State of Texas LLC: Everything You Need to Know
To form a state of Texas LLC, you'll have to follow specific steps.3 min read
To form a state of Texas LLC, follow these steps:
- Choose a business name.
- Designate a registered agent.
- File a certificate of formation with the state.
- Create an operating agreement.
- Obtain an Employer ID Number and all necessary licenses and permits.
How to Form an LLC in Texas: Choosing a Name and Registered Agent
Limited liability companies (LLCs) combine features of partnerships and corporations. LLCs are pass-through entities. They offer their owners limited liability protection and flexibility in operating procedures.
You'll go through the Secretary of State office to set up your LLC.
The first step you'll take is choosing an appropriate business name. Do some research and select a name that fits your business and attracts potential customers. Adhere to the naming guidelines, ending your business name with a designator such as LLC, L.L.C., or Limited Liability Company.
Some words will be restricted, such as “attorney” or “bank.” You may need a licensed professional, such as a lawyer or doctor, to be part of your LLC in order to use certain restricted words. Other words are prohibited — such as Secret Service or FBI — because they can confuse people into associating your business with a state or federal agency.
Your business name has to be distinguishable from existing business names in the state. You can check the Secretary of State website to see if the business name you wish to use is available.
You must name someone as your registered agent, sometimes referred to as an agent for service of process, statutory agent, or resident agent. This is an individual or company that agrees to accept and send legal paperwork on your LLC's behalf. Documents may include state filings and service of process. Your registered agent must have a physical street address in Texas.
The person or company acting as your registered agent must give written or electronic consent to fill this role.
Documents, EINs, and Licenses
To create an LLC in Texas, you'll file a certificate of formation with the state. The document must include the following:
- The name and address of your business
- The name and address of your registered agent
- Each organizer's name and address
- How the LLC will be managed, i.e. by members or managers
- Document drafter name
To state the purpose for your LLC, it's fine to say you're forming it for "any lawful purpose." You may also choose "perpetual" for its duration. You can file your certificate with the state by mail or online.
An operating agreement outlines your business's ownership and operating procedures. Texas doesn't require you to have this legal document, but it's still a good idea to have one for your own records.
You'll need an EIN, or Employer Identification Number, also called a Federal Tax ID Number. Your LLC's EIN will be a nine-digit number that identifies your unique business. You'll need to use your EIN when you file taxes with the state and federal government. You'll also use it to open business bank accounts, as many banks require businesses to use EINs instead of an owner's Social Security Number.
After you start your LLC, you can obtain your EIN from the IRS. It's free to do so. To obtain an EIN, you can apply online at the IRS website. You can also print out an application and mail it in.
You might need to obtain certain city, county, and/or state permits and licenses to do business. This will depend on the type of business you operate and your location. You may also need to register with the Department of Revenue, depending on whether you sell goods, collect sales tax, or have employees. You can usually register for permits and licenses online or by mail.
LLCs are considered the easiest business type to start because it's generally inexpensive and quick to set them up. Many people are able to form their own LLCs without legal help. They enjoy the liability protection and flexible management that LLCs offer.
You can find resources and tips at the state website if you're thinking of starting an LLC. You can also call the state office if you have additional questions.
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