Registering an LLC in Texas is easy, once you know what you are doing. Check out our six-step guide on how to register an LLC in Texas. We will walk you through the process step-by-step and cover everything you need to know.
HOW TO OBTAIN AN LLC IN TEXAS
Are you a company owner and planning on forming an LLC in Texas? Well, you’re in the right place. Forming an LLC in Texas is a straightforward process involving six simple steps. See below for how to get your LLC registered with the state authorities.
SIX STEPS TO FORM AN LLC IN TEXAS
1: Choose a Name
2: Appoint a Registered Agent
3: File a Certificate of Formation
4: Create an Operating Agreement
5: Get Your EIN (Tax Number)
6: Submit Annual Franchise Tax Report
1: CHOOSE A COMPANY NAME
The first step to forming an LLC in Texas is to choose a company name. And, there are some requirements you will have to abide by – your company name must be unique, cannot be easily confused with an existing company, and must include an LLC identifier.
You can check name availability on the Texas Secretary of State website. You will have to pay a $1 charge for each search. If your name is available you can reserve it for 120 days using the Texas Secretary of State SOSDirect website for a fee of $40.
Let’s take a closer look at the Texas name requirements for an LLC, see below.
• NAME MUST BE UNIQUE
Your company name must be unique. You cannot choose a name that has already been registered by another company. And additionally, you cannot choose a name that could be reasonably confused with another business. You can use the link above to check the Texas Secretary of State’s database of existing names.
• MUST HAVE A LLC IDENTIFIER
Under Texas state law your company name must include an identifier that makes it clear it is an LLC. You will need to include one of the following terms: Limited Liability Company, Limited Company, Ltd. Company, L.L.C., Ltd. Co., LC, LLC, or L.C.
• ASSUMED NAME (DBA)
You have the option of using an assumed name for your company – also known as a ‘doing business as’ name. This means you can choose a name that is different from the name you used in your LLC filing documents.
To use an assumed name you will have to complete an Assumed Name Certificate and file it with the Texas Secretary of State and the county clerk in the county your LLC is based. The fee for creating an assumed name is $25.
• RESTRICTED WORDS
Under Texas law, there is a range of words that cannot be included in your company name. These words include college, university, school of medicine, medical school, bank, bank and trust, trust, and trust company.
For more information on restricted words, check out the Secretary of State website for guidelines.
• CAN NOT BE CONFUSED WITH A GOVERNMENT AGENCY
You cannot use any words that could lead someone to believe the company is a government agency. For example, you cannot include the words Treasury, Department of, State Department, State Commission, etc.
2: APPOINT A REGISTERED AGENT
Under Texas law, you must appoint a Texas based registered agent for your LLC. This is an individual or business that agrees to receive any official communications on the company’s behalf. The registered agent is the point of contact for any important government, tax, or legal correspondence.
Your registered agent can be any individual over the age of eighteen or a business entity that has a physical address in the state of Texas. They cannot use a PO box. You can appoint yourself or any member of the LLC as the registered agent.
Many companies choose to hire a registered agent service to act as their point of contact. For more, see our full guide – What is a LLC Registered Agent?
3: FILE YOUR CERTIFICATE OF FORMATION
The key step in ‘How to register an LLC in Texas’ is to complete and file a certificate of formation form. You will need to complete form 205 – Certificate of Formation for a Limited Liability Company – and file it with the Secretary of State of Texas. The fee for this filing is $300.
The Certificate of Formation will capture the following company details.
• Company Name – LLC name
• Registered Agent – name and address
• Management Structure – member or manager managed
• Member & Manager – names and addresses of all individuals
• General Purpose Clause – the aims of the company
• LLC Organizer – name and address
• Effective Date – effective date of the certificate
• Signature – of the organizer
4: CREATE AN OPERATING AGREEMENT
An operating agreement is not a legal requirement in Texas. However, we highly recommend you create one. The document should be written and agreed upon by all LLC members from the outset of forming the company.
In Texas, an operating agreement is known as a company agreement. The document is crucial for the smooth running of an LLC. It acts as a legal contract binding all members and outlines the policies, operational details, and management structure of the company.
A Texas company agreement allows LLC members to set the terms of how they want to run the company. In the absence of an operating agreement, Texas state law will govern how the company will be operated. And, any disputes that arise will be settled according to default state law.
For more information, check out our full guide – Texas LLC Operating Agreement.
5: GET YOUR EIN (FEDERAL TAX NUMBER)
All LLCs based in Texas with more than one member must have an EIN. If you form a one-member LLC you do not need an EIN unless you will have employees working for you or you want to have the company classed as a corporation for tax purposes.
An EIN is an Employer Identification Number and is used by the Federal Government for tax purposes. It is a nine-digit number issued by the Internal Revenue System (IRS). Getting an EIN is easy – just apply online on the IRS website. And, there is no fee for this application.
An EIN is used to uniquely identify a business entity and track it for tax reporting. It works just like a social security number – but for a business. You need an EIN for Federal and State tax reporting, to open an LLC bank account, and hire employees.
6: TEXAS ANNUAL FRANCHISE TAX
All Texas LLCs must file an annual state franchise tax return. This is the only yearly state fee associated with running an LLC in the state of Texas. The report must be filed online with the Texas Comptroller of Public Accounts.
The state franchise tax is based on a taxable entity’s margin which is calculated in one of the following ways.
• Total revenue times 70 percent
• Total revenue minus cost of goods sold (COGS)
• Total revenue minus compensation
• Total revenue minus $1 million
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HOW MUCH DOES IT COST TO FORM AN LLC IN TEXAS?
Forming an LLC in Texas will cost you $300. This sum represents the state fee for filing your Certificate of Formation (Form 205). You will also have to pay $15 to appoint a registered Agent. Additional fees apply to optional services that you may or may not need for your business. For more, check out How Much Does a Texas LLC Cost?
Additionally, there are no annual maintenance costs. All you have to consider is your Annual Franchise Tax – which is based on company earnings. For more information check out the Texas Comptroller of Public Accounts website – over here.
HOW TO START AN LLC IN TEXAS FOR FREE
If you need some help getting your LLC formed you can engage the services of a professional LLC formation company. These companies specialize in filing LLC registrations with state authorities. And, some even offer their basic service for free.
If you want to get your LLC formed in Texas for free check out – the Best LLC Formation Companies 2024. Bear in mind you will still have to pay the Texas state fee.
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- ILLINOIS LLC FORMATION
- HOW MUCH DOES AN LLC COST?
- BUSINESS LICENSE FOR LLC
- HOW DO I PAY MYSELF FROM AN LLC?
- ADVANTAGES & DISADVANTAGES OF LLC
HOW TO REGISTER AN LLC IN TEXAS FAQ
HOW MUCH DOES IT COST TO REGISTER AN LLC IN TEXAS?
It costs $300 to register an LLC in Texas. This fee covers the filing of your Certificate of Formation with the Texas State Secretary. There is no other fee associated with forming an LLC in Texas.
HOW DO I REGISTER MY LLC NAME IN TEXAS?
To secure a company name in Texas you must first check it is available on the Secretary of State website – over here. You can then reserve the name for 120 days by completing an online form and paying a $40 fee.
DO I NEED AN EIN FOR MY TEXAS LLC?
Yes, you will need an EIN for your Texas LLC so that it can be tracked by the IRS for tax purposes – unless you form a single-member LLC that has no employees and the company will not be classed as a corporation for tax purposes at any stage.
WHAT TAXES DOES AN LLC PAY IN TEXAS?
An LLC registered in Texas will have to submit an annual state franchise tax return statement. This is the only yearly fee associated with owning and running an LLC in Texas. The franchise tax return will be filed online with the Texas Comptroller of Public Accounts.
READ NEXT
- WHAT IS AN LLC? – click here
- TOP 5 BENEFITS OF AN LLC – click here
- TIPS ON USING AN LLC FORMATION COMPANY – click here
- PROS & CONS OF AN LLC FILING SERVICE – click here
OTHER BUSINESS STRUCTURES
- LLC vs SOLE PROPRIETORSHIP – click here
- LLC vs PARTNERSHIP – click here
- LLC vs S CORP – click here
- LLC vs C CORP – click here
ABOUT THE AUTHOR
Jennifer Matheis – LLC Formation Specialist
Jennifer is our in-house LLC formation specialist. She is a graduate of the Ross School of Business at the University of Michigan and holds a Master of Business Administration. Jennifer has worked as a business management consultant in an advisory role for many years.
Hailing from Buffalo New York, Jennifer is a firm believer in the ‘seize the day’ mantra. When she is not writing for My LLC Guide she is busy managing one of her many start-up ventures. She is a keen sports fan and regularly attends Madison Square Garden to support the New York Knicks.
You can get an EIN on the IRS website. It’s free and all LLC companies should get one if they have to pay tax or pay employees.
Texas is one of the best states to form an LLC. The state has the best turn aorund on applications in the US.
I didn’t know you could use just LC to identify a Texas LLC.
You learn something new everyday.