Introduction: How to Start an LLC in Texas
Thinking about forming an LLC in the Lone Star State? Texas is one of the most business-friendly states in the U.S., making it a great place to start your company. In this guide, we’ll walk you through how to start an LLC in Texas, including paperwork, costs, and legal steps.
Step 1: Choose a Name for Your Texas LLC
Your business name must:
- Be unique and not already in use in Texas.
- Include the phrase “Limited Liability Company” or “LLC”.
- Avoid restricted words like “Bank” or “University” without proper permissions.
Use the Texas SOS name search tool to check availability.
Step 2: Appoint a Registered Agent
Texas law requires every LLC to have a Registered Agent—an individual or company with a physical address in Texas to receive legal documents.
You can:
- Appoint yourself
- Hire a professional registered agent service
Step 3: File a Certificate of Formation
You must file Form 205 – Certificate of Formation with the Texas Secretary of State.
- File online via SOSDirect
- Filing fee: $300 (non-refundable)
- Processing time: 3–10 business days
Step 4: Create an Operating Agreement
Although not required by Texas law, an Operating Agreement is highly recommended. It outlines:
- Ownership structure
- Voting rights
- Profit and loss distribution
- Rules for business operations
This protects your LLC and helps prevent internal disputes.
Step 5: Get an EIN from the IRS
An EIN (Employer Identification Number) is like a Social Security number for your LLC. It’s required for:
- Opening a business bank account
- Hiring employees
- Filing federal taxes
Apply for free on the IRS website.
Step 6: File for Any Necessary Business Licenses
Depending on your industry and location, you may need:
- Local business licenses (city or county)
- Sales tax permit from the Texas Comptroller
- Professional or occupational licenses
Check with the Texas Department of Licensing and Regulation (TDLR) for industry-specific requirements.
Step 7: Stay Compliant with Ongoing Requirements
To keep your Texas LLC in good standing:
- File a Public Information Report (PIR) annually with the Texas Comptroller
- Pay your franchise tax
- Update your registered agent and address if they change
Why Start an LLC in Texas?
- No state income tax
- Business-friendly environment
- Strong legal protections
- Affordable formation fees (compared to some states)
Conclusion: Ready to Start Your Texas LLC?
Now that you know how to start an LLC in Texas, you’re one step closer to building your business. By following these steps carefully, you can protect your personal assets and enjoy the flexibility and benefits that come with forming an LLC.
