How to Start an LLC in Texas

When you launch a Texas business, it is important to form an LLC. Many new business owners feel intimidated by paperwork, filing requirements, compliance obligations, and other legalities.

It’s easy to start an LLC in Texas when you use an online service. This guide will show you how.

State Seal of Texas

It’s worth starting an LLC in Texas

Texas LLCs offer business owners protection they would not otherwise have as a sole proprietor, general partner or partnership. The owner’s personal assets, such as their financial assets, are not at risk if the company is sued or goes bankrupt.

Texas LLCs offer owners flexibility in taxation. Texas LLCs are subject by default to pass-through taxes. This means that the profits and losses of the LLC are passed on to each member’s tax returns and taxed at their individual tax rates. However, LLCs can choose to be taxed either as a C-corporation or S corporation. This gives members greater control over how profits are distributed and how taxes are paid.

An LLC is legal and gives your company credibility. It’s easier than forming a sole proprietorship or general partnership. Customers and other businesses often find LLCs more credible than single-person operations.

The ease of forming an LLC in Texas is another reason it’s worth the effort. Contrary to popular belief the process is quick, painless, and easy.

How Much Does it Cost to Start an LLC?

Texas charges a $300 filing fee to process your Certificate of Formation. This is the official document that you will submit to the Texas Secretary of State. An EIN (employer identification number) is also required. This can be obtained free of charge from the IRS.

You can also use an online service for assistance. Although you will have to pay an additional fee for the convenience, it is well worth it to have professionals file your taxes on your behalf. Northwest Registered Agent provides business formation packages starting from $225 $39, plus the state filing fees. Our readers get the Northwest discount price through our links. Northwest is ranked #1 on our list of the best Texas registered agents and they rank at the top of our list for the best LLC services.

It takes between two and twenty business days to set up an LLC in Texas. This depends on whether you are interested in expedited filing or not. A Texas registered agent will be appointed, and this cost is approximately $300 per year. Northwest Registered Agent includes this service in their $225 $39 business formation package.

You will need to pay for other startup costs, in addition to the filing requirements. They will vary depending on the type of business and industry. Examples include rent, electricity, or phone services, as well as office furniture, vehicles, and supplies. You should also consider labor costs if you plan to hire employees.

7 Steps to Start an LLC In Texas

It is easy to start an LLC in Texas if you follow these seven steps.

Step #1 – Name Your Texas LLC

The first step of this process is to come up with a name. Names are important because they represent your company’s brand and also appear on your official filing documents.

You might have an idea for a name, which is great. You still need to confirm that the name is available and that it meets the requirements of a Texas LLC.

Texas LLCs must contain the words “limited liability corporation” or “limited company”, or abbreviations such as L.L.C., L.C., LLC, and LC.

Except for forming a particular type of business, certain words cannot be used in LLC names in Texas. Bank trust, trust, law, and medicine, veteran, war, are just a few examples. Texas allows foreign words to be used in LLC names. However, these words must be distinguished from Texas LLCs. They cannot be translated to determine the availability of an entity name.

You should ensure that your name conforms to the Texas guidelines. You want your name to have a domain name and social media handles. You might want to consider a different name if someone already owns a website that is registered under your business name.

Northwest Registered Agent offers a complete name search service that will help you find the perfect name. Northwest Registered Agent offers an entity reservation service if you already have a name in mind.

Northwest Registered Agent also offers DBA name assistance. This allows you to register your LLC name with Texas, but still operate the company as an assumed name.

You might name your company “Jon Jones Trucking Services LLC.” However, you can get a DBA name such as “Jon’s Garage” and open a bank account. This will make it easier for customers and employees to write checks to you.

Step #2 – Appoint Texas Registered Agent

Texas LLCs must appoint registered agents. This agent must be an individual, or organization with a Texas physical address.

The registered agent is responsible for accepting, receiving, and forwarding any service of process, summons, or government correspondence that the LLC has requested.

Technically, you can register yourself as the registered agent of your LLC. This is not recommended. You would need to be available for all business hours at the physical address. It could also be embarrassing to receive a court order in front of customers or employees.

Northwest Registered Agent provides registered agent services in Texas for $125 per year and LegalZoom offers registered agents in Texas starting from $299. per year.

Northwest Registered Agent is a registered agent that helps you keep your business compliant and allows you to scale up. Northwest Registered Agent provides registered agent services in all 50 US states. This means that even if your company expands outside Texas, you can still use the same registered agent to register in other states. If you are using a local registered agency that has only one office in Texas, this would not be possible.

This service can be easily added to your LLC formation package during checkout.

Step #3 – Get your Certificate of Formation

The state of Texas requires that the Certificate of Formation be filed in order to create an LLC. It requests information such as:

  • Type and name of the entity
  • Information about registered agents
  • The governing authority
  • LLC purpose
  • Mailing address
  • Filings are effective
  • Time

You can submit the form online, by post, or by courier. A $300 filing fee is required upon submission.

You can use a business formation service such as Northwest Registered Agent to complete and file the Certificate Of Formation.

Northwest Registered Agent is easy to use. All you have to do is answer a few questions about your company. Northwest Registered Agent offers expedited filing which allows you to file your documents in as little as two to five days. Standard filing can take up to 20 days.

After the Texas Secretary of state approves the document, they will issue an official certificate to your business. This certificate will confirm the existence of your LLC and allow you to open bank accounts, apply at licenses, or obtain an employer identification number.

Step #4 – Apply for an Employer Identification Number.

EIN stands for Employer Identification Number. An EIN is required by any company that employs workers. It’s also common for vendors, clients, or banks to request an EIN before they work with you.

An EIN cannot be obtained directly from Texas. These numbers are issued by the IRS and are federal numbers.

Submit an online request from the IRS to receive a free EIN. You can also pay a small fee to add this to your LLC creation package through Northwest Registered Agent.

Northwest Registered Agent is a standalone service that allows you to get an EIN starting at $39.

Step #5 – Make an Operating Agreement

Technically, an operating agreement is not required to form an LLC. You can legally form an LLC in Texas without one. The Secretary of State’s Office doesn’t require you to file one.

However, it is in your best interests to make one during the formation process. This is especially true when you form a multi-member LLC that has different owners and business partners.

The operating agreement outlines how the LLC will be managed internally. It describes the rights and responsibilities of all members and describes how the LLC will operate.

If there are any disagreements between members, this legally binding document is essential. To see how situations will be handled, you can always refer to the operating agreement.

What happens if a member leaves the company or dies? Is it possible to sell the stake without asking? Is their family allowed to inherit the stake and manage it?

The operating agreement also describes how profits and losses are shared, who will manage the LLC, and how new members will join.

These are only a few of examples that would be included in an operating agreement.

This service includes a review by legal professionals to ensure that the document is complete and accurate.

Step #6 – Get Licenses and Permits

Each person will have a different experience with this step. Depending on the type of your business, or industry, you will need certain licenses or business permits in order to legally operate in Texas. You might need additional permits in certain cases.

The Complete Coverage service includes assistance in obtaining Texas business licenses.

Some examples include:

  • General business license
  • Permits for building and zoning
  • Sales tax permit
  • Professional license
  • Certificate of occupancy
  • Resale permit
  • Health permits

Each permit type has its own fees, renewals, and compliance requirements. It is a good idea to seek professional assistance during this process.

You could lose something, which could put your newly-formed LLC at risk of being shut down or fined.

Step #7 – Prepare your Annual Franchise Tax Report

To remain compliant, many states require LLCs to file annual reports. Texas is not one such state.

You will need to file an annual franchise tax report. The report and all fees are due by May 15. The report must be submitted by the next business day if May 15 falls on a holiday or weekend.

Each year, the tax rates, thresholds, and deduction limits change. The Texas Comptroller’s website has the following table:

Northwest Registered Agent is another reason to use their services for business registration and agent. They can also help with compliance reminders or annual reports.

This will ensure that you don’t forget these deadlines so that you can avoid late fees, fines, and other penalties.

Next steps

It’s time for you to make the leap and start your LLC in Texas. Northwest Registered Agent is our top choice, but for more options, you can check out our list of best business formation services.

Steve Andrew is EntityFiling's main writer and editor.

Steve is an expert in business development and management with 14 years of business consulting experience. He assisted clients with LLCs and Registered Agent services using his business management degree.

Steve speaks and writes about business growth opportunities worldwide.