Here are the steps to form a limited liability partnership (LLP) in Texas. LLPs are governed by state law and must be registered with a state office. They are often formed by licensed professionals (like attorneys, accountants, or physicians) because they generally protect each individual partner from liability for the professional malpractice of all other partners. However, any group of two or more people can form an LLP in Texas.
The name of a Texas LLP must contain the phrase “Limited Liability Partnership” or an abbreviation of that phrase. Unlike most other states, the names of Texas LLPs are not required to be distinguishable from the names of other Texas business entities, nor can you pay a fee to reserve a name for an LLP.
You create a Texas LLP by filing a Registration with the Texas Secretary of State (SOS) and paying the required filing fee. To complete the Registration you’ll need to provide:
You can download a blank Registration of a Limited Liability Partnership form (Form 701) by going to the SOS website. You can also file online at the Secretary of State's SOSDirect website. You are not required to publish your Registration.
Unlike many other states, Texas LLPs are not required to have a registered agent. (Foreign (non-Texas) LLPs doing business in Texas are required to have registered agent.
You are not required to have a written LLP partnership agreement in Texas. However, a written partnership agreement is highly recommended. You don’t need to file the agreement with the state. For further guidance, check Nolo’s article Creating a Partnership Agreement.
An LLP is a separate legal entity from its individual partners. Therefore, your LLP must obtain a federal Employer Identification Number (EIN) from the IRS. You need an EIN for an LLP even if it has no employees. You can get an EIN by completing an online application on the IRS website. There is no filing fee.
In some cases, for example if you will be selling goods and collecting sales tax, you’ll need to register with the Texas Comptroller of Public Accounts (CPA). Texas also imposes an annual franchise tax on LLPs. Depending on the tax involved, you may be able to register online, by mail (using the correct form), or in person at a CPA field office.
Depending on what kind of business you are running and where it is located, you may need to obtain local or state business licenses for your LLP. Among other possibilities, these might include licenses related to:
The State of Texas requires you to file annual renewals of the registration for your LLP and pay an annual fee. The renewal is due by the anniversary date of your LLP’s registration. You can download a blank Renewal of Registration of a Limited Liability Partnership form (Form 703) by going to the SOS website. You can also file online at the Secretary of State's SOSDirect website. To complete the renewal you must provide the same information as on the original Registration.
If you’re interested in forming an LLP to provide professional services, it’s always advisable to first review the state law and regulatory board rules for your profession. In some cases, you may find restrictions on whether or how you can form an LLP. Texas’s general partnership law has specific provisions regarding partnerships formed jointly by combinations of:
If you are a licensed professional in any of the latter areas and want to form an LLP, you should be sure to review Sections 152.055 and 152.0551 of Texas’s partnership law.
Forming your business as an LLP will protect you personally from creditors seeking to collect unpaid debts owed solely by the LLP. Moreover, in most cases, if you are a licensed professional and your LLP is formed to provide professional services, you also are protected from:
However, for some professions in some states, LLP partners are required to have a minimum amount of malpractice insurance before they are eligible for protection from other partners’ malpractice. In addition, some states require LLPs for some professions to adhere to additional rules—such as having partners keep up with professional registrations—in order for each partner to be eligible for protection from liability from other partners’ malpractice. Therefore, it’s always a good idea to double check your state’s rules for your particular profession regarding minimum insurance requirements, registration renewals, and other issues that may affect your personal liability as a partner.
Meanwhile, you are personally responsible if:
Because professionals are not protected from their own malpractice, if you are a professional you should make sure you have professional liability insurance—and, if applicable, that your coverage meets any state minimum insurance requirements.
As an alternative to forming your business as an LLP, you may want to consider options such an LLC or S Corporation. In addition, if your business provides professional services, you may want to consider a PLLC or PC. For more information on business entity choices, including how an LLP differs from other business entities, see the Business Formation section of the Nolo website.