How to Create an LLC in Texas: Everything You Need to Know

A limited liability company (LLC) is a type of company effectively suited to many smaller enterprises. It permits a proprietor to restrict private legal responsibility within the funds of the corporation. Firm owners are solely financially accountable for their funding within the enterprise in LLC. Forming an LLC additionally offers some flexibility in how the company runs.

In Texas, LLCs are fashioned simply and inexpensively. Federal and state regulation present many tax benefits to LLCs. For instance, the LLC itself doesn't pay taxes; the enterprise’s web earnings are given to the proprietors who report it on their private earnings selections.

How to Start an LLC in Texas

Applicants need to first make sure that they meet all the mandatory requirments. Then, they will need to complete and submit the relevant forms and fees directly to the Secretary of State.

Individuals looking to start a Limited Liability Company in Texas will need to file a Certificate of Formation (Type 205).

Registration Requirements

The Certificates of registration should include pertinent data as follows:

  • Business name and contact information
  • The resident agent’s name and contact information
  • Type and structure of management
  • The organizer’s name and contact information
  • Business goal and purpose
  • Duration and end date, if relevant

Don't forget to incorporate the submitting payment. You could register in the following ways:

  • Online
  • By mail
  • By fax

Decide On Your Business’s Name

A business name could also be reserved by submitting a Form 501. Submission of the Form 501 requires a nonrefundable fee and can be executed online or via mail. Your agent or lawyer must sign the form after adding the desired business name, entity designation, and contact information.

Assign a Resident Agent

You will also want to submit a Form 401-A to assign a registered agent to your business. The 401-A should include the following:

  • Title of the LLC
  • Announcement and consent from the person agreeing to to be the registered agent
  • The registered agent’s name and signature
  • The date of the agreement

There's an additional process fee that should accompany your 401-A form.

Have the IRS Provide an Employer Identification Number (EIN)

If your LLC has more than one member, you will need to acquire an EIN. The IRS will issue the EIN and it is used for tax purposes.

Develop an Operating Agreement Between Members

When filing for a tax license from Texas, you’ll need an operating agreement that outlines the business arrangement between all parties associated with the Limited Liability Company. This document isn’t required to obtain the LLC but is necessary to receive a tax license.

Understand the Legal Obligations of a Limited Liability Company

Texas has what is known as a franchise tax for LLCs that operate within the state. Within your first year, you’ll be required to submit a franchise report to the Texast Comptroller. You must then submit one every subsequent year that your LLC is active. This must be completed before May 15. This is just one of the many ongoing obligations that Texas LLCs have and it’s important that you understand your obligations moving forward.  

Texas LLC and Fees

The processing payment for the Certificates of Formation (Type 205) is nonrefundable.

Forms and Fees

All LLCs are required to submit a completed Certificate of Formation, Type 205, with the Texas Secretary of State, together with the submission payment. Payment can also be made using the following methods:

  • Private check
  • Cash order
  • LegalEase debit card
  • Bank card (American Express, Discover, MasterCard, or Visa)

All bank card funds are subject to a convenience fee of 2.7 percent of the entire charges.

Timeline

All forms and paperwork submitted for processing and submitting are normally performed from three to five enterprise days upon receipt of the paperwork. Expedited processing companies can be found for a further per-document or form payment and should be accompanied by a written request for expedited processing companies.

Naming Requirements

You can have your title checked for availability by calling the Secretary of State at (512) 463-5555 and dialing 7-1-1, or by emailing your queries to corpinfo@sos.state.tx.us.

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