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Limited liability companies (LLCs) are business structures that offer a combination of flexibility, legal protections and tax advantages. Texas LLCs are formed in a few steps — you’ll need to choose a name, find a registered agent located in Texas, obtain any relevant business permits and file a certificate of formation with the Texas Secretary of State.
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How to start an LLC in Texas
Step 1: Choose a name for your LLC
The first step is choosing a business name. Under Texas law, an LLC must have a name that’s sufficiently distinct from existing business names in the state. An exception would be granted if another business gives you express written consent to use a similar name. You can check name availability online at Texas’s Secretary of State’s website.
Names for Texas LLCs can’t imply a business purpose that’s different from what’s indicated in the business’s certificate of formation. Texas also requires special approval to include words tied to education (e.g. “college” or “school”), banking (e.g. “bank and trust” or “trust company”) and veterans. Additionally, LLC names must end with "limited liability company" or "limited company.” Abbreviations of those terms, such as L.L.C., LLC, L.C. or LC, are also appropriate.
You can reserve a business name for up to 120 days by filing the appropriate application and fee online, by mail, by fax or by personal delivery.
Keep in mind that reserving a name with the secretary of state doesn’t guarantee that the name complies with trademark laws. If you have concerns about choosing a legal name for your business, it’s best to consult a business attorney.
If you’re doing business under a trade name that’s different from your LLC’s legal name, then you’ll also need to file an Assumed Name Certificate, also known as a fictitious business name.
» MORE: How to start a business in Texas
Step 2: Choose a registered agent in Texas
Every LLC that’s authorized to do business in Texas must have a registered agent, including out-of-state business that will be operating in Texas.
A registered agent is an individual or company that accepts legal and official documents on your business’s behalf. An individual Texas resident or an organization that is authorized to do business in Texas can act as your registered agent.
If you choose an individual, they should be:
18 years or older.
A Texas resident with a physical address in Texas (no P.O. boxes).
Available to accept documents during normal business hours.
Registered agents in Texas must provide consent to serve in that capacity through a specific consent form.
Although a business entity cannot serve as its own registered agent, you or another member of the LLC can serve as registered agent. A business can also contract with an online legal service, like Bizee or ZenBusiness, which will act as your registered agent in exchange for a fee.
Step 3: Obtain Texas business permits
General business licenses are not required in the state of Texas — rather, the certificate of formation you get when registering with the state serves as the license. Depending on your business’s industry, however, you might need additional permits from one of many Texas state, city and county regulatory agencies. Required licenses are listed by industry on the Texas Business Permit Office’s website.
Any business in Texas that sells or leases taxable goods or services or those that procure taxable goods or services from out-of-state merchants must apply for a sales tax permit from the Texas Comptroller.
Step 4: File a certificate of formation
The next step to form your LLC is to file a certificate of formation with the secretary of state. This document is equivalent to what other states call the articles of organization. You can file the form online at the Secretary of State’s website for faster processing, mail the form, send it by fax or hand deliver it to the Secretary of State’s Austin office.
The following will be included on your Texas certificate of formation:
LLC name.
Registered agent’s name and address.
Whether the LLC is member-managed or manager-managed.
Name and address of each LLC member if the LLC is member-managed.
Name, address and signature of the organizer who is filling out the form (this usually is, but need not be, a member or manager of the LLC).
Date that you’d like the LLC registration to be effective.
Once you submit your certificate of formation, the secretary of state will review and file it, and send you back a stamped copy of the document. This typically takes three to four business days.
Maintaining good standing for your Texas LLC
Once you’ve completed the steps to register your LLC in Texas, there are a few things you should keep in mind to maintain good standing throughout the life of your business.
Draft an LLC operating agreement
In Texas, it’s not required by law for an LLC to have an operating agreement; however, it’s prudent for all LLCs to keep one.
The LLC operating agreement should contain the following types of information:
The products or services offered by the LLC.
Each member’s name and address (and the manager’s, if there is one).
Each member’s financial contributions to the business.
Each member’s ownership interest in the company and division of profits and losses.
Procedure for admitting new members.
Procedure for electing a manager if the LLC is manager-managed.
Meeting schedule.
Procedures for voting on important company matters.
Dissolution procedures.
You won’t file your operating agreement with the state. You should store it along with other important business documents.
Pay taxes and file information report
Regardless of how an LLC elects to be taxed, all LLCs that operate in Texas, and make over $2.47 million in 2024 or 2025 must pay a franchise tax. LLCs that don’t meet that threshold must file a No Tax Due Report.
In addition to the taxes or No Tax Due Report, LLCs must also fill out a public information report (PIR) by May 15 (or the next business day) of each year. Depending on your business, you may also be subject to employer taxes and sales and use taxes.
Follow federal requirements
In addition to Texas state requirements for LLCs, you’ll also need to comply with federal requirements.
LLCs with employees or those that are taxed as corporations at the federal level must apply for an employer identification number (EIN). An EIN is like a Social Security number for your business, and is used to identify your business when you file federal taxes.
Although there’s no Texas state income tax, LLC members should be prepared to pay 15.3% in federal self-employment taxes to cover Social Security and Medicare obligations. If you have employees, you also have to withhold federal Social Security and Medicare taxes from your employees’ wages and pay the employer share of these taxes.
Costs of starting an LLC in Texas
The costs of starting an LLC in Texas vary based on your specific business and needs. Initial costs for a domestic LLC can range from $315 for basic filing costs to over $800 depending on any amendments, name reservations or registered agent services.
$300 for a Certificate of Formation.
$750 for a Certificate of Formation for a foreign entity.
$15 for the Consent of Registered Agent to Appointment.
$40 for a name reservation.
$25 for an Assumed Name Certificate.
$150 for a Certificate of Amendment.
$15 for a Change of Registered Agent.
$15 for a Change of Registered Office by a Registered Agent.
Who can form an LLC in Texas?
In Texas, almost anyone with a valid business purpose can form an LLC. To start a domestic Texas LLC, your principal business office must be located in the state. If you are based outside of Texas and want to start operating in the state, you must register as a foreign entity.
Certain regulated professions, such as doctors and veterinarians, have to form a professional entity, such as a professional limited liability company or a professional corporation. The Texas Secretary of State has published a guide of permissible entity types, broken down by profession.
» MORE: LLC vs. corporation: Which is best for your business?
A version of this article was first published on Fundera, a subsidiary of NerdWallet.
