How to Form an LLC in Texas
To form an LLC in Texas, here's everything you need to know.
1. Choose a Name for Your LLC
Under Texas law, an LLC name must contain the words the words "Limited Liability Company" or "Limited Company," or the abbreviations "L.L.C.," "LLC," "LC," or "L.C." "Limited" may be abbreviated as "Ltd." or "LTD" and "Company" as "Co."
Your LLC’s name must be distinguishable from the names of other business entities already on file with the Texas Secretary of State. Names may be checked for availability by at the Texas Secretary of State SOSDirect website.
You may reserve a name for 120 days by filing a Application for Reservation or Renewal of Reservation of an Entity Name (Form 501) with the Texas Secretary of State. The reservation may be filed online through the Texas Secretary of State SOSDirect website, or filed by mail. The filing fee is $40.
2. File a Certificate of Formation
A Texas LLC is created by filing a Certificate of Formation (Form 205) with the Secretary of State. The certificate must include: the LLC's name; the name and address of the LLC’s registered agent; whether the LLC will be member-managed or manager-managed; the name and address of the LLC's governing person(s); the name and address of the LLC's organizer; and the effective date of the certificate. The certificate may be filed online through the Texas Secretary of State SOSDirect website, or by mail. The filing fee is $300.
All of the paperwork and procedural steps to start a limited liability company in Texas can be done online using Nolo's Texas Online LLC Formation application.
3. Appoint a Registered Agent
Every Texas LLC must have an agent for service of process in the state. This is an individual or business entity that agrees to accept legal papers on the LLC’s behalf if it is sued. The registered agent may be a Texas resident or a business entity authorized to do business in Texas. The registered agent must have a physical street address in Texas. The LLC may not be its own registered agent. You can find information on Texas commercial registered agents here.
4. Prepare an Operating Agreement
An LLC operating agreement is not required in Texas, but is highly advisable. For help creating an LLC operating agreement, see Form Your Own Limited Liability Company, by Anthony Mancuso (Nolo) or use Nolo’s Online LLC. If an operating agreement is created, it need not be filed with the Certificate of Formation.
5. Publication Requirements
6. Comply With Other Tax and Regulatory Requirements
Additional tax and regulatory requirements may apply to your LLC. These may include:
EIN: If your LLC has more than one member, it must obtain its own IRS Employer Identification Number (EIN), even if it has no employees. If you form a one-member LLC, you must obtain an EIN for it only if it will have employees or you elect to have it taxed as a corporation instead of a sole proprietorship (disregarded entity). You may obtain an EIN by completing an online EIN application on the IRS website. There is no filing fee.
Business Licenses: Depending on its type of business and where it is located, your LLC may need to obtain other local and state business licenses. For more informaiton, visit the Texas Department of Licensing and Regulation.
Comptroller of Public Accounts: 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. (Texas also imposes an annual franchise tax on most LLCs.) Depending on the tax involved, you may be able to register online, by mail (using the correct form), or in person at a Comptroller field office. For more information on state LLC tax registration, see Nolo's article LLC Annual Report and Tax Filing Requirements: A 50-State Guide.
7. No Annual Reports
Unlike most states, Texas does not require SMLLCs to file annual reports with the Secretary of State. However, LLCs must file annual franchise tax reports. The details for computing the tax can be complicated. Check the Comptroller of Public Accounts website for more information.
8. Foreign LLCs Doing Business in Texas
To do business in Texas, all LLCs organized outside of the state must register with the Texas Secretary of State. Foreign LLCs must appoint a registered agent for service of process. The agent may be a Texas resident or a business entity authorized to do business in Texas.
To register, file an Application for Registration of Foreign Limited Liability Company (Form 304). The application may be filed online or by postal mail. The filing fee is $750.
Before filing the application, make sure the LLC’s name is available in Texas by checking the Texas business name database. If the name is not available, the foreign LLC must adopt an assumed name for use in Texas. The LLC must file online or by mail an Assumed Name Certificate (Form 503), with the Secretary of State and pay a $25 filing fee. For more information on foreign LLC registration requirements, see the information page on Secretary of State's website.