This is the first and most important step in starting your LLC. Do some research to make sure the name you choose is suited to your business venture and is easily searchable by potential clients.
- Follow the naming guidelines: Your entity name must contain the words Limited Liability Company or the abbreviation L.L.C. or LLC. Restricted words (e.g. Bank, Attorney, University) require additional paperwork and may require a licensed individual, such as a doctor or lawyer, to be part of the LLC. Prohibited words are those that would confuse the name of your LLC with a federal or state agency (e.g. FBI, Secret Service, Treasury etc.)
- Is the name available in Texas? Make sure the name isn't already taken by registering for a free account with Texas Secretary of State and doing a name search. Making an account on the Texas SOS website will also grant you access to File any business forms online and make any payments to the State.
- Is the URL available? Check to see if the name of your LLC is available so that you can reserve your domain name. Even if you don't plan to make a website today, you may want to buy the domain name in order to prevent others from acquiring it.
An email address is also something to consider when choosing a name. Get a professional email system (@yourcompany.com) with Google's G Suite, which also comes with business tools for word processing and spreadsheets, all with business-grade security - Try it for free
You are required to nominate a Registered Agent for your Texas LLC. This can be done online, by mail, or in-person.
What is a Registered Agent? A registered agent is a person or business that agrees to send and receive legal papers on behalf of your LLC. Such papers include service of process of legal action (if you are sued) and state filings.
Who can be a Texas Registered Agent? A Registered Agent must be a resident of Texas or a Company authorized to transact business in Texas. You may also elect an individual in the company including yourself, but an LLC cannot be its own Registered Agent.
A Registered Agent must consent to Appointment in written on electronic form. The Language to be used in the consent is found in the Acceptance of Consent form 401-A. The consent does not have to filed with the secretary of state.
Click here to learn more about the role of a registered agent, and why you may wish to consider hiring a professional registered agent service.
* Recommended: INCFILE.COM provides free registered agent service for the first year as part of their LLC Packages.
To register your LLC, you will need to file the Certificate of Formation with the State of Texas.
When filing the Certificate of Formation in Texas you will need to decide if your LLC will be member managed or manager managed. Read our article on the topic to learn more.
File the Certificate of Formation for a Domestic LLC
- or -
Fee: Nonrefundable $300, payable to the Secretary of State.
Follow the instructions on the form you choose.
Important: If you're expanding your existing LLC to the State of Texas you are forming a Foreign LLC. Learn how.
An operating agreement is not required in Texas, 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 your LLC. Learn more about operating agreements here.
* Recommended: Check out our free sample operating agreement
What is an EIN? The Employer Identification Number (EIN), or Federal Tax Identification Number, is used to identify a business entity. It is essentially a social security number for the company.
Why do I need an EIN? An EIN is required when filing state and federal taxes. In addition, banks may require an EIN to open a business checking account.
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 by one of two ways:
Click here to learn more about EINs and further details on how to register for one with the IRS.
Considering Using an LLC Formation Service?
We reviewed and ranked the top 5 LLC formation services.
Find out which is best for you.
Opening a business bank account is an important first step, as it:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
Getting a business credit card allows you to:
- Separate personal and business expenses.
- Build your company's credit history, which can be useful to raise money for your company later.
* Recommended: Compare business credit card offers at CreditCards.com.
Do I need to register for State taxes?
- If you have Employees, you are required to register for Texas Unemployment Insurance Tax.
- Register for Texas Unemployment Insurance Tax through the Texas Workforce Commission.
- If you are selling taxable goods or services in Texas, you will need to register for Texas sales tax by applying for a Texas sales tax permit.
- Register for a Texas Sales Tax Permit through the Texas Comptroller of Public Accounts
- If your business falls within a specific industry, additional state taxes may apply.
- In addition, all Businesses in Texas need to pay a Franchise Tax.
*Recommended: Learn more about LLC taxes by reading TRUiC's LLC Tax Guide.
Even if you haven't officially opened for business - it's critical to get your books in order. A well managed accounting system will help you:
- Track your business finances, including bills, expenses and income.
- Simplify your annual tax filings.
The right software makes accounting easy. Look for software that:
- Syncs with your bank automatically.
- Matches transactions to invoices, bills and purchase orders.
- Can be accessed from your phone.
*Recommended: QuickBooks has all the accounting features your small business will need.
Try QuickBooks FREE.
Do I need business licenses and permits?
To operate your LLC 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 licenses and permits for your business or have a professional service do it for you:
- Federal: Use the U.S. Small Business Administration (SBA) guide to federal businesslicenses and permits.
- State: Apply for or renew licenses and permits at Texas.gov's Work Section.
- Local: Contact your local Chamber of Commerce and ask about local licenses and permits.
What is Workers Compensation Insurance? This form of insurance is required for most businesses with employees, but varies by state. Click here to learn more.
What is General Liability Insurance? This is an important service, but is not required in most states. Click here to learn why.
How much will the right insurance cost you? Click here to find out.
When you decide to hire employees, you must follow these legal requirements:
- 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
- Pay employees at least minimum wage and as often as your state requires (weekly, bi-weekly, etc.)
Obtain more employer information at Texas Workforce Commission.
Recommended: A payroll service saves you time and makes it easier to follow these requirements.
How to Start a Business in Texas
5 easy steps to starting a business in Texas.
We have a far more detailed guide - How to Start a Business which will go over the points in more details.
Identify a suitable business idea that works for you - Check out our Business Ideas Tool.
Critically analyze your idea with our Lean Business Model Canvas Tool. You can then go on to create a full business plan with our Free Online Business Plan Tool.
Formally organize your Business into a company. An LLC is the most popular way to structure your business. Learn how to Form your LLC in Texas.
Complete important key steps after formation such as acquiring business licenses & permits, registering for state taxes, and opening a business bank account.
Build your website and develop your brand.
To maintain a Texas LLC, it is necessary to make periodic filings with the State of Texas. Learn how to keep your LLC in good standing and avoid state penalties.
Texas requires LLCs to file an annual report called the Franchise Tax Public Information Report (along with the appropriate franchise tax payment, if applicable) with the Comptroller of Public Accounts.
File the Annual Franchise Tax in Texas
- or -
Tax Calculation: LLCs with annualized revenue below $1,110,000 do not pay any tax, but must file a “no tax due report.” LLCs with annualized revenue greater than $1,100,000 pay a graduated tax that is calculated based on a complex formula.
Due Date: Due by May 15 each year. Reports do not need to be filed in the same year that an LLC is formed. If your LLC was formed in March 2016, then your first report is due on May 15, 2017.
Late Filings: Texas charges a $50 penalty for failure to file on time (whether or not you have tax due). Additionally, a late tax payment is subject to a 5% penalty fee, which increases to 10% if you pay after 30 days.
The IRS treats all multi-member LLCs as partnerships, unless they choose to be taxed as a C-Corp or S-Corp. Therefore, most multi-member LLCs are required to report their income to the IRS using a Form 1065 Partnership Return.
Each year, thousands of LLCs are fined or unknowingly dissolved for missing an important state filing, such as an annual report. When this happens, LLC owners risk loss of limited liability protection. A registered agent service can help prevent this outcome by notifying you of upcoming filing deadlines and submitting reports on your behalf.
* Recommended: INCFILE.COM offers a reliable registered agent service.
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A Certificate of Good Standing verifies that your LLC 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
To order a Certificate of Good Standing in Texas, simply place your order online through the Texas Secretary of State Website.
If 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 LLC, there are two broad steps:
- Close your business tax accounts
- File the Articles of Dissolution
If you have an existing LLC and want to register to do business in Texas, you will need to form a foreign LLC.
File a Foreign LLC in the State of Texas
Fee: $750 - Follow the instructions on the PDF
Benefits of Forming a Foreign LLC
The major benefit of becoming a foreign corporation is that it allows your company
to operate as one entity in many jurisdictions. For example, if you originally incorporate
your LLC in the State of Delaware, you can file your existing domestic LLC as a foreign corporation
in other states.
State of Texas Quick Links
- Secretary of State Corporations Section
- Texas QuickStart for Businesses
- Official Texas Wide Open for Business
- SBA's Small Business Resource for Dallas / Ft. Worth Dallas / Ft. Worth
- SBA's Small Business Resource for El Paso
- SBA's Small Business Resource for Harlingen / Corpus Christi
- SBA's Small Business Resource for Houston
- SBA's Small Business Resource for Lubbock
- SBA's Small Business Resource for San Antonio