1. LLCs in Texas: an Overview
2. Essential Requirements for Forming an LLC in Texas: 1. Registration
3. Essential Requirements for Forming an LLC in Texas: 2. Forms and fees
4. Essential Requirements for Forming an LLC in Texas: 3. Timeline
5. Essential Requirements for Forming an LLC in Texas: 4. Naming requirements
6. Essential Requirements for Forming an LLC in Texas: 5. Formation requirements
7. Starting an LLC in Texas: STEP 1: NAME YOUR LLC
8. Starting an LLC in Texas: STEP 2: CHOOSE A REGISTERED AGENT
9. Starting an LLC in Texas: STEP 3: FILE THE CERTIFICATE OF FORMATION
10. Starting an LLC in Texas: STEP 4: CREATE AN OPERATING AGREEMENT
11. Starting an LLC in Texas: STEP 5: OBTAIN AN EIN

An LLC state of Texas business offers the limited liability of a corporation combined with the management methods of a partnership. This structure is sometimes referred to as a "hybrid" business model.

LLCs in Texas: an Overview

Texas is a popular state in which to incorporate and form an LLC. It also has the second largest population and a robust business community. Many Fortune 500 companies are headquartered in Texas. The LLC business structure provides owners with:

  • Limited liability
  • Pass-through taxation
  • Flexible operating procedures

Essential Requirements for Forming an LLC in Texas: 1. Registration

A Certificate of Formation must be filed with the Texas Secretary of State (SOS) in order to establish an LLC in Texas. A Certificate of Formation must include: 

  • The address and name of the LLC
  • The address and name of the resident address
  • An explanation of the management type
  • The address and name of the organizers
  • The purpose
  • The date of dissolution

Essential Requirements for Forming an LLC in Texas: 2. Forms and fees

According to the Texas SOS, it is mandatory to file Form 205, the Certificate of Formation. Accepted forms of payment include:

  • Credit card
  • Money order
  • Debit card
  • Personal check
  • LegalEase

Essential Requirements for Forming an LLC in Texas: 3. Timeline

It may take up to five business days to process and file the necessary paperwork. Faster processing is available for a fee.

Essential Requirements for Forming an LLC in Texas: 4. Naming requirements

The LLC name must be distinguishable from other businesses in the area. Users can register their LLC on the Texas SOS website in order to: 

  • Perform a free search to determine if the preferred name for their LLC is available
  • File forms
  • Make Payments

The name of the LLC will need to be authorized by certain Texas government departments and will need to include specific content in order to meet the guidelines setup by the Texas SOS. Requesting to use words such as bank, attorney, or university in the name of the LLC may require additional paperwork. Any words that may confuse the name of the LLC with a government agency are prohibited.

Essential Requirements for Forming an LLC in Texas: 5. Formation requirements

Creating a limited liability operating agreement is strongly advised for LLCs with more than one member.

Starting an LLC in Texas: STEP 1: NAME YOUR LLC

The most important step in forming an LLC is to appropriately name it. Taking time up-front to make sure a name is well-suited for your business and is easily searchable online will pay dividends in the long-run.

Business names must end in "Limited Liability Company" or some variant of its abbreviation. It will also need to go through an approval process by the necessary governmental agencies. 

The filing of Form 501 will need to include:

  • The requested entity name
  • The name and address for whom the reservation is made
  • The entity type
  • The signature of the applicant's agent or lawyer

Starting an LLC in Texas: STEP 2: CHOOSE A REGISTERED AGENT

All Texas LLCs must nominate a registered agent who is responsible for sending and receiving legal papers on behalf of the LLC. These papers may include state filings and services of process of legal actions. In order to consent, the registered agent should submit Form 401-A with the LLC. This form does not have to filed with the Texas SOS.

Starting an LLC in Texas: STEP 3: FILE THE CERTIFICATE OF FORMATION

A Certificate of Formation will need to be filed with the Texas SOS in order to register as an LLC. The Certificate of Formation includes such things as:

  • The LLC name and registered address
  • Name and address of its registered agent
  • Consent form of the registered agent
  • The purpose for which the LLC was formed

Starting an LLC in Texas: STEP 4: CREATE AN OPERATING AGREEMENT

Any LLC with more than one member should have an operating agreement. An operating agreement is a legal document that specifies the operating procedures and ownership of the LLC. It's not required to complete one in Texas, but it's considered best practice to have one.

Starting an LLC in Texas: STEP 5: OBTAIN AN EIN

After forming a company, it's important to contact the IRS in order to receive an Employer Identification Number (EIN), or Federal Tax Identification Number. An EIN is required to complete state and federal income tax returns. It also may be needed to open up a business bank account.

If you need help organizing an LLC in Texas, you can post your job on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.