Texas LLC Filing Requirements: Everything You Need to Know
Texas LLC filing requirements are simple and affordable. Texas has specific rules regarding LLC filings to which business owners must adhere.3 min read
2. Forming an LLC in Texas
3. Costs of Forming an LLC in Texas
Texas LLC filing requirements are simple and affordable. As with any other state, Texas has specific rules regarding LLC filings to which business owners must adhere.
Choosing a Business Structure
Starting a business is an important decision not to be taken lightly. You should consider all your options and consult with an accountant and attorney, reviewing issues related to liability, taxes, continuity, management, operation, and transferability of ownership. When you're ready, you must file the required forms with the Texas Secretary of State and pay the appropriate fees.
In general, you will consider the following business structures when starting your enterprise:
- Sole Proprietorship
- The simplest business form with no formal organization
- Only one individual owns the business and engages in its activities
- The owner may elect to operate under an assumed name, or doing business as name
- General Partnership
- A business structure created when two or more individuals carry out business activities
- Operates under a partnership agreement
- No state-filing requirement or official written agreement required
- S Corporation
- A federal tax status obtained through the Internal Revenue Service
- Businesses such as LLCs can elect S-corp status to take advantage of certain tax benefits
- Limited Liability Company
- A business structure created by filing a certificate of formation
- A distinct entity unlike a corporation or partnership, but one that has characteristics of each
- The business is managed by the owners or hired managers
- The management structure is established in the LLCs certificate of formation
LLCs are one of the most popular types of businesses to form. Owners are referred to as members, and a member can be an individual, trust, corporation, partnership, or other legal entity. Each member's liability is limited to how much money they've invested in the company. They enjoy pass-through taxation advantages and avoid being held liable for company debts or legal judgments.
Because of federal tax classifications, an LLC has both favorable tax treatment and structural flexibility that's attractive to many entrepreneurs. Even so, business owners thinking about starting an LLC should consult their accountant and legal counsel before filing the required documents.
Forming an LLC in Texas
You must follow some essential steps when establishing an LLC in the state of Texas:
- File Form 205, Certificate of Formation, with the Texas Secretary of State's office
- Fill out all pertinent information on the form, including the LLCs name and address, the registered agent's contact information, a description regarding the management structure, each owner's contact information, and the purpose of the LLC
- Form 205 requires a filing fee made payable to the Texas Secretary of State
- You can pay all required fees online, in person, or via mail using a personal check, credit or debit card, or money order
- Credit card payments are subjected to a 2.7 percent convenience fee
- Filed documents are generally processed within three to five business days
- If you're in a hurry, choose the expedited processing service option and pay the additional fees
- Naming Requirements
- LLCs have strict naming requirements, and you must do your research before choosing your business name
- A new LLC name must be different from any other business name on record
- The name must be approved by state agencies and avoid any restricted words
- Check your LLCs name availability by calling or emailing the Texas Secretary of State's office
An LLC with more than one member should create an operating agreement. This agreement details each member's rights and responsibilities in the company. Also, when choosing a registered agent, the individual or company you choose must live in Texas and sign Form 401-A, which is an acceptance of consent.
Costs of Forming an LLC in Texas
The main cost associated with forming an LLC in Texas is the certificate of formation (Form 205) fee, which is $300. Expedited processing is an additional $25.
Filing the registered agent's consent form, known as Form 401-A, is $15 for a for-profit business and $5 for a nonprofit. Form 501, the name reservation, is $40.
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