Form a LLC in Texas
Everything you need to know about forming a LLC in Texas. Filing fees, requirements, timeline, and step-by-step guidance.
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How to File
Choose a Business Name
Select a unique name that includes 'Limited Liability Company,' 'LLC,' or 'L.L.C.' and is distinguishable from existing Texas entities. Search the Texas SOS name availability database to confirm your desired name is not already in use.
30-60 minutes
Designate a Registered Agent
Appoint a registered agent with a physical street address in Texas (P.O. boxes are not permitted) who is available during normal business hours to accept legal documents on behalf of the LLC. The agent can be an individual Texas resident or a business entity authorized to do business in Texas.
15-30 minutes
File Certificate of Formation
Complete and file Form 205 (Certificate of Formation for a Limited Liability Company) with the Texas Secretary of State online via SOSDirect, by mail, or in person. The filing fee is $300 and you must include the LLC name, registered agent information, management structure, and organizer details.
30-45 minutes
Create an Operating Agreement
Although not legally required by Texas law, drafting an operating agreement is strongly recommended to define member roles, ownership percentages, profit distribution, and management procedures. This internal document helps prevent disputes and reinforces limited liability protections.
1-3 hours
What's Next After Filing
Once your LLC is officially formed, you'll want to complete these important steps:
- •Obtain an EIN from the IRS — Apply for a Federal Employer Identification Number (EIN) from the IRS online at no cost, even if you have no employees, as it is required to open a business bank account, hire employees, and file federal and state taxes. Single-member LLCs may use their SSN but an EIN is still recommended.
- •Register for Texas State Taxes — Register with the Texas Comptroller of Public Accounts for applicable state taxes, including sales and use tax if you sell taxable goods or services, and for the Texas Franchise Tax which applies to most LLCs with revenues above the no-tax-due threshold. Registration is done through the Texas Comptroller's online portal.
- •Obtain Business Licenses and Open a Bank Account — Research and obtain any required federal, state, or local business licenses or permits specific to your industry and municipality, then open a dedicated business bank account to maintain separation between personal and business finances. Texas does not have a general state business license, but many industries require specific permits.
Advantages
- ✓No state income tax in Texas, meaning LLC profits passed through to members are not subject to a state-level personal income tax, significantly reducing the overall tax burden.
- ✓Flexible management structure allows members to choose between member-managed or manager-managed operations without rigid formality requirements.
- ✓Strong personal liability protection shields members' personal assets from business debts, lawsuits, and obligations.
- ✓No annual report fee and a high franchise tax no-tax-due threshold ($2.47 million) means many small LLCs have minimal ongoing state compliance costs.
- ✓Single-member LLCs are permitted, making it an accessible structure for solo entrepreneurs seeking liability protection.
Considerations
- •The $300 Certificate of Formation filing fee is higher than many other states, increasing the upfront cost of formation.
- •Texas Franchise Tax applies to LLCs exceeding the no-tax-due threshold, and the tax calculation can be complex, often requiring professional accounting assistance.
- •Self-employment taxes still apply at the federal level to member earnings, and Texas LLCs do not benefit from an S-Corp election at the state level to reduce self-employment tax without additional federal filings.
Annual Obligations
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