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How to Start an LLC in Texas

Texas LLCs (limited liability companies) are business entities that protect your personal assets from business-related debts. An LLC also offers a flexible management structure and certain tax benefits. To start an LLC in Texas, you must file a Certificate of Formation with the Texas Secretary of State and pay the $300 filing fee. But first, you’ll need to choose a name and registered agent for your LLC. It will take up to 40 business days to officially form your LLC unless you pay an additional $25 for expedited processing (4-5 days). Below, we provide detailed instructions for how to start an LLC in Texas.

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1. Name Your Texas LLC

Before you can file your Certificate of Formation, you’ll need to choose a business name for your LLC. The name of your Texas LLC must:

  • Include an indicator such as “limited liability company” or “LLC.”
  • Not include words or abbreviations that may make your LLC sound like a different type of entity, like “LP” or “corporation.”
  • Be unique from other Texas businesses.

Already have a business name? Check to see if it’s available.

Can I reserve a business name in Texas

Yes. Texas allows you to reserve a business name for up to 120 days by filing an Application for Reservation or Renewal of Reservation of an Entity Name. There is a $40 filing fee.

What’s the difference between my LLC’s name and an assumed business name?

The legal name of your LLC is the one listed on your Certificate of Formation. An assumed business name is any name you conduct business under that’s not your LLC’s legal name.

Some LLCs use an assumed business name to establish a chain of stores under different names. For example, a company called Molly Ann’s Used Books LLC might also do business under the name “Sarah Beth’s Reading Corner.” Utilizing an assumed business name can alleviate the hassle of creating a new LLC for each additional store or help you market to a specific audience.

If you choose to have an assumed business name, you must file an Assumed Name Certificate ($25) with the Texas Secretary of State.

Learn How to Get a DBA Name.

2. Designate a Registered Agent

The next step to forming your LLC is to appoint a Texas registered agent—an individual or business authorized to accept legal and state mail on behalf of your LLC. Texas requires all LLCs to have a registered agent. You’ll need to list your registered agent’s name and address on your Certificate of Formation.

Learn why the pros use a registered agent service.

What does a registered agent do?

The duties of a registered agent in Texas are outlined in TX Bus Org § 5.206. At a minimum, your registered agent must:

  • Have a physical street address in Texas—not a PO box.
  • Maintain regular business hours.
  • Accept legal and state mail on behalf of your LLC and forward it to you right away.

Can you be your own registered agent in Texas?

Yes. But, keep in mind that acting as your own registered agent means listing your personal information on the Certificate of Formation. You’ll also be required to maintain regular business hours so you can accept documents in person.

Hiring a registered agent allows you to keep your personal information off public record and means you won’t be held down by the need to maintain regular business hours.

Can I change my registered agent after I start an LLC?

Yes. You can change your registered agent in Texas by submitting a Statement of Change of Registered Office/Agent with the Texas Secretary of State. It costs $15 to file.

3. Submit LLC Certificate of Formation

To form an LLC in Texas, you must file a Certificate of Formation with the Texas Secretary of State. The filing fee is $300. If you file by mail, you must send the original and one copy of your certificate. Once the state receives your documents, they will stamp and return the duplicate form to you. Mailed submissions can take up to 40 business days to process. You can pay an additional $25 for expedited processing (4-5 days), but the state encourages people to file online instead. Online filings are expedited without the additional fee.

Note: All of the information on this form will become part of the public record.

To complete the certificate, you’ll need to provide the following information:

  • Company name. Include an indicator such as “limited liability company” or “LLC.”
  • Registered agent name and address. Include the name and address of the individual or business entity that will accept legal and state documents on your behalf.
  • Governing authority. Indicate whether your LLC will be member-managed or manager-managed. Include the name and address of each member or manager.
  • Purpose (optional). The Certificate of Formation already states that you may form an LLC in Texas for any lawful purpose. You may include a more specific business purpose, but it’s not required.
  • Mailing address. This can be a PO box.
  • Supplemental/provisional information (optional). You can include additional provisions or leave this section blank.
  • Organizer name and address. This is the person filing your certificate. They do not otherwise have to be associated with your LLC.
  • Effectiveness of filing. You may include a future date (up to 90 days) to delay the start of your LLC or select “A” for the earliest possible formation date.
  • Execution. This is where your organizer must sign and date the form.

Ready to start your Texas LLC? File for free with Northwest.

How can I keep my personal information off the public record?

Unfortunately, your Certificate of Formation is a public record and will be stored in an online database. As a result, marketers will find your personal information and sell it to data brokers—bombarding you with junk mail and unwanted phone calls. It’s what they do.

The best way to protect your information is to hire a registered agent who will allow you to list their business address instead of yours—like us.

What’s the difference between a member-managed and manager-managed LLC?

In a member-managed LLC, the owners (members) take on the business’s daily responsibilities. In a manager-managed LLC, members appoint or hire managers to run the LLC. Whoever manages your LLC will have the authority to perform many tasks—everything from hiring employees to opening a company bank account.

For help with deciding which management structure will work for you, see our page on LLC Member Vs Manager.

How do I file the Texas Certificate of Formation?

You can submit your certificate online or by mail.

Mail:
Secretary of State
PO Box 13697
Austin, TX 78711-3697

Online:
SOSDirect

4. Write an LLC Operating Agreement

An operating agreement is a legally binding document that outlines how your LLC will function—everything from the voting process to potential mergers.

Check out our attorney-drafted Texas LLC Operating Agreement.

Does Texas require an LLC to have an operating agreement?

Texas doesn’t require your LLC to have an operating agreement (or “company agreement”).

Although it’s not legally required, having an operating agreement can help resolve disputes among members and protect your limited liability status. So, it’s vital that you have a written agreement.

Operating agreements are internal documents, so you don’t need to file them with the state. However, your LLC will be governed by Texas’s default LLC statutes if you don’t adopt an operating agreement.

What should be included in an operating agreement?

A solid operating agreement should provide a detailed overview of the LLC’s overall business purpose and other “big picture” situations, such as how the company will be taxed and accept new members. Here’s a list of other topics typically included in operating agreements:

  • initial investments
  • profits, losses, and distributions
  • voting rights, decision-making powers, and management
  • transfer of membership interest
  • dissolving the business

Texas allows you to include pretty much anything in your operating agreement—so long as it doesn’t violate state law or the Certificate of Formation.

Does a single-member LLC need an operating agreement?

Yes. Single-member LLCs will need an operating agreement to open a business bank account and support their limited liability protection.

5. Get an EIN

An employer identification number (EIN) is basically a social security number for your LLC. You’ll use this number on tax filings, so the IRS can quickly identify your business.

Learn How to get an EIN for your LLC.

Do I need an EIN for my Texas LLC?

Yes. Technically, you’ll only need an EIN if you are taxed as a corporation or choose to hire employees. However, most banks require an EIN to open a business bank account. Having an EIN also prevents you from needing to give your social security number to vendors.

What To Do After Forming Your Texas LLC

6. Open a Bank Account

Once you’ve officially formed your LLC, it’s important to establish a business bank account. Why? A separate bank account will help maintain the legal distinction between the LLC and you (the owner). Because an LLC offers limited liability protection, creditors and potential litigators won’t be able to go after your personal assets. However, if you mix personal and business finances, you could risk losing your liability protection.

To open a bank account for your Texas LLC, you’ll need to bring the following to the bank:

  • Texas LLC Certificate of Formation (a copy is fine)
  • the LLC’s operating agreement
  • the LLC’s EIN
  • an LLC Resolution to Open a Bank Account (if your LLC has more than one member).

If your LLC has more than one member, use our free LLC Resolution to Open a Bank Account.

7. Fund the LLC

Okay, you’ve established your LLC and bank account. Time to fund it. Each member should make an initial contribution to pay for their membership interest. Typically, members make initial contributions by writing a check or depositing cash into the LLC’s bank account. However, members may also contribute property or services to the LLC. If you or another member decides to go that route, note that those types of contributions can trigger tax events.

What is LLC membership interest?

Your membership interest is the percentage of the LLC that you own. Typically, your membership interest is proportionate to the amount you initially invested in the business. For example, if you invest $6,000 in the LLC and four others invest $1,000 each, you would own 60% of the LLC, and the others would each own 10%. Often, members who make larger contributions also have greater voting power.

8. File State Reports & Taxes

Texas requires all LLCs to file an Annual Franchise Tax Report with the Texas Comptroller of Public Accounts each year. Your rate will be determined by your LLC’s total revenue and/or the type of business you own (i.e., retail or wholesale). Most businesses won’t pay any taxes. However, you’ll still be required to file a return. Here’s a quick breakdown of the rates:

If your total revenue is $1,230,000 or less, you’ll likely pay zero taxes. However, if your income is more significant than $1,230,000, but less than $20 million, you’ll pay 0.331%. Retail or wholesale companies with a total revenue greater than $20 million will pay 0.375%. And businesses (other than retail or wholesale) with a gain greater than $20 million will pay 0.75%.

Worried you’ll forget? Let us file your annual franchise tax report for you.

When is the Texas Annual Franchise Tax Report due?

Your Annual Franchise Tax Report will be due by May 15 each year. The report can be filed online or by mail.

How are Texas LLCs taxed?

By default, LLCs in Texas are taxed as pass-through entities. This means that profits from the LLC get distributed to the members, who then report their shares on their personal tax returns. Texas LLCs are also subject to the federal self-employment tax rate (15.3%). LLCs can also file paperwork with the IRS to be taxed as an S-corp or a C-corp.

Learn more about S-Corp Vs LLC tax designation.

Ready to Start an LLC in Texas?