How to Start an LLC in Texas
Looking to start an LLC in Texas? You’re on the right page. Read on and learn how to from an LLC in Texas in 3 simple steps. Checkout our recommendations for the top Texas LLC filing services.
Start an LLC in Texas in 4 simple steps
- Choose a unique name for your business
- Select your Texas Registered Agent
- File A Certificate of Formation with the Texas Secretary of State
An LLC or ‘limited liability company’ is a U.S. business structure that provides the owners with a level of legal protection by not making them personally liable for the company’s legal responsibilities or debts.
Starting an LLC is one of the simplest and safest ways to shape your business while protecting your assets, should your business be sued. That said, filing one without prior experience can be a challenging and time-consuming process. Any mistakes you make can cause significant delays.
That’s where a reputable business formation service like ZenBusiness comes in. For just $49, you can file your LLC in less than 10 minutes and they will take care of all the paperwork and help you avoid mistakes.
We’ll return to ZenBusiness later in this article – first, let’s understand just how a business owner obtains LLC protection. Each US state has its own set of guidelines for starting an LLC, however as this article focuses on California, here is the step-by-step guide to forming your California LLC.
Step 1: Choose a unique name for your Texas LLC
Choosing a name for your Texas LLC is not as easy as it looks. First, you will need an original and one-of-a-kind name that is not currently being used by any other business in Texas. If you already have a business name in mind, make sure that it is yours for the taking. You can check your tentative LLC name by visiting the Texas Secretary of State website.
The search results should show ‘No Matching Entries Found,’ which tells you that you can proceed with your chosen LLC name. From here, you need to be aware of some of the name rules of the Texas LLCs. You can check out more information here.
Here is a quick summary of the main guidelines:
- Your LLC business name should not contain the following words: ‘Agency,’ ‘Board,’ ‘Bureau,’ ‘Commission,’ ‘Department,’ or ‘Municipal.’
- Your chosen name should include ‘Limited Liability Company’ or at least an abbreviation of the entire phrase like ‘LLC,’ ‘L.L.C.,’ ‘Limited,’ ‘Ltd.,’ ‘Company,’ or ‘Co.’
- The name should not be confused with a government organization, so words and phrases like ‘State Department,’ ‘Treasury,’ and ‘FBI,’ among others, cannot be used.
Additionally, aside from checking the name availability, you have to check if your intended URL is also available. You may not have plans of having a website for your business now, but it would be recommended – as early as now – to check if the web domain is available.
If you’re proactive, you can prevent other businesses from snagging a URL that you may want to use in the future.
Step 2: Select your Texas Registered Agent
All Texas LLCs must have a ‘Registered Agent.’ This person is responsible for receiving official government documents, tax correspondence, and legal notices. Part of the responsibility is also filing the needed reports with the Texas Secretary of State. They are your LCC’s point-of-contact with the Texas government, in short.
This position can be yourself, another manager in your LLC, or a professional Registered Agent service. You can check out our Registered Agent guide to better understand why we highly recommend that you appoint a professional Registered Agent service. (See our recommended services below)
In Texas, your Registered Agent must file an Acceptance of Appointment and Consent to Serve as Registered Agent form.
Should you pay for the services and expertise of a Registered Agent service, it is essential that they have a physical address in Texas and should always be available to receive documents on behalf of your organization during standard business hours.
Fortunately, we’ve got not one, but two industry-leading recommendations for you:
BEST FOR: Register your LLC company
As the name suggests, there’s no need to ruin your Zen under the weight of legal jargon – ZenBusiness is one of the most reliable Registered Agent services in Texas, with thousands of positive reviews and high ratings.
With ZenBusiness you can register your business in less then 10 minutes. You can also use their Registered Agent service for $149 and take advantage of their worry free service so you can focus on growing your business.
Additionally, ZenBusiness provides you with a virtual dashboard, so you have 100% visibility of the forms and documents of your company. You can go through them, download them, and even print them to have a personal copy for any business or legal reasons.
Read our full ZenBusiness review
BEST FOR: Professional registered agent service
Northwest Registered Agent is a well-established Registered Agent service with two decades of experience. They allow you to add a registered agent in multiple states (If your business requires it) and can cover all of your Texas LLC registration needs.
Northwest Registered Agent gives you an online portal to easily access your uploaded documents and state forms. You can check anytime from anywhere while ensuring that all your information is secure.
Read our full Northwest Registered Agent review
Step 3: File A Certificate of Formation with the Texas Secretary of State
Once all the information for your LLC Texas is complete, you can start filing the ‘Articles of Organization,’ known in Texas as ‘Certificate of Formation’. You need to file the form with the Texas Secretary of State. After this step has been completed, your business will be officially created.
Filing your Certificate of Formation can be accomplished in several ways:
On the SOS website.
2. By mail
Secretary of State
P.O. Box 13697
Austin, TX 78711-3697
You’ll be charged a $300 fee for filing and starting an LLC. You only need to file this document once but you are required to file and pay the Texas Franchise Tax every year (if applicable).
Additional services and requirements
Procure an Employer Identification Number (EIN) from the IRS
The essential information you need when you file and pay your taxes or when you submit your LLC’s payroll information is your Employer Identification Number (EIN). The EIN is also termed the Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN).
The EIN is also needed when planning to open a business bank account for your organization and when you want to hire employees.
You can directly apply for your EIN in the following ways:
You can directly apply for your EIN from the Internal Revenue System website.
Downloaded this form and send it to:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
The good news about getting an EIN is that it is for free. Once you have your EIN, your LLC is officially formed.
Create a Texas LLC Operating Agreement
We recommend that you create an Operating Agreement as soon as you register your LLC in Texas. It is the instruction manual that contains all relevant details of how you will run your business, how decisions are to be taken, etc. However, it is not legally required.
Settle Your TX LLC Tax Obligations
Every LLC in Texas has a tax obligation that must be fulfilled. It is recommended that you set aside 30 cents per dollar of your income for taxes. LLCs in Texas are liable to pay a state franchise tax to the Texas Comptroller of Public Accounts (CPA).
My LLC in Texas is registered – What’s next
Congratulations on your LLC! Don’t forget that the process and legwork don’t stop here. After successfully forming your LLC, post guidelines can make your business organized, seamless, and less complicated.
Set the line between personal and business resources
It’s recommended that you separate your personal assets from your LLC. Assets such as your house, car, and other personal properties should not mix with your LLC’s assets. This way, if your Texas LLC gets sued, you can have peace of mind knowing that your valuables are safe and will not be dragged into the picture.
Open your business bank account
It will be easy and tempting to ‘borrow’ or refinance your LLC using your account when your LLC needs some financial uplift, but don’t. Just like your personal resources, your savings and money meant for personal use should be kept private. If you need funds to jump-start your business, you can always consider a business loan.
Secure a business credit card
This follows the same logic of keeping your personal properties from your business valuables. A business credit card will also help build your LLC’s credit history, which can help you in the future should you want to apply for a business loan. Make sure that you are making your payments on time!
Onboard a business accountant
A business accountant can oversee and ensure that your organization is not overpaying in taxes while at the same time making sure that you don’t have any penalties and other expensive tax errors. Having one also removes the responsibility of bookkeeping and payroll off your shoulders. You can focus on the other angles of growing your business.
Consider getting business insurance
Regardless of how small your company is at the moment, growth and expansion are part of the long-term goal. Getting business insurance can help you feel secure from any possible risks. It can assist you in managing potential lawsuits or even malpractice and other business-triggered errors.
As a responsible and pro-employee organization, you’d also want to consider workers’ compensation insurance to provide coverage for your employees should there be any work-related injuries, sicknesses, or even death that may happen.
Frequently asked questions
What’s the Texas LLC state fee cost to register a new business?
Texas LLC State fee: $300
What’s the annual LLC report fee in Texas?
Most states refer to this fee as an Annual Report Fee but some states might have different names for this fee including:
- Annual List of Members
- Annual Certificate
- Biennial Report
- Annual Registration Fee
- Biennial Statement
- Periodic Report
- Decennial Report
- Business Privilege Tax Return
- Franchise Tax Report
No Tax Due Report and Public Information Report must be filed every year in Texas.
Is a Trade Name mandatory for my business?
In Texas, most LLCs don’t need a ‘Doing Business As’ (DBA) or a trading name. The name you set for your LLC is your brand name, and you can accept payment under that name. It is recommended that you have a DBA when you have plans to do business under a different name.
How long is the processing time for my Certificate of Formation?
If you filed it online and through the mail, the ideal turnaround time is 5-7 business days. This can be expedited to 1 business day, though, if you are willing to pay more. You may get it within the same day by adding $25 per document.
I already have an EIN from my sole proprietorship business. Do I need to get a new one for my LLC?
Yes, the Internal Revenue System mandates that sole proprietorships secure a new EIN when converting their business type to an LLC.