Checklist for Starting an LLC in Texas
Starting a limited liability company (LLC) in Texas is easy. To make it even easier, we’ve created a Texas LLC formation checklist.
A limited liability company offers the benefits of limited liability protection and tax options for small businesses. This makes creating an LLC one of the most popular business structures for Texas small businesses and startups.
This Checklist for Starting an LLC in Texas covers the necessary steps you need to take when you create your LLC.
Recommended: Start your LLC with Northwest for $29 (plus state fees).
Texas LLC Formation Checklist
Our Texas LLC startup checklist will help you get your business off the ground quickly. These are the first steps you will need to take when starting your LLC:
- Name your LLC
- Appoint a registered agent
- Submit a Certificate of Formation
- Create an operating agreement
- Get an EIN
Name Your LLC
Once you’ve decided to start a new business, choosing a name is the first step.
There are several things to keep in mind when naming your business:
Legal Requirements
Your name must be unique and it will need to meet Texas naming requirements, which include:
- The LLC name must include the phrase “limited liability company” or “limited company” or one of its abbreviations (LLC, L.L.C., LC, or L.C.).
- Your name cannot include words that could confuse your LLC with a government agency (e.g., FBI, Treasury, State Department, etc.).
- Your name must be distinguishable from any existing business in the state. This includes Texas reserved names.
You can complete a Texas LLC name search to learn if your business name is unique and distinguishable.
Domain Name
If your business name is available as a web domain, that’s a big plus. However, there are often creative alternatives if the domain isn't available.
Marketing
You want your name to be easy to market. This can mean different things for different businesses.
Learn more in our How to Name a Business in Texas guide.
Having trouble coming up with a business name? Try our free business name generator tool.
Choose a Registered Agent
Texas requires LLCs to have a registered agent. A registered agent is an individual or business entity that accepts tax and legal documents on behalf of your business.
You have to elect your registered agent when you complete your LLC’s Certificate of Formation, which is the main LLC formation document in Texas.
A member of the LLC or other individual in the company can be the LLC’s registered agent as long as they meet the following requirements:
- Is 18 years or older
- Has a physical address in the state where the business is formed
- Is available (in person) during normal business hours
However, it is usually a good idea to hire a registered agent service. There are a few advantages to hiring a registered agent service:
- Compliance with the law
- Peace of mind
- Flexibility
- Privacy
Check out our Best Registered Agent Services guide for help picking the best registered agent for your LLC.
Get Free Registered Agent Services
Form an LLC with Northwest Registered Agent to get one year of registered agent services free of charge.
File Formation Documents
To register your Texas LLC, you'll need to file Form 205 - Certificate of Formation with the Texas Secretary of State. You can apply online, by mail, or in person.
In this document, you’ll list some of the basic information about the company. This includes its address, registered agent, whether it is member-managed or manager-managed, and its owners.
The Texas Certificate of Formation filing fee is $300.
Our Texas Certificate of Formation guide will help walk you through the process step by step.
If you want professional help, these Best LLC Services can file the Certificate of Formation for you.
Draft an LLC Operating Agreement
An operating agreement, known in Texas as a company agreement, is a legal document that outlines the ownership and member duties of your limited liability company.
While an operating agreement isn't legally required in Texas, we recommend having one for a few reasons.
First, an operating agreement can help prevent or resolve disputes between LLC owners. And even if your business is a single-member LLC, an operating agreement can bring the company credibility and ensure courts uphold its limited liability status.
Operating agreements usually have at least six main sections:
- Organization
- Management and Voting
- Capital Contributions
- Distributions
- Membership Changes
- Dissolution
For more information, check out our Texas LLC Operating Agreement guide.
Get an EIN
An Employer Identification Number (EIN) is like a Social Security number (SSN) for your LLC. It is sometimes called a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN).
Most banks will require an EIN open your business bank account. You will also need an EIN if any of the following apply to your business:
- Your LLC has employees
- Your LLC is a multi-member LLC
- Your LLC files excise taxes
- Your LLC withholds taxes for nonwage income paid to a nonresident alien
But even if you own a single-member LLC with no employees, getting an EIN is a good idea. Most banks require that your LLC have one to open a business bank account. Check out our 7 Benefits of Getting an EIN article to better understand why your LLC should have one.
Need Help Starting Your LLC?
Check out our Best LLC Services review.
After Forming a Texas LLC
After forming an LLC, there are some important things you should do that will help ensure that you comply with any relevant local, state, and federal regulations, keep your liability protection intact, maintain accurate financial records, and attract customers to your business.
Register for Taxes
If you are selling a physical product, you’ll typically need to register for a seller's permit through the Texas Comptroller of Public Accounts. This certificate allows a business to collect sales tax on taxable sales.
If you have employees in Texas, you will have to register for Unemployment Insurance Tax through the Texas Workforce Commission on behalf of your employees.
You can learn more about LLC taxes with our guide.
Get an Accountant
Many small business owners think they can do their own accounting and are looking to avoid paying for a professional service. However, hiring an accountant can save you money, stress, and potentially legal troubles in the long run.
If you want to keep track of your LLC’s finances yourself, check out our guide to the best accounting software.
Find out how much you could be saving today by scheduling a consultation with a business accountant.
Research and Apply for Business Licenses
Getting the right LLC business licenses and permits is one of the most important things to do after forming an LLC.
The main state-level permit or license in Texas is the sales tax permit, also known as a seller’s permit.
Additionally, businesses in certain professions or industries may need other specific licenses or permits. The Texas Business Permits Office has a Business Permits and Licenses Guide that provides a comprehensive list of state licenses and permits.
The Texas Department of Licensing and Regulation website also provides information about some statewide professional business licenses.
In Texas, you may or may not need other licenses or permits from your local government depending on your location and business activity. Check with your local city or county government office for more information.
Open a Business Bank Account
Opening a business bank account is an essential part of maintaining your LLC’s corporate veil and its limited liability protection. You’ll need to keep your personal financial accounts separate from the LLC’s accounts and never make business purchases with your personal bank account or credit card.
Recommended: Check out our review of the best banks for small business and our article about small business credit cards for more details.
Get Insurance
Every LLC should have some type (or types) of business insurance.
At a minimum, your LLC should have general liability insurance, which is a broad insurance policy that protects your business from lawsuits. Other insurance policies an LLC may need depend on the type of business, if you have employees or not, and other factors.
Before you decide on which business insurance to get for your LLC, check out our review of the 7 Best Small Business Insurance Companies.
Establish a Web Presence
All businesses should have an internet presence. This includes having:
- A website
- Social media accounts
- A YouTube channel
If you don’t feel comfortable making your own website, there are a lot of tools and website builders that can help you create your own business website.
Publish a Press Release
One easy and inexpensive way to promote your new business is by issuing a press release. A press release is an official statement by a business that is given to the press for public knowledge. Press releases are typically short and to the point.
Read our review of the best press release distribution services to help you get the word out about your new LLC.
Learn more about running your LLC with our After Forming Your LLC article.
How to Form an LLC
Forming an LLC is easy. There are two options for forming your LLC. You can hire a service for a small fee or use our free Form an LLC guides.
Recommended: Use our free Form an LLC in Texas guide to form an LLC yourself.
Texas LLC Checklist FAQ
The Certificate of Formation must be filed to form an LLC in Texas. The filing fee is $300.
Setting up an LLC in Texas is easy. Our How to Start an LLC in Texas step-by-step guide can help you through the process.
Getting an LLC in Texas only takes a day if filing online or expediting a mail-delivered registration. Non-expedited filings typically take five to seven business days.
The cost of maintaining an LLC in Texas varies. Texas LLCs with annualized revenue greater than $1.13 million pay a graduated franchise tax that is calculated based on a complex formula. LLCs with annualized revenue below that amount do not have to pay the tax.
LLCs can be structured as either a single-member LLC (one owner) or a multi-member LLC (more than one owner). They can also be either member-managed or manager-managed.
An S corp could potentially be better than an LLC if the company meets certain conditions. Check out our LLC vs. S corp guide for more information.
Owners of an LLC get paid in a couple different ways: either a distribution that passes through to your individual tax return or a reasonable salary and distribution if the LLC elects to be taxed as an S corporation (S corp).
You generally don’t need to hire a lawyer to form an LLC. You can start an LLC using our How to Form an LLC guides or hire an LLC formation service to help you.
Yes, you need a separate business bank account for your LLC. This will prevent the company’s corporate veil from being pierced and maintain the LLC’s personal liability protection.
Check out our Best Banks for Small Business guide to help choose the best bank for your LLC.
Texas is a good state to form an LLC in if your business is based in Texas. If a business is located in a different state, it should form an LLC in that state.
Related Articles
Article Sources
Texas Secretary of State - Texas Business Organizations Code:
https://www.sos.state.tx.us/corp/boc.shtml
Texas Comptroller of Public Accounts:
https://comptroller.texas.gov/
Texas Secretary of State - SOSDirect:
https://www.sos.state.tx.us/corp/sosda/index.shtml
IRS - Limited Liability Company (LLC):
https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc
SBA - Choose a Business Structure:
https://www.sba.gov/business-guide/launch-your-business/choose-business-structure