How to Start an LLC in Texas

Forming an LLC in Texas is easy, just follow these simple steps:

You will need to file the Texas Certificate of Formation to set up an LLC (limited liability company) in Texas. The Certificate of Formation is the document that officially creates your Texas LLC and it can be filed online, or by mail. The filing cost is $300.

Follow our step-by-step How to Start an LLC in Texas guide to get started today.

STEP 1. Name Your Texas LLC

Choosing a company name is the first and most important step in starting your LLC in Texas. Be sure to choose a name that complies with Texas naming requirements and is easily searchable by potential clients.

1. Follow the naming guidelines for a Texas LLC:

• Your name must include the phrase “limited liability company,” or one of its abbreviations or words: “LLC, L.L.C., Limited, Ltd., Company or Co.”
• Your name cannot include words that could confuse your LLC with a government agency (FBI, Treasury, State Department, etc.).
• Restricted words (e.g. Bank, Attorney, University) may require additional paperwork and a licensed individual, such as a doctor or lawyer, to be part of your LLC.
• For a complete list of naming rules in Texas, you can read the Texas Secretary of State's guidelines.

2. Is the name available in Texas? Make sure the name you want isn't already taken by doing a name search on the Texas Comptroller of Public Accounts website.

3. Is the URL available? We recommend that you check online to see if your business name is available as a web domain. Even if you don't plan to create a business website today, you may want to buy the URL in order to prevent others from acquiring it.

Not sure what to name your business? Check out our LLC Name Generator. After you get your business name, your next step is getting a unique logo. Get your unique logo using our Free Logo Generator.

FAQ: Naming an LLC in Texas

STEP 2. Choose a Registered Agent in Texas

You are required to appoint a Registered Agent for your Texas LLC.

What is a Registered Agent? A registered agent is an individual or business entity responsible for receiving important tax forms, legal documents, notice of lawsuits, and official government correspondence on behalf of your business. Think of your registered agent as your business' point of contact with the state.

Who can be a Registered Agent? A registered agent must be a resident of Texas or a corporation, such as a registered agent service, authorized to conduct business in the state of Texas. You may elect an individual within the company including yourself.

A Registered Agent must consent to Appointment in written or electronic form. The statement of consent should include:

1. The name of your LLC
2. An express statement that the person designated consents to serve as the LLC’s registered agent
3. The name of the person designated as registered agent
4. The signature of the registered agent
5. The date of execution

The consent statement does not have to be filed with the secretary of state. For in-depth information on this requirement, as well as a fillable consent form, view the Acceptance of Consent Form 401-A.

FAQ: Nominating a Texas Registered Agent

STEP 3. File The Texas LLC Certificate of Formation

To register your Texas LLC, you will need to file the Certificate of Formation with the Secretary of State. You can apply online, in-person, or by mail.

The Texas Certificate of Formation for an LLC (limited liability company) is a legal document to officially form your business. You’ll be expected to provide the name of the LLC, the name and address of your registered agent, the purpose of the company, the date of the effectiveness of filing, the name of the LLC’s Organizer, and the state filing fee.

When filing, you will need to state whether your LLC will be member-managed or manager-managed. We recommend learning more about member-managed vs manager-managed LLCs before you file.

After you file the Certificate of Formation, we recommend you obtain an Employer Identification Number (EIN) if you plan to hire employees and open a business bank account.

If you’re expanding your existing LLC to the State of Texas, you will need to form a Foreign LLC.

FAQ: Filing Texas LLC Documents

STEP 4. Create a Texas LLC Operating Agreement

An operating agreement isn't required for Texas LLCs, but it's a good practice to have one.

What is an operating agreement? An operating agreement is a legal document outlining the ownership and operating procedures of an LLC.

Why are operating agreements important? A comprehensive operating agreement ensures that all business owners are on the same page and reduces the risk of future conflict.

For more information on operating agreements, read our Texas LLC operating agreement guide.

FAQ: Creating a Texas LLC Operating Agreement

STEP 5. Get an EIN for your Texas LLC

What is an EIN? The Employer Identification Number (EIN), Federal Employer Identification Number (FEIN), or Federal Tax Identification Number (FTIN), is a nine-digit number issued by the Internal Revenue System (IRS); an Employer ID Number is used to identify a business entity and keep track of a business’s tax reporting. It is essentially a Social Security number (SSN) for the company.

Why do I need an EIN? An EIN number is required for the following:

• To open a business bank account for the company
• For Federal and State tax purposes
• To hire employees for the company

Where do I get an EIN? An EIN is obtained from the IRS (free of charge) by the business owner after forming the company. This can be done online or by mail.

FAQ: Getting an EIN

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Important Steps After Forming an LLC

Separate Your Personal and Business Assets

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your Texas LLC is sued. In business law, this is referred to as piercing the corporate veil.

You can start protecting your LLC in Texas with these steps:

1. Opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Need help finding your EIN for your bank application? Visit our EIN Lookup guide for help.

2. Getting a business credit card:

• Helps you separate personal and business expenses.
• Builds your company's credit history, which can be useful to raise capital (e.g., small business loans) later on.

For other important steps to protect your corporate veil, like properly signing legal documents and documenting company business, please read our corporate veil article.

Find a Business Accountant

One of the main reasons that LLC’s make great business structures is the benefits of pass-through taxation and the ability to write off business expenses. Having a business-savvy accountant to help you with your small business accounting and take advantage of these benefits can literally save you and your business thousands of dollars in taxes each year.

Along with the obvious benefit of massive tax savings, a business accountant can help you to:

• Track business expenses and reconcile your bank accounts
• Discover areas of unforeseen loss or extra profit in your business
• Run payroll for you and your employees
• Prepare and submit your quarterly tax filings
• Advise on advanced business strategies for even deeper tax savings
• Avoid costly errors and ensure your business stays on the good side of the IRS

Starting a relationship with an accountant gives you a head start when it comes to running your business and keeps your finances clean in the future.

However, if you would like to run your own accounting, read our review of the best accounting software for small business.

Get Business Insurance for Your LLC

Business insurance helps you manage risks and focus on growing your LLC. The most common types of business insurance are:

• General Liability Insurance: A broad insurance policy that protects your business from lawsuits. Most small businesses get general liability insurance.
• Professional Liability Insurance: A business insurance for professional service providers (consultants, accountants, etc.) that covers claims of malpractice and other business errors.
• Workers' Compensation Insurance: A type of insurance that provides coverage for employees’ job-related illnesses, injuries, or deaths.

Read our review of the best small business insurance companies.

Send Out a Press Release

Press Releases are among the easiest and best ways to promote your business. They are also one of the most cost-effective strategies as they:

• Provides publicity
• Establish your brand presence on the web
• Improve your website’s SEO, driving more customers to your website
• Are a one-time cost in terms of effort and money
• Have long-lasting benefits

Read our review of the best press release distribution services.

Keep Your Company Compliant

Texas Business Permits & Licenses

Do I need business licenses and permits?

To operate your LLC in Texas you must comply with federal, state, and local government regulations. For example, restaurants likely need health permits, building permits, signage permits, etc.

The details of business licenses and permits vary from state to state. Make sure you read carefully. Don't be surprised if there are short classes required as well.

Fees for business licenses and permits will vary depending on what sort of license you are seeking to obtain.

Find out how to obtain necessary Texas business licenses and permits for your LLC or have a professional service do it for you:

• Federal: Use the U.S. Small Business Administration (SBA) guide to federal business licenses and permits.
• State: Apply for or learn more about licenses, permits and registration with The State of Texas' Work Section.
• Local: Contact your local county clerk and ask about local business licenses and permits.

Texas LLC Tax Filing Requirements

Depending on the nature of your business, you may be required to register for one or more forms of state tax:

Sales Tax

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.

Sales tax, also called "Sales and Use Tax," is a tax levied by states, counties, and municipalities on business transactions involving the exchange of certain taxable goods or services.

Read our Texas sales tax guide to find out more.

Employer Taxes

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.

FAQ: Additional Taxes

Federal LLC Tax Filing Requirements

Most LLCs will need to report their income to the IRS each year using:

• Form 1065 Partnership Return (most multi-member LLCs use this form)
• Form 1040 Schedule C (most single-member LLCs use this form)

How you pay yourself as an owner will also affect your federal taxes. Visit our guide to learn more about how to pay yourself from your LLC.

Texas Annual Report & Franchise Tax

LLCs in Texas are required to file an annual report and Franchise Tax with the Texas Comptroller of Public Accounts. These can only be filed online at the Texas Comptroller website. You will need to create an online account to complete the filing process.

Avoid Automatic Dissolution

LLCs may face fines and even automatic dissolution when they miss one or more state filings. When this happens, LLC owners risk loss of limited liability protection. A quality registered agent service can help prevent this outcome by notifying you of upcoming filing deadlines, and even submitting reports on your behalf for an additional fee.

Hiring Employees

If you plan to hire employees for your Texas LLC, stay compliant with the law by following these steps:

• Verify that new employees are able to work in the US
• Report employees as "new hires" to the State
• Provide workers' compensation insurance for employees
• Withhold employee taxes
• Print compliance posters and place them in visible areas of your work space

Find more information at the Texas Workforce Commission website.

FAQ: Hiring Employees

Small Business Resources

Women in Business Tools and Resources

If you have a woman-owned business, many resources are available to help you concentrate on your business’s growth:

• Funding - (ie. grants, investors, loans)
• Events - (ie. conferences, meetups)
• Guides - (ie. business formation, personal growth)
• Support - (ie. advice, communities, business strategies)

Our information and tools will provide educational sources, allow you to connect with other women entrepreneurs, and help you manage your business with ease.

Free LLC Legal Forms

TRUiC offers a number of free LLC legal forms to help with creating documents like:

• Operating agreements
• LLC resolutions
• Hiring documents, including:
  • Employment contracts
  • Independent contractor service agreements (ICSA)
  • Non-disclosure agreements (NDA)

All you’ll need to do to download the forms is sign up for the TRUiC Business Center, which is also free, forever.

How to Make a Website

Check out our how to build a website guide to learn how creating a website isn’t as difficult as it might seem. With the right tools, a good guide, and a bit of patience, you can learn how to make a website for your business in no time.

How to Build Business Credit

Learning how to build business credit can help you get credit cards and other business funding options in your business's name (instead of yours), with better interest rates, higher lines of credit, and more.

TRUiC’s Small Business Tools

TRUiC believes business tools should be free and useful. Our tools help solve business challenges, from finding an idea for your business, to creating a business plan, writing an operating agreement for your LLC, and more.

Check out TRUiC’s small business tools:

• Business Name Generator
• Business Idea Generator
• Free Logo Maker
• Operating Agreement Tool
• Business Plan Generator
• Entrepreneurship Quiz

More Texas LLC Information

Texas Foreign LLCs

Forming a foreign LLC allows your company to operate as one entity in multiple states. If you have an existing LLC and want to do business in Texas, you will need to register as a foreign LLC. This can be done by mail or online.

How to Obtain a Certificate of Good Standing in Texas

A Certificate of Good Standing, known in Texas as a Certificate of Status, verifies that your LLC in Texas was legally formed and has been properly maintained. Several instances where you might need to get one include:

• Seeking funding from banks or other lenders
• Forming your business as a foreign LLC in another state
• Obtaining or renewing specific business licenses or permits

You can order a Texas LLC Certificate of Status online.

How to Dissolve an LLC in Texas

If at any point in the future you no longer wish to conduct business with your LLC, it is important to officially dissolve it. Failure to do so in a timely fashion can result in tax liabilities and penalties, or even legal trouble. To dissolve your Texas LLC, there are two broad steps:

• Close your business tax accounts
• File the Articles of Dissolution

When you are ready to dissolve your LLC, follow the steps in our Texas LLC Dissolution Guide.