How to Form an LLC in Texas in 7 Steps
Creating a limited liability company (LLC) in the state of Texas requires several steps including naming the LLC, appointing a registered agent, filing a certificate of formation, applying for a federal EIN, and setting up business and tax accounts.
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While there are several options for business structures, the limited liability company (LLC) is a popular choice for new businesses. An LLC is like a hybrid of a corporation and a sole proprietorship and has most of the benefits each of those business types has to offer. The steps to start an LLC depend on state law, but all states require that you file paperwork with the appropriate government agency.
7 Steps to Form a Texas LLC
Name Your LLC
You’ll need to come up with a name for your LLC that both attracts potential customers to your business and complies with the state laws of Texas. Start with a brainstorming session and create a list of several business names you like. You’ll want to have a list of several potential names because a name or two on your list might not be available.
Under Tex. Bus Org Code §5.053, the name you choose for your LLC must be distinguishable from the other names already registered or reserved with the state. This means your LLC name can’t be the same as or similar to a business name that’s already on record. You’ll need to do a name search to check for name availability.
Also, note that under Tex. Bus Org Code §5.056, your Texas LLC name must include one of the following phrases or an abbreviation: “limited liability company” or “limited company”. Don’t use any restricted words (such as “bank” or “attorney”) unless you have the required licenses or approvals. Don’t use any words or phrases that would lead the public to confuse your organization with a governmental agency.
Get a Registered Agent
Texas LLCs must have a registered agent to accept legal documents on behalf of the company if it’s sued (Tex. Bus Org Code §5.201). Your Texas registered agent could be a person who’s a resident of the state of Texas or a business entity that’s authorized to do business in the state of Texas. Although an officer, owner, or employee may serve as an entity’s registered agent, an entity may not serve as its own registered agent.
Either way, you’ll need to ensure that your appointed registered agent can handle service of process during regular business hours and has a physical street address. P.O. Boxes aren’t acceptable as registered agent addresses. Many business owners use a professional service as their registered agent to ensure receipt of service of process.
File Your Certificate of Formation
While other states require articles of organization, Texas uses a certificate of formation. Filing your LLC certificate of formation with the Texas Secretary of State is crucial because it creates the LLC. Once you’re ready to file, you can decide if you’d like to file online or by mail. The filing fee for a Texas certificate of formation is $300. Under Tex. Bus Org Code §3.005 you must include the following in your filing:
- LLC name
- Registered agent name and address
- Whether the LLC is member-managed or manager-managed
- Effective date
- Organizer(s) name and address
- Purpose of your organization
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Draft an Operating Agreement
An LLC operating agreement is an essential internal document that outlines how your LLC will be governed. Without an operating agreement, Texas state laws could apply in the event of a dispute or conflict within the organization.
LLC operating agreements tend to cover ownership, rights and responsibilities of the members, voting powers, dissolution, admission of new members, and liabilities. You should have an operating agreement that addresses these topics, even though you don’t have to file it with the state.
Get an EIN
An EIN (Employer Identification Number) or Tax ID number is a number assigned to business entities by the IRS (Internal Revenue Service). It’s like a Social Security Number but for your business. You’ll likely need this number to open a business bank account or hire your employees. Get one for free online at the IRS website.
Set Up Business and Tax Accounts
LLC owners need to keep their business and personal funds separate. If you don’t keep your business funds separate from your personal funds, you could lose your personal liability protection. For this reason, you need to get a business bank account and a business credit card or debit card as soon as possible. It’ll also make tax preparation and accounting easier. You may also be required to set up state tax accounts for your LLC with the Texas Comptroller of Public Accounts.
Check for Additional Federal or State Requirements
Check state and federal websites to determine if there are any specific rules for your business. For example, some LLCs may have to file a Beneficial Ownership Information Report (BOIR) with FinCEN. Under current law, LLCs created in the United States are “domestic reporting companies” and are exempt from the BOIR requirement.
However, laws may change, so stay up to date with state and federal requirements.
Business and Tax Requirements in Texas
Business owners in Texas register, report, file, and pay taxes through the Texas Comptroller of Public Accounts. You can set up an electronic account on their website to make managing your business taxes more convenient.
State Business Tax
Your LLC may have to pay the state’s franchise tax for the privilege of doing business in Texas. Newly registered LLCs should complete the franchise tax accountability questionnaire to set up a franchise tax account and establish your tax responsibility beginning date.
State Employer Tax
Texas does not have a state income tax. If your LLC has employees who work in Texas, you don’t have to withhold state income tax on their wages but still need to deduct federal income tax for those employees.
Sales and Use Tax
If your LLC engages in retail sales, leases and rentals of goods, or certain services, it will likely be subject to the 6.25% state sales and use tax. Cities, counties, and some districts can also impose a local 2% sales and use tax.
Business Licenses and Permits
Texas does not have a general business license requirement. Your LLC’s certificate of formation received upon approval from the Texas Secretary of State is sufficient. If you sell or lease tangible personal property, you must apply for a Texas sales tax permit. Your LLC may need to obtain specific permits to operate depending on its location and business activities. The Texas Business Permit Office provides a guide containing information on permits required for specific business enterprises.
Registration in Other States
If you want to do business in another state, you will likely have to apply to do business as a foreign LLC. You may need to show a certificate of good standing as part of the application process. This can be obtained from the Texas Secretary of State.
Annual Requirements in Texas
Texas LLCs are not required to file an annual report, however they must file an annual franchise report with the Texas Comptroller of Public Accounts. They also must file a Public Information Report.
Texas LLC Formation FAQs
The fee for filing the certificate of formation to register and form your LLC in Texas is $300.
The cost of maintaining your LLC can vary. Each year you must file an annual franchise tax report with the Texas Office of Comptroller and the fee is calculated according to a taxable margin. For 2026 and 2027, if your income is less than $2,650,000, there is no tax due. Even though you may not owe tax, your LLC must file a No Tax Due report. Your LLC may be subject to additional license or permit fees as well.
There are a few different types of LLCs you can create in Texas.
- Single-member LLC: If you form an LLC with only one owner, it’s a single-member LLC. The sole owner has total control of the business.
- Multi-member LLC: If you have two or more business owners (members), it’s considered a multi-member LLC. Members share control over business activities.
- Professional LLC: Texas also has a Professional Limited Liability Company (PLLC) as an option. This is an LLC formed by professionals such as attorneys, physicians, dentists, or veterinarians. It is formed by filing a certificate of formation.
A certificate of formation is your initial LLC’s formation document or charter. You may need a copy of your certificate of formation to open a business bank account or apply for a business license. If you need a certified copy, you can request it from the Texas Secretary of State. The fee is $1 per page plus $15 per certificate.
A certificate of good standing verifies that your LLC has complied with state laws and tax and reporting obligations. In Texas, this is called a certificate of fact (including a certificate of existence or certificate of account status). If you register as a foreign LLC or apply for a bank loan or line of credit, you may need to show a recent certificate of good standing. You can request a certificate of fact from the Texas Secretary of State. The fee is $15.
To form your Texas LLC, you need to file a certificate of formation with the Secretary of State and pay the state fees of $300. You will need to designate a registered agent to accept service for the company. You will be responsible for annual franchise tax as well as other state and federal taxes.
You are not required to file an operating agreement, however creating one is a very important step in your business planning as it allows you to decide how profits will be shared, how members may be bought out, and how the business will run on a daily basis.
LLCs offer limited liability. This is an essential feature for many entrepreneurs because liability protection allows you to keep your personal assets (such as houses or cars) safe in the event of a lawsuit against your company.
While corporations also offer liability protection, you’ll need to consider the issue of double taxation if you decide to form a corporation. On the other hand, limited liability companies offer flexibility in terms of taxation. You can opt to pass the income through to your personal federal tax return or you can elect to be taxed as a corporation.
You need to ensure your LLC is current on its tax filings and fees with the Texas Comptroller of Public Accounts. You should make sure your LLC’s registered agent information is kept up to date with the Texas Secretary of State and make any required fee payments.
Each year you must file your annual franchise tax report and public information report. The fees will be calculated and must be paid to continue operating your business. You should renew any permits or business licenses your LLC is required to maintain to stay in business.
No. A certificate of formation is the initial LLC formation document. The certificate of formation is a public record filed with the Texas Secretary of State. An operating agreement is not a public record but an internal business agreement that defines your business operations and does not need to be filed with the state.
Yes. If you would like to use a DBA (doing business as) for your LLC, you must register the name with the state. File an Assumed Name Certificate with the Secretary of State and pay a $25 filing fee.
A general business license is not required in Texas. However, many industries and businesses do require licenses and permits to operate in the state. Check the Texas Business Licenses and Permits guide to find out what’s required. You should also contact the city or county government where your LLC is located to apply for local permits or licenses.
You can start your LLC online by filing a certificate of formation through the SOS Direct site. You should gather all the information you’ll need before starting the process. You can also use an LLC formation service company to handle LLC formation in Texas on your behalf.
The mailing address for the Texas Secretary of State is:
Secretary of State
PO Box 13697
Austin, Texas 78711-3697
The physical address is:
1019 Brazos Street
Austin, Texas 78701
Business days are Monday through Friday from 8 a.m. to 5 p.m.
You can choose to name yourself, another LLC member, or LLC employee as your registered agent. You also have the option of hiring a professional registered agent service to handle this for you. The value of a professional registered agent can outweigh the cost because of the benefits they offer including:
- Provides a Texas address if owners are located in outside states
- Service for business disputes at the registered office address prevents your customers from knowing about potential business issues
- Keep your LLC in good standing by ensuring receipt of notices and deadlines
- Service of process during regular business hours when you may be unavailable
If your LLC is formed in Texas, it is a domestic LLC.
To register your existing business as an LLC in another state, you must apply to register as a foreign LLC in that state. You do this with the Secretary of State or other government agency office that oversees business formations in the new state. You will likely have to:
- Confirm your LLC’s good standing in Texas
- Request a certificate of fact from Texas to include in your application
- Search the new state’s business records to ensure your LLC name is available
- File an application as a foreign business entity in the new state
- Pay the foreign LLC registration filing fee
A foreign LLC is an LLC that was formed in another state and transacts business in Texas. You are required to register your foreign LLC with the Secretary of State using an Application for Registration of a Foreign Limited Liability Company and pay a $750 fee.
To dissolve an LLC in Texas you will file a Certificate of Termination with the Secretary of State and pay a $40 fee.
An anonymous LLC does not list the personal information of owners in the certificate of formation. Texas is not one of the few states (Delaware, Nevada, New Mexico, and Wyoming) that allow the formation of anonymous LLCs at this time.
Disclaimer: The information presented here does not constitute legal advice or representation. It is general and educational in nature, may not reflect all recent legal developments, and may not apply to your unique facts and circumstances. Consider consulting with a qualified business attorney if you have legal questions.
How to Start an LLC in Other U.S. States
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- Texas
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