How to Create an LLC in Texas

The process for creating an LLC in Texas is similar to the process in other states. A limited liability company (LLC) is a type of company suited to many smaller enterprises. It permits a proprietor to restrict private legal liability to the funds of the corporation. Firm owners are solely financially accountable for their investment in the LLC. Forming an LLC also offers some flexibility in how the company runs.

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

How to Start an LLC in Texas

Applicants need to first make sure that they meet all the mandatory requirements. 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 certificate of registration should include pertinent data like:

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

Don't forget to include fee 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 done 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 Registered 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 be the registered agent
  • The registered agent’s name and signature
  • The date of the agreement

There's an additional processing 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 Texas 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 total charges.

Timeline

All forms and paperwork submitted for processing are normally reviewed from three to five business 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.

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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