Do you want to know how to start an LLC in Texas? This is a comprehensive, step-by-step guide to forming your own Texas LLC (limited liability company).
There’s an easy way and a less easy way to form your own Texas LLC.
The easier route would be using one of the many company services that offer this service for filing online by answering their user-friendly questionnaire. Check out our reviews for these LLC Services with pricing offers to get yourself started on forming your Texas LLC today!
Benefits of Starting an LLC in Texas
- LLCs offer protection from personal liability for their owners. This means that the owners of an LLC are not personally responsible for any debts or lawsuits against the company.
- LLCs are pass-through taxation entities, which means that profits and losses pass through the company and are taxed on the individual tax returns of the owners. This can be a favorable tax option for businesses that are just starting out.
- Texas offers three types of tax options for LLCs, partnership, S corporation, or a C corporation.
- Setting up an LLC in Texas is relatively simple and easy to do by yourself.
Texas LLC Filing Rules & Requirements
When you want to start an LLC in Texas, it is important to be aware of the rules and requirements these businesses need to follow. While it’s true that this state has some of the lightest business regulations compared to others around the nation, there are still certain necessities that must be followed before your business becomes official. This article will cover those requirements and what they entail.
Best Texas LLC Formation Services
The easiest way to start an LLC in Texas is through one of the many online services that offer this service. The process of filing your new business takes only a few minutes and you get instant access to all your filed documents once completed.
We have reviewed and compiled a list of the best LLC formation services in Texas for you to choose from. The companies we’ve selected offer excellent prices and an array of price-only options that are ideal for small businesses just starting out.
A more difficult but still possible approach entails completing all work necessary such as gathering specific information before being able to start your new business in Texas. Follow this guide to filing your LLC in Texas to get started.
5 Steps to Starting an LLC in Texas
- Choose a name for your Texas LLC
- Choose a registered agent
- File The Certificate of Formation for your Texas LLC
- Create an Operating Agreement
- Get an EIN (Employer Identification Number)
Step 1: Choose a name for your Texas LLC
It must contain LLC. According to Texas law, the name must contain the words “limited liability company” or abbreviated as LLC.
It must be unique. Whichever name you choose, it must be unique – no one else in the state can have that same name. If you would like to use a similar name to an existing LLC, you will need to request consent from the existing LLC using this form. ex. If you want to register an LLC name such as Brown Brothers Bikes LLC, you must get consent from Brown Bros Bikes LLC.
Not similar to government agencies. It must be confused for government agencies such as FBI, CIA, State Department, IRS, Treasury, etc.
Certain words may require licenses. You may be asked for additional paperwork depending on the name you choose. Ex. if you choose any of the restricted words such as University, Lawyer, Attorney etc., you might need a license.
No funny characters. Texas doesn’t allow special type treatments like subscript characters in company names.
No offensive name. Try not to choose a vulgar or derogatory company name to avoid any potential legal issues. Although the law is still unclear and confusing, it’s best if you steer clear of anything with profanity for fear of getting into trouble later on.
Check domain availability. Make sure the domain name that you want to use for your company is still available. If not, there’s nothing worse than finding this out when it’s too late.
Step 2: Choose a registered agent
After you have found a name, the next step is to register with the Texas secretary of state. This process starts by choosing and appointing an active agent for your LLC in Texas.
What is a registered agent?
Registered agents are your official contact for the state, and an active registered agent is required by law. A registered agent receives all of the legal documents on behalf of your LLC, acting as a liaison between you and a government agency.
The agent’s entire job will be to accept the service of official documents on behalf of the company. If there are any legal proceedings against your business, then these documents will be delivered to the agent.
The registered agent should therefore be accessible through a mailing address, as well as a street address. The Texas secretary of state will require this information to register your company name and appoint its registered agent.
Who can be a registered agent?
There are a number of different registered agent options to choose from.
You can be your own registered agent. By using yourself as the official company contact, you will have full access to your own information at all times.
An employee of your Texas LLC can be the registered agent as well. By doing this, the employee will be responsible for delivering any state documents received by your company to you.
You can appoint an individual or a business, but it must be someone in Texas that is active and available at all times. Some businesses provide their own service as the registered agent, while others will offer this service for a small fee.
You will need a written or electronic statement of consent from the selected Registered Agent which must include:
- Their name (Registered Agent’s name)
- The name of the LLC
- Their physical address
- A statement that they agree to act as the registered agent for your Texas LLC.
- The certificate must be dated(date of execution) and signed.
You do not need to file the consent statement with the secretary of state.
Registered agent services
Many business owners choose a registered agent service because of privacy, comfort, and flexibility. These services will act as your registered agent on your behalf. This means that your address will be confidential and that you won’t have to worry about any government documents being sent to your home address. As a registered agent service is more than just an address, they are able to handle many other tasks for you as well.
Step 3: File The Certificate of Formation for your Texas LLC
Once you have chosen your registered agent and their signed written statement of consent, the next step is to file the Certificate of Formation with the state of Texas.
First of all, you will need to decide and state between and member-managed or manager-managed LLC.
If you are registering a member-managed company, then all members must be listed on the certificate of formation. If it is manager-managed, only the person who signs the document needs to be registered.
There are two ways you can file the certificate, electronically or manually.
Online Option: You can fill the form 205 online and file it directly there.
If you choose this option, you will have to use a credit card or electronic funds transfer service, and your filing will be processed immediately upon submission. You may also receive an email confirmation of the filing.
Mail Option: You can download this form, fill it and sent it by mail to P.O. Box 13697, Austin, Texas 78711-3697; or fax it to (512) 463-5709; or deliver it to the James Earl Rudder Office Building, 1019 Brazos, Austin, Texas 78701
There is a filing fee of $300 to form an LLC in Texas. You may pay by cash, check, money order, credit card or electronic funds transfer service. The filing fee may be paid by personal check or business account.
Step 4: Create an Operating Agreement
The operating agreement is not required, but it’s a good idea to create one. This document will set the ground rules for how owners (shareholders) in your Texas LLC conduct business.
A good operating agreement can help avoid expensive disputes and protect the assets of your Texas LLC. It can also make it easier to transfer ownership interests in a Texas LLC because it spells out how profits and losses are shared, how meetings are conducted, when new owners may be admitted (and under what conditions), and other rules.
Step 5: Get an EIN (Employer Identification Number)
Your Texas business will need a federal employer identification number, called an EIN. You can apply for an EIN online at the IRS website. The information is entered on Texas EIN Form SS-4 and mailed to you.
The EIN registration is required in Texas in order to open any kind of bank account (e.g., checking or savings) and to apply for a tax identification number from the state of Texas.
Important next step: Beneficial Ownership Information
As of 2024, a significant new law known as the Corporate Transparency Act (CTA) has come into effect. This law requires most LLCs, including those formed in Texas, to file a Beneficial Ownership Information (BOI) Report with the Financial Crimes Enforcement Network (FinCEN). The goal of this filing is to increase financial transparency and prevent criminals from using shell companies to hide illicit activities like money laundering.
File a Beneficial Ownership Information (BOI) Report
Understand the Requirement: The Corporate Transparency Act (CTA) mandates that most LLCs file a Beneficial Ownership Information report with the Financial Crimes Enforcement Network (FinCEN). This provides transparency regarding the true owners of your company.
Gather Information: You’ll need the following about each beneficial owner and company applicant:
- Full legal name
- Date of birth
- Current residential or business street address
- Unique identifying number from an acceptable ID (e.g., driver’s license number, passport number)
File the Report: The method of filing is determined by FinCEN and may change. Check the most up-to-date instructions on FinCEN’s website.
Important Deadlines:
- LLCs formed before January 1, 2024: Companies in existence before this date have a more extended deadline. They have until January 1, 2025, to file their initial BOI report with FinCEN.
- LLCs formed in 2024: Companies formed during 2024 have 90 calendar days from the date they receive actual or public notice of their creation or registration becoming effective. This means 90 days from when the state officially processes your LLC paperwork or makes information on your company publicly available.
- LLCs formed on or after January 1, 2025: Companies formed from this date onward will have a stricter deadline of 30 calendar days to file their initial BOI reports with FinCEN.
Important Notes:
- Failure to file the BOI Report can carry civil and criminal penalties.
- The information you provide is protected, but accessible to law enforcement agencies.
Texas LLC Processing Time
Online: It will take 2-4 business days for your Texas LLC to be formed online.
By mail: A certificate of formation will be mailed to you within 7-10 business days from the date of filing, and you can start doing business right away. Once the certificate of formation is filed, it is considered official.
Texas LLC Frequently Asked Questions
Do I need a DBA for my LLC in Texas?
If you conduct business under another name different from your legal LLC name, then you will need to file a DBA (Doing Business As) application with the Secretary of State.
Can I be my own registered agent in Texas?
Yes, you can be your own registered agent in Texas. A registered agent is a person or company that accepts legal notices on behalf of a business. You can choose any person or company to serve as your registered agent, including yourself.
How do I start an LLC in Texas?
Step 1: Name your Texas LLC
Step 2: Choose a Registered Agent
Step 3: File the Certificate of Formation
Step 4: Create an Operating Agreement
Step 5: Get an EIN
How much does it cost to start an LLC in Texas?
To start an LLC in Texas, you need to pay a $300 filing fee as well as a 2.7% convenience fee to file the Certificate of Formation.
Can veterans get free LLC in Texas?
Starting an LLC in Texas for veterans is free. You will also be exempt from Franchise Tax for the first five years of your business if you are a veteran.
Do LLCs pay taxes in Texas?
In Texas, LLCs are treated as pass-through entities for tax purposes. This means that the LLC itself does not pay any taxes on its income; rather, the income passes through to the individual members of the LLC and is taxed at their individual tax rates. The only tax imposed on LLCs in Texas is the Franchise Tax. The Franchise Tax is a yearly tax assessed on all business entities operating in Texas, and it is based on the net assets of the LLC minus its members’ contributions.
How long does it take to get LLC approved in Texas?
You can get an LLC approved online in 2-4 business days. If you choose to get your LLC approved by mail, it will take 7-10 business days. However, if you choose to get your LLC approved by mail with the expedited service, it will take business 4-5 days.
Can a single person form an LLC in Texas?
Yes. A single person can form an LLC in Texas, and it’s very common. You don’t need to have another person involved.
How long does an LLC last in Texas?
An LLC in Texas lasts for one year. It’s renewed every year before expiration. To renew, you simply file an annual report with the Secretary of State’s office.
How much is an EIN number in Texas?
An EIN number (Employer Identification Number) is a free service provided by the IRS for businesses in the US. It’s used to identify businesses for tax purposes. You can apply for an EIN number online at IRS.
