Key Takeaways

  • Learning how to start an LLC in Texas involves choosing a compliant business name, appointing a registered agent, and preparing an operating agreement.
  • You must also file a Certificate of Formation (Form 205) with the Texas Secretary of State and pay the state filing fee to officially form your LLC.
  • Texas LLC owners should obtain an EIN, register for applicable licenses or permits, and comply with ongoing rules, including the Texas Franchise Tax and Public Information Report.
  • Texas LLCs offer personal liability protection and flexibility, and owners maintain pass-through tax treatment unless they elect otherwise.
  • An operating agreement—while not required—clarifies ownership, decision-making, duties, and exit procedures.

How Do I Form an LLC in Texas?

When learning how to form an LLC in Texas, you should first know what an LLC is. By establishing an LLC, or limited liability company, a small business owner can greatly reduce the potential financial impact a catastrophic event or lawsuit can incur. The owner or owners are only responsible for their stake in the business, meaning personal assets won’t be drained to keep the business afloat. There are other benefits as well, including the owners’ ability to file business information in their personal tax forms instead of having to file taxes for the LLC itself.

That the individual owners are allowed to keep record of their own financial stake in the business makes for a more fluid and dexterous work environment, with plenty of room for growth. If you plan on starting an LLC in Texas, you’ll be pleased to find many tax benefits meant to encourage small business entrepreneurship.

Understand Texas Filing Requirements

To officially form an LLC in Texas, you must file a Certificate of Formation (Form 205) with the Texas Secretary of State and pay the state filing fee. The filing can be completed online, by mail, or in person, and the Secretary of State will issue confirmation after processing. Online submissions are typically processed faster than mailed filings, and you can monitor your filing status through the state’s SOSDirect system. After approval, your LLC becomes a recognized Texas business entity.

How to Start a Business in Texas

When starting your LLC in Texas, asking the following questions will guide you through the process:

  • What type of business is for me?
  • How do I expand my business concept?
  • What types of licenses, financial accounts, and tax-filing forms are required to run my business properly?
  • What are the tax benefits my business can take advantage of in the state of Texas?
  • How do I use the internet to bring attention to my business?

Check Licensing and Permit Requirements

After forming your LLC, determine whether your business needs state, city, or county licenses. Texas does not have a universal statewide business license, but many industries—such as childcare, construction, food service, and professional services—require state-issued authorization or permits. If you sell taxable goods or services, you may also need a Texas Sales and Use Tax Permit. Research local requirements and confirm obligations through the Texas Department of Licensing and Regulation and your local city or county clerk.

Name Your LLC

When picking out a name for your LLC, you’ll want to first think of something that suitably connects to what your business does. Think of people who may seek out your services online and tailor your name to what they might type into a search engine. Once you’ve done that, simply make sure that your business name is in accordance with LLC naming regulations and contains either the abbreviations L.L.C. or LLC or the words Limited Liability Company.

If you want to legally use words like University, Bank or Attorney in your LLC’s name, be sure to fill out proper paperwork and ensure that at least one company owner has the work qualifications to use the word without being misleading. Additionally, using any name other than your legal name will require an assumed name certificate with the Secretary of State, which comes with a $25 fee.

Once you’ve decided on a name, you’ll want to claim and protect it. The office of the Texas Secretary of State offers a free account that allows you to search for other registered business names, so you can make sure your name isn’t already taken. If it isn’t, register a domain name. You can use your Texas Secretary of State account, or file by mail for a $40 fee, to reserve your name for 120 days with an Application for Reservation or Renewal of Reservation of an Entity Name (Form 501).

Even if you’re still in the planning stages for your LLC, and have no intent on getting started on your website, reserving your name and claiming a domain let you plant a flag in the best name for your company before someone else gets the same idea.

Follow Texas Naming Rules and Restrictions

Texas requires LLC names to be distinguishable from existing entities and to include “LLC,” “L.L.C.,” or “Limited Liability Company.” Certain terms—like bank, university, or attorney—are restricted and require proof of credentials or agency approval. You may reserve a name for 120 days by filing a reservation request if you are still finalizing your business plans. It is also wise to check domain availability and secure your digital branding early, especially if your LLC will operate online.

Choose a Registered Agent

In order to handle your legal matters, nominating a Registered Agent is a requirement for your Texas LLC. This person or business must be a resident or authorized to do business in the state of Texas, and will be in charge of legal documents either entering or leaving your LLC. A registered agent can be an individual owner of the LLC but not the LLC itself, and will be the recipient and sender of anything, from state filings to anything lawsuit related.

Understand Registered Agent Responsibilities

Your registered agent must maintain a physical address in Texas and be available during normal business hours to receive legal documents, service of process, and state correspondence. Although you may serve as your own registered agent, many LLC owners choose a professional service to maintain privacy and ensure availability. This role is essential, as missed legal notices can lead to default judgments or state penalties.

Create an Operating Agreement

You don’t need to have an operating agreement for your LLC in Texas, but it can provide a helpful outline of your business’ ownership and operating procedures.

Start your operating agreement with a mission statement for your business. Then, allocate responsibilities and a designated percentage stake in the LLC to each of your partners. It will be important for you and your business to make sure someone is in charge of your financial affairs, including bookkeeping and bill-pay obligations.

You should also use your operating agreement to plan protocol for when a member departs the LLC. A process for dissolving the LLC should also be put into place, because it’s never too early to think about an exit plan.

Texas Franchise Tax and Annual Filing

Texas LLCs must file a Public Information Report and comply with the Texas Franchise Tax each year, even if no tax is owed. Missing these filings can result in penalties or loss of good standing with the state.

Obtain an EIN

Most LLCs need an Employer Identification Number (EIN) from the IRS to open a bank account, hire employees, and file federal taxes. The EIN is free and can be obtained online through IRS.gov.

File Certificate of Formation

To legally form your LLC, file Form 205 with the Secretary of State and pay the filing fee. You will list your LLC name, registered agent, management structure (member-managed or manager-managed), and organizer information. Keep a stamped copy for your records.

Address Key Governance and Exit Terms

Texas does not require an operating agreement, but it is one of the most important internal documents for clarifying rights and responsibilities. A strong agreement should define ownership percentages, voting rights, financial contributions, how profits are shared, and what happens if a member leaves or passes away. It should also document who can sign contracts, how amendments are made, and how disputes are handled. These provisions reduce conflict and support smooth operations.

Frequently Asked Questions

  1. How much does it cost to start an LLC in Texas?
    You must pay the state filing fee when submitting your Certificate of Formation. Additional costs may apply for name reservation, registered agent services, or local licenses.
  2. How long does Texas LLC approval take?
    Online filings are typically processed faster, while mail filings take longer. Processing times vary based on state workload.
  3. Is an operating agreement legally required?
    No, but it is strongly recommended to prevent disputes and clarify business operations.
  4. Do Texas LLCs pay annual fees?
    LLCs must file a Public Information Report and comply with the Texas Franchise Tax each year, even if no tax is owed.
  5. Do I need an EIN for my Texas LLC?
    Yes—especially if you hire employees, open a business bank account, or have more than one member.

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