Frequently asked questions about starting and running an LLC, or limited liability company.
Here are the steps you need to take to form a limited liability company (LLC) in Texas. For more information on how to form an LLC in any state, see How to Form an LLC.
Your LLC's name must be distinguishable from the names of other business entities already on file with the Texas Secretary of State. You can check for name availability at the Texas Secretary of State SOSDirect website.
Under Texas law, an LLC name must contain one of the following:
You may reserve a name for 120 days by filing an Application for Reservation or Renewal of Reservation of an Entity Name (Form 501) with the Texas Secretary of State. You can file the reservation online through the Texas Secretary of State SOSDirect website, or by mail. The filing fee is $40.
Every Texas LLC must have an agent for service of process in the state. An agent is an individual or business entity that agrees to accept legal papers on the LLC's behalf if someone sues the company. 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.
You can create a Texas LLC by filing a Certificate of Formation for a Limited Liability Company (Form 205) with the Secretary of State. The certificate must include:
You can file the certificate online through the Texas Secretary of State SOSDirect website, or by mail. The filing fee is $300.
An LLC operating agreement is not required in Texas, but is highly recommended. This is an internal document that establishes how you will run your LLC. It sets out the rights and responsibilities of the members and managers, including how the LLC will be managed. It can help preserve your limited liability by showing that your LLC is truly a separate business entity. In the absence of an operating agreement, state LLC law will govern how your LLC operates.
The operating agreement should include the following:
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 you create an operating agreement, you do need to file it with the state.
If your LLC has more than one member, it must get 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 can get an EIN by completing an online EIN application on the IRS website. There is no filing fee.
Unlike most states, Texas does not require LLCs 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. For more information, check the Comptroller of Public Accounts website, and Texas LLC Annual Filing Requirements.