How to Start an LLC in Texas (A Step-by-Step Guide)

If you’re considering forming a Texas LLC, you’re making a smart choice for protecting your assets while enjoying flexibility in business operations.

Entrepreneurs across America are launching small businesses in record numbers in the Lone Star State. According to the U.S. Small Business Administration Office of Advocacy, Texas has over 3 million small businesses.

To establish your LLC successfully, you must choose a unique business name, designate a registered agent, and file a certificate of formation.

But there’s more.

Forming your LLC in Texas costs about $300. When filed online, Texas takes 5-7 business days to process your LLC’s certificate of formation and up to 22 days for mail or in-person submissions. Expedited processing is available for an extra $25.

This guide compiles all the information you need to start an LLC in Texas today.

What Are the Steps to Start an LLC in Texas?

To start an LLC in Texas, you need to:

• Step 1. Choose and search for a unique name
• Step 2. Designate a registered agent in Texas
• Step 3. File a certificate of formation with the state
• Step 4. Create an Operating Agreement
• Step 5. Get an EIN from the IRS
• Step 6. File your Franchise Tax Report & Public Information Report
• Step 7. File a BOI Report

Let us dive more in-depth into these steps so I can show you how to get them:

Step 1: Choose a Name for Your Texas LLC

Choosing a name for your LLC in Texas is an essential first step. Once you’ve chosen a suitable name for your Texas LLC, you must determine if another business entity has used it. 

Using the Taxable Entity Search tool from the Texas Comptroller of Public Accounts website helps you ensure the name you want hasn’t already been taken.

Your LLC name must include at least one of these terms:

• Limited Liability Company
• L.L.C.
• LLC
• Limited Company
• Ltd. Co.
• Limited Liability Co.

Your name must be unique. Just changing a few words will not work. For example, “XYZ Ltd. Co.” is not distinct from “XYZ LLC.”

Next, consider if your name is appropriate. It must not be offensive or misleading. Avoid terms that suggest a government connection, like “Treasury” or “State Department.”

You can’t use trademarked or restricted terms like “Bank,” “Trust,” “Trust Company,” “Olympic,” “College,” “University,” or “Veteran” in your LLC name without explicit permission from the relevant authority, such as the Banking Commissioner, U.S. Olympic Committee, or Texas Higher Education Coordinating Board.

If you’re considering a website, check that the matching domain name is available and free from trademark issues.

Step 2: Appoint a Registered Agent for Your Texas LLC

Every Texas LLC must have a registered agent. This person or service handles critical legal documents like tax forms and lawsuit notices.

Who Can Be a Registered Agent?

You have a few options for who can be your Registered Agent in Texas:

• You: You can act as your registered agent, but remember you must be available during business hours to receive documents.
• A Family Member: A trusted family member can be your registered agent.
• An LLC Formation Service: Professional services offer expertise in handling official correspondence and ensuring compliance with state regulations.
• A Lawyer: A legal service firm can also serve as your registered agent, providing additional legal support if needed.

Requirements for Texas Registered Agents

Texas law requires registered agents to have a physical street address, not just a P.O. Box. The address must be where the agent can consistently receive legal documents and official mail during regular business hours.

Additionally, the registered agent must be at least 18 years old and available to accept service of process. This means they must be present to handle any legal notices or court documents delivered to the LLC.

What registered agents do I recommend for Texas?

I highly recommend Northwest registered agent services for obvious reasons.

They offer a range of benefits that set them apart, including a free year of registered agent service, which helps you save (about $300) on initial costs.

You’ll receive a complimentary operating agreement essential for outlining your LLC’s internal structure. My favorite part? Northwest also allows you to use their office address for your LLC filing, keeping your address off public records and enhancing your privacy.

Their free email forwarding service ensures you stay on top of important correspondence, and their exceptional customer support is always available to assist you whenever needed.

Step 3: Prepare and File Your Texas Certificate of Formation

To start an LLC in Texas, you must file the Certificate of Formation with the Texas Secretary of State. This document, also known as Articles of Organization in some states, sets out how your LLC will work.

You can organize your LLC with one person or several. However, only one organizer must file the company’s formation paperwork with the state.

To file your Certificate of Formation in Texas, follow these steps:

Step #1. Complete the Form: Obtain and complete the Certificate of Formation form from the Texas Secretary of State website.

Here’s what you’ll need to include in the Certificate of Formation:

• Entity type and name
• Registered agent (the person who will receive legal papers)
• Governing authority (member-managed or manager-managed)
• Purpose of the business
• Initial mailing address
• Supplemental provisions/information
• Organizer’s name and address
• Organizer’s signature

Step #2: File Online, in Person, or by Mail: You can file your Certificate of Formation online through the Texas Secretary of State’s direct account.

Or by mailing the completed form to:

Secretary of State
P.O. Box 13697
Austin, TX 78711

Or file in person at:

James Earl Rudder Office Building
1019 Brazos St.,
Austin, TX 78701

Step #3: Pay the Filing Fee: The filing fee is $300. If you file online, you can pay with a credit card. For mail or in-person filings, use a check or money order.

Once your Certificate of Formation is approved, your Texas LLC will be officially established.

Step 4: Prepare Your Texas LLC Operating Agreement

Creating an operating agreement for your Texas LLC is highly recommended, even though it is not legally required. This internal document outlines how your business will operate and details the ownership structure.

Here are some key components to include in your operating agreement if you choose to prepare one:

• Ownership Structure: Listing all members and their ownership percentages.
• Management Roles: Specify who will manage the LLC. This can be member-managed or manager-managed.
• Voting Rights: Define how decisions will be made. Will all members have equal votes?
• Profit Distribution: Explain how profits and losses will be shared among members.
• Meeting Procedures: Outline how often meetings will occur and how members will be notified.
• Amendment Process: Describe how changes can be made to the agreement in the future.

Without this agreement, your LLC may be subject to Texas’s default laws. These laws might not align with your needs, so an operating agreement can protect your interests and ensure a smoother operation.

Step 5: Obtain an EIN for Your TX LLC

An Employer Identification Number (EIN) is a unique nine-digit number the IRS assigns. It is crucial for your Texas LLC formation.

You will need an EIN to open a bank account, hire employees, file taxes, and apply for business licenses and permits.

How to Apply for an EIN:

• Online: Visit the IRS website. This is the fastest way to get your EIN.
• By Mail: Fill out Form SS-4 and send it to the IRS. This option takes longer.
• By Fax: You can also fax the completed Form SS-4.
• Phone: U.S. residents can call the IRS at 1-800-829-4933 to apply.

How Much Does It Cost To Get EIN?

Obtaining an EIN is free. However, some services charge $100 or more to help you with the entire process.

How Does it Take to Obtain my EIN?

• Online: Get it immediately.
• By Mail: Expect 4 to 6 weeks.
• By Fax: Usually within 1-2 weeks.

Step 6: File your Franchise Tax Report & Public Information Report

To remain in good standing, all Texas LLCs must annually file a Franchise Tax and Public Information Report (PIR).

These reports are free to file, with the Franchise Tax only applying if your LLC earns over $2,470,000 annually. Most LLCs in Texas will file a No Tax Due Report, which includes the PIR, when filed online.

Both reports are due by May 15 each year, with the first filing due the year after your LLC’s approval. For example, if your LLC was approved on August 15, 2024, your first report is due by May 15, 2025. Filing online is recommended for ease.

Step 7: File a BOI Report

When forming an LLC in Texas, it is crucial to be aware of the federal Beneficial Ownership Information (BOI) reporting obligation.

This requirement is part of the government’s efforts to combat money laundering and ensure transparency in business ownership.

You must file a BOI report with the Financial Crimes Enforcement Network (FinCEN) within 90 days of establishing your LLC. This report is submitted electronically through the FinCEN website and is free of charge.

The process involves providing detailed information about your company and its beneficial owners, including anyone who directly or indirectly owns or controls 25% or more of the LLC or exercises substantial control over the company.

This reporting requirement is essential because it helps the government maintain a record of individuals with significant ownership or control over companies, making it harder for criminal organizations to hide illicit activities behind shell companies.

Failure to comply with this requirement can result in penalties, so it’s essential to gather all the necessary information during the formation process of your LLC to ensure timely and accurate reporting.

What are the Different Methods To Start a Texas LLC?

When starting your LLC in Texas, you have three main options: doing it yourself, using an online service, or hiring an attorney. Each option has its unique benefits and drawbacks.

DIY LLC Formation in Texas

The DIY method allows you to take full control of the formation process. You will complete and submit the Texas Certificate of Formation and the $300 filing fee.

Pros:

• Cost-Effective: You save money by not hiring anyone.
• Control: You handle every step, ensuring it meets your needs.
• Learning Opportunity: You gain firsthand knowledge about the process.

Cons:

• Time-Consuming: Being unfamiliar with the requirements may slow you down.
• Complexity: You need to ensure that all forms are completed accurately.
• Privacy Issues: Your address could become public if you serve as your registered agent.
• Lack of Guidance: You might miss essential steps without professional help.

Using a Professional/Online LLC Formation Services

Online services make the LLC formation process easier by guiding you through the paperwork. They handle most of the filing for you.

Pros:

• Convenient: They manage the filing, which saves you time.
• User-Friendly: Most platforms provide straightforward instructions.
• Support Available: Many services offer customer support for your questions.
• Privacy Benefits: These services can use their address, keeping your address private.

Cons:

• Costs: You’ll need to pay a service fee, which adds up.
• Variable Quality: Not all services provide the same level of reliability.

Hiring an Attorney

Working with an attorney ensures that you have professional legal guidance throughout the LLC formation. This method is beneficial for complex businesses.

Pros:

• Expertise: An attorney understands legal requirements and can help you avoid mistakes.
• Customization: Your LLC can be designed to suit your specific business needs.
• Support with Complex Situations: Great for businesses with unique legal circumstances that may require additional help.

Cons:

• Higher Costs: Legal fees can be significant.
• Dependence on Others: You might rely on the attorney’s schedule for completion.
• Potential Delays: The process could take longer because of attorney workloads.

What is The Cheapest Alternative Way to Form an LLC in Texas?

If you want to form an LLC in Texas without spending too much, the cheapest way is to do it yourself. By filing the Certificate of Formation online with the Texas Department of State, you can keep your costs between $300 and $350. This saves you from additional fees associated with hiring professional services.

This DIY approach helps you avoid the extra fees of hiring a service or lawyer, saving you money for other business expenses.

However, while DIY is cost-effective, it requires some effort. You’ll need to understand all the forms and regulations, and missing a detail could delay your application or create problems later.

Consider using a registered agent if you prefer not to handle everything yourself.

They can make the process smoother by ensuring you receive important documents and helping you stay compliant with state requirements. Although this adds a bit to the cost, it can provide valuable support and peace of mind.

Who Provides the Best LLC Services in Texas?

There are a myriad of Texas LLC services from which to choose. Choosing the wrong one can affect your Texas LLC formation timeline—I know this from my experience using a few and researching a dozen over the years.

Here are some top-rated options you should consider:

Best Texas LLC Service	Google Rating	LLC Formation Cost	Registered Agent Fee
Northwest Registered Agent	4.7/5	$39	Free for 1 year
Doola	4.6/5	$0 (plus state fees)	$297/year
Tailor Brands	4.4/5	$0 (plus state fees)	$199/year
ZenBusiness	N/A	$0 (plus state fees)	$199/year

Besides, the fact that other services bill you for their registered agent in the first year, and Northwest offers it for free, is a HUGE plus for me.

Northwest Registered Agent stands out from Texas LLC formation due to its commitment to transparency, customer service, and privacy. Using their address helps protect your personal information, making them a reliable choice.

They ensure a straightforward process, allowing you to focus more on running your business.

How Much Does It Cost To Form an LLC in Texas?

Forming an LLC in Texas involves several costs that you should consider. The main expense is the filing fee for the Certificate of Formation.

The state filing fee is $300, which is moderate compared to other states—Wyoming charges $100, while Massachusetts charges $500. Additionally, Texas has no personal or corporate income tax, keeping ongoing LLC costs low.

However, Texas LLCs earning $2.47 million or more annually may incur a franchise tax of 0.75% of gross receipts, not found in states like Wyoming or Nevada. This fee is typically $300.

Here’s a summary of the costs:

Item	Cost
Filing Fee	$300
Operating Agreement (optional)	$100 – $500
EIN Application	Free
Registered Agent fee (optional)	$0 (via Northwest)
LLC formation service	$39 (via Northwest)
Franchise Tax	Free (for LLCs with less than $2,470,000 revenue), up to 0.75% for others
Annual filing fee	Free
Total Estimated Cost	$300 – $800

The total cost can range from $300 to $800, depending on your choices for registered agents and operating agreements. Remember that these costs can vary based on your specific needs or services.

Then, if you want to go further, you can get other bells and whistles like a virtual mailbox, custom website, trademark services, premium EIN services, etc.

That said, the most significant (and essential) expense for every Texas business owner is filing the Certificate of Formation, which costs $300.

Pros and Cons of Forming an LLC in Texas

6 Important Things To Do After Creating Your Texas LLC

Once you have formed your Texas LLC, you must take several key steps to ensure it runs smoothly and meets all legal requirements. These steps include securing necessary licenses, setting up financial accounts, understanding taxes, and more.

1. Research the Best Licenses and Permits for Your Business

Even though Texas does not require a general state business license, you might still need specific licenses or permits. This varies depending on your business type and location.

Start by checking with local city or county offices. They often have requirements for businesses operating in their area. For example, a restaurant requires health permits, while a construction business may need special permissions.

Standard licenses and permits include:

• Health permits
• Occupational licenses
• Zoning permits

Make sure to gather all necessary documentation to avoid fines or issues later.

2. Create Business Accounts for Your Texas LLC

Once your LLC is set up, creating a separate business bank account is essential. This will help you separate your personal finances from your business finances.

Having a business account makes it easier to track income and expenses. It also simplifies tax preparation. You’ll need your Employer Identification Number (EIN) to open this account, a unique identifier for your business.

Consider getting a business credit or debit card as well. This will help with budgeting and building your business’s credit history.

3. Understanding Texas Tax Requirements and Managing Your Taxes

As a Texas LLC, you must remain aware of your tax obligations. You’ll typically need to file both state and federal taxes each year.

Texas requires all LLCs to file a Franchise Tax Report and a Public Information Report annually, due by May 15. If your LLC earns less than $2,470,000, you will file a No Tax Due Report with no filing fee.

Additionally, you must collect and remit sales tax if your business sells taxable goods or services. Consult a tax professional to ensure you understand your specific tax requirements and stay compliant.

LLCs don’t pay federal income tax. Instead, the LLC Members pay the taxes for the LLC.

By default, the IRS taxes Texas LLCs based on the number of owners: Single-Member LLCs are taxed as Sole Proprietorships, and Multi-Member LLCs as Partnerships.

You can also opt for C-Corporation or S-Corporation taxation. Married couples in Texas, a community property state, can tax their LLC as a Single-Member LLC (Qualified Joint Venture) instead of a Partnership.

4. File Annual Reports

Your Texas LLC must maintain its good standing by filing required annual reports. The two main reports are the Ownership Information Report and Public Information Report, which are free to file.

These reports confirm your LLC’s structure and ownership to the state. Remember that if your LLC is subject to the Franchise Tax, you must also file that report.

Failing to file these reports on time can result in penalties and even the loss of your LLC’s status. Set reminders to ensure you meet all deadlines.

5. Get Business Insurance for an LLC

Protecting your LLC with the right business insurance is essential. Insurance helps shield your business against various risks, including liability claims and property damage.

General liability insurance is a good starting point. If your LLC has specific needs, like professional liability insurance, consider obtaining that as well. This covers potential mistakes in your professional services.

Assess your business activities to determine which types of insurance are necessary. Make sure to review these policies regularly as your business grows.

6. Setup Your Business Online Presence (optional)

Establishing an online presence is increasingly vital in today’s digital world. Create a professional website that showcases your services or products.

Use social media to engage with customers and build a brand. Platforms like Facebook and Instagram can help attract and retain customers.

Additionally, consider registering your business on local directories and review sites to enhance visibility. This can attract more customers and increase your LLC’s credibility.

Texas LLC vs. S Corp vs. Partnerships vs. Sole Proprietorship vs. Corporations

When starting a business in Texas, you have several structures, each with unique features.

Here’s a breakdown:

Sole Proprietorship

A Texas sole proprietorship is the most straightforward way to start a business. Imagine you’re running a lemonade stand on your own. You make all the decisions and keep all the profits.

However, there’s no legal separation between you and your business. If your lemonade stand faces financial trouble or legal issues, your assets, like your car or home, could be at risk. It’s easy to set up and manage, but it does leave you personally responsible for any business debts.

Partnership

A Texas partnership involves teaming up with one or more people to run a business together.

Think of it as joining forces with a friend to open a café. You share the profits and responsibilities, and you both make business decisions.

However, like a sole proprietorship, each partner is personally liable for any business debts or legal issues. If the business encounters financial trouble, your assets could be at risk, too. Partnerships are relatively easy to set up but require clear agreements between partners to avoid conflicts.

LLC (Limited Liability Company)

An LLC offers a blend of flexibility and protection.

Picture it as a protective umbrella over your lemonade stand. This structure separates your assets from your business, so if your LLC faces legal issues or debts, your personal belongings are generally safe.

LLCs are more formal than sole proprietorships or partnerships but offer flexibility in management and tax treatment. They are ideal for small—to medium-sized businesses that want liability protection without the complexity of a corporation.

S-Corporation

An S Corporation is a more structured business form.

Think of it as a business where owners are shareholders, much like a small-scale company with multiple investors. It protects liability and allows profits to pass through to your tax return, avoiding double taxation.

This means you report the income and losses on your tax return, which can be beneficial for tax purposes. However, S Corps have stricter operational requirements and formalities compared to LLCs.

Corporation

A Texas corporation is the most complex structure, suitable for larger businesses aiming for significant growth. Imagine a big company with many shareholders. A corporation offers robust liability protection and is a separate legal entity from its owners, meaning your assets are protected.

Corporations can raise capital more efficiently by issuing stock and can offer employee benefits. However, they come with extensive regulatory requirements, formalities, and paperwork, making them more suitable for businesses with significant resources and expansion plans.

My Final Thoughts: Forming an LLC in Texas

To start an LLC in Texas, you need to follow these steps:

• Choose a name that includes “Limited Liability Company” or “LLC.”
• Select a registered agent for your LLC.
• File a Certificate of Formation with the Texas Secretary of State.
• Create an Operating Agreement to outline management.
• Obtain an EIN from the IRS for tax purposes.

The cost to file the Certificate of Formation in Texas is $300. Annual fees and taxes may apply, so it’s important to remember when budgeting for your business.

Learn More About Starting an LLC in Texas

If you need additional help to start an LLC in Texas, check out these valuable resources:

Frequently Asked Questions

Can I change my registered agent in Texas?

Yes, you can change your registered agent in Texas. To do this, you must file a form with the Texas Secretary of State and provide the new agent’s information.

How do I change my Texas LLC’s name?

To change your LLC’s name in Texas, file an amendment to your Certificate of Formation with the Secretary of State. Make sure to choose a name that complies with naming rules.

How do I renew my Texas LLC?

Texas LLCs don’t have an annual renewal. However, you must file an annual report if your LLC is taxed as a corporation. Keep your records and fees up to date to remain in good standing.

How do I dissolve an LLC in Texas?

To dissolve your LLC in Texas, you must file a Certificate of Termination with the Secretary of State. Make sure all debts and obligations are settled before proceeding.

How do I add a member to a Texas LLC?

To add a member, review your operating agreement to see if you need a vote or approval. You then update your records and file any necessary amendments with the state if required.

How do I add a DBA to an LLC in Texas?

To add a Doing Business As (DBA) name, file an assumed name certificate with the county where your LLC operates. This allows you to use a different name for your business.

Can a minor own an LLC in Texas?

Yes, a minor can own an LLC in Texas, but they need an adult to manage the LLC on their behalf. It’s essential to follow the rules for managing business affairs for minors.

What is the deadline for filing a Texas LLC annual franchise tax report?

The annual franchise tax report is due May 15. If May 15 falls on a weekend or holiday, the due date will be the next business day.

Does LLC expire in Texas?

An LLC in Texas does not expire as long as you keep your filings up to date and your fees paid. If you fail to maintain your LLC, it could be administratively dissolved.

Can a non-resident open an LLC in Texas?

Yes, a non-resident can open an LLC in Texas. No residency requirements exist, but you will need a registered agent with a Texas address.

Can I buy a house or car with my LLC in Texas?

Yes, you can purchase a house or car in the name of your LLC. However, the purchase must be for business purposes, and proper documentation must be maintained.

Can you have multiple businesses under one LLC in Texas?

You can operate multiple businesses under one LLC in Texas; remember that they share liability. Ensure you track income and expenses separately for each business.

Is Texas a good state to form an LLC? Is it worth it?

Texas is considered favorable for forming an LLC due to its business-friendly environment and lack of state income tax. Many entrepreneurs find it beneficial to register their LLCs in Texas.

Can one person form an LLC in Texas?

Yes, a single individual can form an LLC in Texas. This is a single-member LLC and a popular choice for solo entrepreneurs.