Texas LLC Formation Options
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How to Start an LLC in Texas
To start an LLC in Texas, you’ll need to do three things: appoint a registered agent, choose a name for your business, and file a Certificate of Formation with the Texas Secretary of State. You can file the document online or by mail. The certificate costs $300 to file. Once filed with the state, this document formally creates your Texas LLC.
According to TX Bus Orgs § 5.201 (2019), every Texas LLC must appoint a registered agent. You don’t need to hire a registered agent, but if you do, make sure your registered agent will list their address on your certificate wherever possible to ensure maximum privacy.
If you’re starting a new business, you probably already know what you want to name your LLC. But you’ll need to know if your preferred name is available. There are two ways to do this in Texas. The first is through the Texas Secretary of State and costs $1 per name searched. You can make an account and complete your search at https://direct.sos.state.tx.us/acct/acct-subscribe.asp. The second, through the comptroller, is free but maybe less accurate. You can search under this method at https://mycpa.cpa.state.tx.us/coa/. Pick a method, and search until you find the perfect name for your LLC.
Once you know who your registered agent will be and what your LLC name is, you’re ready to file your Texas Certificate of Formation. Follow along with our filing instructions below:
Filing the Texas LLC Certificate of Formation
Learn more about each Certificate of Formation requirement below. Note that the information you provide becomes part of the public record—permanently.
Or skip the form entirely and hire us to form your Texas LLC. We provide a free business address to list whenever possible throughout the filing to better keep your personal address private.
1. Company Name
You have to include “Limited Liability Company” or an abbreviation like “LLC.” You can’t choose a name that is the same or too similar to a name already in use in the state.
2. Registered Agent and Office
Your Texas registered agent must be available during business hours to accept legal notices for your LLC. The registered agent can either be an organization (but not your own) or an individual Texas resident. The registered office must be a physical address and will be a permanent public record for your LLC. Hire us as your registered agent and our address will go here.
3. Governing Authority
This is a fancy way of asking how the LLC will structure its management. The authority to govern can go to the members (owners) or to managers. If members share decision-making power, then you don’t have any managers—you’re member-managed. You’ll list the name and address of all members. If any members give up these powers to one or more individuals (managers), you’re manager-managed. You’ll list the the names and addresses of all managers. Tip: Hire us, and you can list list our address here and better keep personal info off public documents.
You can form an LLC in Texas for any lawful purpose. This statement is already included on the Certificate of Formation. You can narrow the purpose if you really want to, but it’s not necessary.
5. Supplemental/Provisional Information
If you have conditions you’d like to put on the LLC like duration of existence (how long the LLC will exist) or some other special restriction, you can put that information in this section. Otherwise, you can leave it blank.
6. Texas LLC Organizer
This is just the person filing the LLC and has no real significance. Tip: If you don’t want your personal name listed you can hire us to form the Texas LLC and we will be the organizer.
7. Effectiveness of Filing
Typically an LLC in Texas will be brought into existence when the Certificate of Formation is filed by the Texas Secretary of State. However, if you want your LLC to be formed at a later date, you can select one of the other options and list the date you want to begin or a triggering event, which you can specify. Future effective dates can be up to 90 days in the future.
This is where the organizer signs and dates the Certificate of Formation. It is the last and final part of the Texas LLC Certificate of Formation. Once you sign and date, either submit it online or mail it in. (Or hire us, and we’ll execute it for you.) You’ve just formed a Texas LLC. Good luck!
Why Have a Registered Agent Form Your Texas LLC?
Professionals in Texas hire registered agent services like Northwest Registered Agent to start an LLC—but why?
Standard filing companies don’t have employees or offices in every state. But as a national registered agent, it’s a requirement for us, which is a benefit for our clients. We own our own building in Austin, Texas. We’re on a first name basis with the people who work in the Secretary of State. We know all the fastest filing methods, which translates to fast, professional service—without extra fees.
As your registered agent, we list our Austin registered office address on your LLC’s formation documents. Why? If you’re starting a business from your apartment in Dallas, do you really want your apartment address as your business address? (Hint: the answer is no.) We’ll list our address, so you don’t have to list yours. Plus, we never sell your data. We don’t list your personal information on filings if we don’t have to. It’s all standard and part of our commitment to Privacy by Default®.
Free Mail Forwarding and Business Address
We already accept your legal mail—so why not take it a step further? In every state, we include limited digital mail forwarding for your regular mail too (10 pieces of regular mail a year; $15 a doc after that). Plus, you can list our address as your business address. That means you can have all business mail routed through our office. With both mail forwarding and a business address included, you get a level of security unmatched in the formation industry.
We know the in’s and out’s of each state—and we use this knowledge to help you when you need it most. Our team of Corporate Guides® has over 200 local business experts. You can call or email us for answers to all your questions about your LLC in Texas. Our Corporate Guides are dedicated solely to helping you with your business—not selling you services or meeting quotas.
What Do I Do After My Texas LLC Is Formed?
After your Texas Certificate of Formation are approved, you still have a few more important steps to take, including getting an EIN, drafting an operating agreement, opening a bank account, funding the LLC and learning about state reporting and tax requirements.
Get an EIN
An EIN (“Employer Identification Number”) is a federal tax ID assigned to your business by the IRS. The IRS uses your EIN to easily identify your business on tax filings.
Does a Texas LLC need an EIN?
Yes—you will need a federal tax ID if you want to hire employees or be taxed as an S corporation with the IRS. Just about every bank will require you to have an EIN for your new Texas LLC. Generally speaking, it is best to get an IRS EIN even if you don’t think you need it right now. If you run into a situation where a vendor asks for it, then you have it. A Texas LLC EIN will help establish credit with many of the vendors you’ll do business with and give you the option to not provide them your personal social security number.
How do I get an EIN for my LLC?
You can apply for an EIN directly from the IRS at no cost. Most businesses are able to apply online, but if you don’t have a social security number, you’ll need to apply with a paper form. Want one less thing to do? Add on EIN service when you hire us, and we’ll get your EIN for you. Or choose our VIP service—an EIN is included.
Write an LLC Operating Agreement
Operating agreements put into writing how your business actually operates—how much each member invested, how profits and losses will be allocated, how voting works, and what happens if there’s a dispute or if the whole business (knock on wood) falls apart.
Do I need an operating agreement for a Texas LLC?
Texas doesn’t legally require a written operating agreement (or “company agreement” as referred to in the Texas Statutes). TX Bus Orgs § 101.052 (2019) states what an agreement may or may not cover, but does not specifically require an LLC to have one.
That said, an operating agreement isn’t just annoying paperwork. It’s one of your LLC’s most important internal documents, and creating one can help your LLC with everything from opening a bank account to handling major events from mergers to dissolution.
What should be in an operating agreement?
An operating agreement should explain how the business will handle “big picture” situations—everything from allocating profits and losses to dissolving the business. Below is a list of common topics that operating agreements should cover.
Profits, losses, and distributions
Voting rights, decision-making powers, and management
Transfer of membership interest
Dissolving the business
Your operating agreement can cover pretty much anything as long as it isn’t contrary to Texas law. Topics not allowed to be changed in the operating agreement are listed in the Texas statute TX Bus Orgs § 101.054 (2019), which forbids actions such as unreasonably restricting a person’s access to records.
How do I write an operating agreement?
To write an operating agreement, you need to address how your business will handle money, members, votes, management, and more. Not sure how to get started? At Northwest, we’re here to help your LLC get off on the right foot. When you hire us, we provide your business with a free LLC operating agreement, specific to your management style. We’ve spent years developing these agreements and other free LLC forms—which have been used by over a million LLCs.
Open an LLC Bank Account
Your LLC needs its own bank account. Why? An LLC gets its limited liability from being a distinct entity, separate from its members. If you mix personal and business finances, you could lose your liability protections.
How do I open a bank account for my Texas LLC?
To open a bank account for your Texas LLC, you will need to bring the following with you to the bank:
A copy of the Texas LLC certificate of formation
The LLC operating agreement
The LLC’s EIN
If there are multiple members in the LLC, you may also want to bring an LLC resolution to open a bank account that states that the person going to the bank is authorized by the members to open the account in the name of the LLC. Northwest can help with this as well—LLC bank resolutions are one of the many free legal forms we provide to ensure you can get your LLC started fast.
Fund the LLC
Time to put some money in that new LLC bank account. What money? For starters, your initial contributions to your LLC’s capital. LLC members are owners, and each owner needs to pay for their membership interest to fund the LLC.
What is membership interest?
Membership interest is your percentage of ownership of the LLC. Membership interest is normally proportionate to your investment. So how does this work?
Imagine your LLC has 5 members. 4 members each invest $1,000 in the business. One member invests $6,000. The total contribution of all members is $10,000. The 4 members each own 10% of the business. The moneybags member who shelled out $6,000 owns 60% of the business.
Typically, this also means that the 4 members would each get 10% of any profits, and moneybags would get 60%. Exactly how profits and losses are allocated, however, can be adjusted in the operating agreement as long as changes are in line with IRS requirements and Texas laws.
File Texas Reports & Taxes
Texas does not require an annual report per se. Instead, Texas LLCs are required to file the Texas Franchise Tax Report. Texas LLCs are also subject to state tax filing requirements.
How much is the Texas Franchise Tax?
The Texas Franchise Tax is a business tax, which according to the Texas Comptroller of Public Accounts (state tax office), is assessed for the “privilege of doing business in Texas.” The tax is based on a business’s total gross receipts. The tax rates are as follows:
0.375% for wholesalers and retailers
0.75% for all other types of businesses
You may not owe any tax if your gross receipts are less than $1,180,000. However, you must still complete the filing for informational purposes. Unlike other states, the franchise tax in Texas is not a simple affair. You will likely need the help of a CPA or financial specialist to complete the form and pay the tax. This is a tax return, and you’ll need to complete your federal taxes before filing the Texas LLC Franchise Tax.
When is the Texas Franchise Tax due?
The Franchise Tax is due every year by May 15. Late fees include a flat $50 fee plus either 5% (if less than 30 days late) or 10% (if more than 30 days late).
When you sign up for Northwest, we send you reminders for your Texas Franchise Tax due dates. Want one less thing to worry about? With our business renewal service, we can complete the report part and send it to you for your tax info and signature. We’ll then submit the report on your behalf. Our business renewal service is $100 plus taxes owed.
What should I know about Texas LLC taxes?
Besides the franchise tax described above, most Texas LLCs have relatively few taxes. Most significantly, Texas is one of the few states with no state personal income tax.
The state does have a 6.25% sales tax—although cities and counties can stack on local sales taxes as well. The maximum total sales tax tops out at 8.25%, but the average total sales tax is 7.578%.
Do LLCs have to register with the Texas Comptroller of Public Accounts?
Yes. This is true whether or not you owe on the state franchise tax. If you are engaged in business in Texas and sell or lease any tangible property (or sell any taxable service), you’re required to register with the Texas Comptroller. You can file online or by paper. The Comptroller’s Office recommends you allow two to three weeks before you receive your permit in the mail. There is no filing fee.
Texas LLC FAQs
How can I submit the Texas LLC Certificate of Formation?
You can file the Texas certificate online, by fax, or by mail. Mailed filings must be submitted in duplicate to the following address:
Business & Commercial Section
Secretary of State
P.O. Box 13697
Austin, TX 78711
Fax: (512) 463-5709
How much does it cost to start an Texas LLC?
The filing fee for your Texas LLC Certificate of Formation is $300. Add $25 for expediting. Online filings also have a credit card processing fee based on the total amount of the transaction, adding on a few more dollars.
Hire Northwest for a one-time fee of $535, including state filing fees, a year of registered agent service, limited mail forwarding and loads of useful forms and tools to help get your Texas LLC up and running. Or, pay just $54 out the door with our VIP monthly payment option.
How long does it take to start a Texas LLC?
Texas LLC filing times vary depending on your filing method. Online filings will be approved in around 2 business days, and you’ll get an emailed zip file confirmation from the Secretary of State when it’s done. In-person filings also take around 2 business days. Mailed filings can take up to 5-7 business days, but expediting options exist for mailed filings as well. If you submit by mail, you’ll get a stamped copy back in the mail after the state approves your certificate of formation.
Pay a $25 expediting fee and Texas will move your paperwork to the top of the stack and usually have your certificate processed by the end of the next business day.
If you hire Northwest to start your LLC, we file online and typically have your Texas LLC formed within 2 business days.
Does a Texas LLC need a business license?
Texas does not have a generic, state level business license. Of course, professional and occupational businesses like dentists, architects and similar kinds of businesses will need to get a occupational licenses with the state.
If you are selling tangible goods (shoes, gum, jewelry, any real personal property) or services, you will need to apply for a Texas Sales Tax Permit.
Need an EIN or a certified copy of your formation docs for your license applications? Northwest can help. You can easily add on these items to your LLC formation order.
Can a Texas LLC help me live more privately?
Yes. While you can’t remove all ownership information from an Texas public filing (like you can in states like New Mexico, Delaware, and Wyoming), a Texas LLC can still help you reduce your public footprint. You can maintain a significant degree of address privacy by listing our address on public docs instead of your own. Check out our page on living privately with an LLC to learn more.
What is a foreign Texas LLC?
A foreign Texas LLC is any LLC formed outside of Texas but registered to do business in the state. For example, if you formed an LLC in New Mexico but wanted to conduct business in Texas as well, you would register as a foreign LLC in Texas by filing an Application for Registration of a Foreign Limited Liability Company with the Texas Secretary of State. Like domestic LLCs, foreign LLCs in the state have to file annual Texas annual reports. Northwest can register your foreign Texas LLC for you today!
What can I do if I need Texas mail forwarding?
Whether you have a home-based business and need a professional address, travel often, or simply want to keep your personal information off public records, your LLC can benefit from mail forwarding. At Northwest, we include limited mail forwarding with our registered agent and formation services. For more robust needs, we also offer unlimited mail forwarding with a unique suite number as part of our premium Texas mail forwarding service.
How to Order LLC Formation Service
Our Texas LLC formation service is designed to be fast and easy—signing up takes just a couple minutes. Here’s how it works:
With Northwest, we give you flexibility on how to pay. You can pay all the fees up front (this includes one full year of registered agent service). Or, pay just $54 out the door with our VIP monthly payment option. With our VIP option, we also include an EIN. Just choose one of the buttons below, answer a few easy questions about your business and submit your payment.
We’ll prepare your Texas Certificate of Formation and send them to the Secretary of State for approval. In the meantime, you’ll have immediate access to your online account, where you can find useful state forms, pre-populated with your business information.
Once the Texas Secretary of State has approved your filing, we notify you that your Texas LLC has been legally formed. You can now take any necessary next steps, like getting an EIN and opening a bank account.