Texas LLC Cost: Everything You Need to Know
Your Texas LLC cost is an affordable way to establish a new business.3 min read
2. Tips for Choosing a Texas LLC Name
3. How to Assign Your LLCs Registered Agent
4. How to Comply With Tax Requirements
Your Texas LLC cost is an affordable way to establish a new business. Limited liability companies mix the liability protections corporations enjoy with the simplicity of partnerships, giving you the best of both worlds.
How to Start an LLC in Texas
Like any other state, Texas has specific requirements for starting an LLC. For starters, you must register with the Texas Secretary of State by meeting all business naming requirements, filing the proper documents, and paying the required fees.
Starting your LLC is as simple as following these steps:
- Choose Your Business Name
- LLC names must be distinguishable from any other business in Texas
- The name must be approved by state agencies
- The name cannot contain prohibited words or phrases
- Check your name availability by contacting the Texas Secretary of State
- File a Certificate of Formation (Form 205)
- Form 205 includes information related to your business's name and address, registered agent, purpose, management structure, organizer information, and the LLCs formation date
- You can register your LLC by filing Form 205 online, via mail or by fax
- Be sure to include the filing fee
- Payments can be made using a credit or debit card, personal check, or money order (all credit card transactions are subject to a 2.7 percent convenience fee)
- Wait for the documents to process
- In Texas documents are typically processed within three to five business days from the day they are received
- Expedited processing is available for an additional per-document fee
- Create an operating agreement, this step is optional
- You do not need to file your LLCs operating agreement with the state, but it's strongly advised to create one to outline each member's rights and responsibilities
After you have filed your Certificate of Formation, paid the $300 filing fee, and waited a couple of days, the Secretary of State's office will email you a zip file confirming that your business has been established. You can then obtain an employer identification number from the IRS and open a business bank account.
If you plan to sell taxable services or goods, you must also visit the Texas Comptroller's office to obtain a Texas Sales Tax Permit.
Tips for Choosing a Texas LLC Name
By law, your LLC name must include the phrase Limited Liability Company, or one of its abbreviations:
- Limited Company
You can check to see if your preferred name is available by navigating to the Texas Secretary of State's website and perusing the database.
When you've decided on a name, you can reserve it for 120 days by filing Form 501, the Application for Reservation or Renewal of Reservation of an Entity Name. This step isn't required, but it helps ensure your name is still available when you file your documents. Reserving an LLC name in Texas costs $40.
How to Assign Your LLCs Registered Agent
A registered agent is a Texas resident or business authorized to accept legal documents on your LLCs behalf. Your LLC must have a registered agent who can accept paperwork in the event your company is sued. Your LLC may not act as its own registered agent, and your registered agent must have a Texas address.
Once you've decided who your registered agent will be, have them sign Form 401-A, a document which provides proof of the registered agent's consent. This form must include:
- The registered agent's statement of consent
- The registered agent's signature
- The date the agreement was made
How to Comply With Tax Requirements
There are additional tax and regulatory requirements that apply to your business. For starters, you must obtain an EIN if your LLC has more than one member, even if you don't plan to hire employees. There is no filing fee to get an EIN from the IRS.
Depending on the nature of your LLC and its location, you may also need to obtain business licenses. Visit the Texas Department of Licensing and Regulation to learn more about specific requirements in your community.
Unlike some states, Texas imposes an annual franchise tax on most of its LLCs. Because of this requirement, you must register with the Texas Comptroller of Public Accounts. You can do so online, by mail, or in person at your local Comptroller's field office.
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