agent.
What is a registered agent, exactly? A registered agent is an individual or business entity whose job is to accept legal documents like service of process and tax notices for your LLC. To learn more about Texas Registered Agents, read our guide.
Your registered agent can be a person or a registered agent service authorized to conduct business in Texas. You can act as your own registered agent, but many business owners choose to use a registered agent service.
Here are a few things to think about before you decide to act as your own registered agent:
- You’ll need to be available during normal (9 am - 5 pm) business hours at the address you provide
- If you run your business from home, you’ll have to make your personal address public
- You could be served with a lawsuit in front of your family or coworkers
- You'll have to remember and be responsible for all upcoming filing deadlines and the corresponding filing fee
Recommended: Northwest Registered Agent offers a free year of registered agent services when you form your Texas limited liability company ($29 plus state fees).
Texas Registered Agent Consent
After the Certificate of Formation is filed, your registered agent must consent in writing or via email. The consent statement doesn't need to be filed with the Secretary of State.
The statement should include:
- The name of your LLC in Texas
- A statement that the person or company consents to serve as registered agent
- The name and signature of the registered agent
- The date
Step 3: File the Texas LLC Certificate of Formation
It’s time to officially form your LLC in Texas by filing your Certificate of Formation with the Texas Secretary of State and paying the state filing fee with the Texas Secretary of State.
Recommended: Now is a good time to decide if your Texas LLC will be member-managed vs manager-managed.
There are 4 main “Articles” on the Certificate of Formation. You'll be asked to provide your:
- Entity Name and Type
- Business Address
- Registered Agent Name and Registered Office Address
- Governing Authority Type
- Business Purpose
For detailed instructions, visit our Texas Certificate of Formation guide.
Mail Your Certificate of Formation:
Send the form and payment (payable to the Secretary of State) to:
Secretary of State
P.O. Box 13697
Austin, TX 78711
Deliver In Person:
James Earl Rudder Office Building
Austin, TX 78701
Or fax it to:
How long does it take to get a Texas LLC approved? Processing time for an LLC in Texas is 3 days if filing online or 5 to 7 days if filing by mail.
Step 4: Create A Texas LLC Operating Agreement
Creating a Texas LLC operating agreement (also known in the state as a company agreement) is the only way to legally lock down your LLC’s management structure and ownership structure. Having an operating agreement in place will give you something to return to if a dispute or lawsuit arises.
Even single-member LLCs benefit from having an operating agreement.
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 will be distributed
You can add as many provisions to your operating agreement as you want, as long as they don't conflict with Texas business law. Take a look at our What is an Operating Agreement guide to learn more.
Download a template or create a custom Free Operating Agreement using our tool.
Step 5: Get An EIN
An Employer Identification Number (EIN) is like a Social Security number (SSN) for your company. It is a federal tax identification number that the IRS and the state of Texas will use 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
The best way to get an EIN for your LLC in Texas is by using the free online application on the IRS website.
If you prefer though you can mail in your Form SS-4 to the IRS to get your Employer Identification Number:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Read our Get an EIN guide for instructions.
Steps After Forming an LLC in Texas
After forming your Texas LLC, it's important to:
Open A Business Bank Account
A business bank account helps separate personal expenses and company expenses, which is required to maintain your Texas LLC's corporate veil. A corporate veil protects your personal assets from creditors in potential lawsuits against your LLC or Business.
Learn more by reading this guide to Banking for Entrepreneurs. For a multi-member LLC, you'll also want to set up capital accounts for LLC members. We also recommend checking out our review of the best business bank accounts.
Get a Business Credit Card.
A business credit card will help separate personal and business expenses while building your company’s credit history. Strong credit history will be useful for raising capital in the form of small business loans.
Set Up Business Accounting
Hiring a business accountant is one of the best ways to ensure you’re taking advantage of LLC tax benefits; possibly saving you and your business thousands of dollars per year.
When you start an LLC in Texas, it’s a good idea to begin a relationship with a business accountant as soon as you start your business to help set your company up for success.
Get Business Insurance.
Keep Your Company Compliant
Research Texas Business Licenses and Permits
To operate an LLC in Texas, you will need to comply with federal, state, and local government regulations such as health permits, building permits, and signage permits.
Business licenses and permit requirements vary from state to state. To get started, visit our How to Get a Business License in Texas guide. To help facilitate this process, you can also utilize a business license service.
File Your Texas LLC Annual Report
Texas annual reports consist of two filings: the franchise tax report and the public information report. If your LLC’s annualized revenue totals more than $1.23 million, you must pay a graduated tax using one of the state’s franchise tax forms; LLCs that do not meet this threshold must still file a “No Tax Due” form alongside their public information report.
Understand Texas State Tax Requirements
Texas businesses selling a physical product are generally required to register for a seller’s permit with the Texas Comptroller of Public Accounts. Visit our Texas Sales Tax guide to learn more about seller’s permits and Texas sales tax.
Additionally, if you have employees in Texas, you will need to sign up for unemployment insurance tax with the Texas Workforce Commission.
Understand Your Texas LLC’s Federal Tax Requirements
Most Texas LLCs will need to report their income to the Internal Revenue Service (IRS) each year using Form 1065: Partnership Return (multi-member LLCs) or Form 1040 - Schedule C (single-member LLCs).
How you pay yourself will affect your federal taxes. Visit our guide to learn more about how to pay yourself from your LLC
Know Your Texas LLC’s Federal Tax Election Options
Pass-through taxation entails a business’s profits passing through to the LLC member’s individual tax returns. Like a sole proprietorship, an LLC is taxed as a pass-through entity, also known as a disregarded entity.
Once this process is completed and after any tax-deductible expenses are taken out, the LLC members pay self-employment taxes and income tax on their portion of the business income.
Alternatively, Texas LLCs can choose to elect to be taxed as an S corporation (S corp) or C corporation (C corp). If S corp tax status is elected, LLC members can be taxed as employees of the business, potentially reducing tax burden.
More LLC Resources
- Texas Foreign Limited Liability Company: Forming a foreign LLC allows your company to operate as one entity in multiple states. Download the Texas foreign LLC form to get started.
- Texas Certificate of Good Standing: A certificate of good standing verifies that your LLC was legally formed. To order, follow our Texas certificate of good standing guide.
- Dissolving a Texas LLC: If you are ready to dissolve your LLC, follow the steps in our Texas LLC Dissolution Guide.
- LLC Legal Forms: TRUiC offers a number of free LLC legal forms including operating agreements, LLC resolutions, and hiring documents.
Texas LLC FAQs
Can an individual or business entity own an LLC in Texas?
Yes, an LLC can be owned by a business entity or individual. The business assets are owned by the LLC, and the members own the LLC. A member can be another LLC or corporation or a single individual. Most limited liability companies are single-member LLCs.
How is a Texas LLC taxed?
On the federal level, a Texas limited liability company is taxed as a pass-through entity. This means that the income and losses of the LLC flow through to the individual members, and are reported on their individual tax returns. The LLC itself does not pay taxes on its income. LLCs can also choose to be taxed as an S corporation or C corporation.
On the state level, a Texas LLC is subject to state income taxes as a pass-through entity. LLCs in Texas are also subject to state franchise taxes.
Do I have to file an annual report for my Texas LLC?
Annual reports are called "franchise tax reports" in Texas. The report is due by May 15th of each year and it helps the state keep track of Texas LLCs and their officers. The report also helps the state keep track of any changes in the company, such as a change in management or a change in address.
Do I need to register my Texas LLC with the Texas comptroller?
Small businesses only need to register with the Texas Comptroller of Public Accounts if they are selling goods and therefore collecting sales tax. You can register online through the state website.
What Is an LLC Formation Service?
An LLC formation service is a great option for those looking to form an LLC in Texas. Services like these can provide you with the resources and assistance you need to complete the process quickly and easily. They can also help you save money on filing fees, as well as provide you with valuable resources and support along the way.
However, it's important to note that using an LLC formation service is not the cheapest option - it's typically more expensive than doing it yourself. But for most people, it's likely worth the extra cost in order to get the help and support of a professional service.
Do I have to submit any LLC paperwork to the IRS?
If you have formed a Texas LLC, you are not required to submit any paperwork to the IRS. The LLC is a separate legal entity, and as such, is not subject to federal income taxes. However, the LLC may be required to file informational tax returns with the IRS, depending on the amount of income generated by the business.
What are the benefits of an LLC in Texas?
An LLC is a popular business structure due to a variety of benefits; LLCs offer personal asset protection, also known as limited liability protection. Forming a registered business entity for limited liability protection is important for all business owners because it protects their personal assets from creditors and other liabilities.
Other benefits of an LLC include increased tax options and credibility.