Any entrepreneur who’s started a business will tell you that you’re about to learn a whole new language. The business world is full of new lingo, like registered agent, business entity, LLC, Inc. – the list goes on and on.
To help business owners who are looking to start a business in Texas, we’ll explain these terms so you can get a business up and running quickly.
One of the steps to setting up a business in The Lonestar State is to select a registered agent. This person or business serves as your company’s point of contact for the state and will receive important documents throughout the year.
To understand what a registered agent is and their role in setting up a business, we’ll look at these topics:
- How is an LLC formed in Texas?
- What is a Texas registered agent?
- Do I really need a registered agent in Texas?
- Can I be my own registered agent in Texas?
- Who can be a registered agent in Texas?
- Why would a company choose to work with a registered agent service?
- List of Texas registered agent services
- How much does a registered agent service cost in Texas?
- How does an owner select a registered agent in Texas?
- Can a company change its registered agent?
- What’s a statutory agent?
- What’s a commercial registered agent?
How is an LLC formed in Texas?
To form an LLC in Texas, entrepreneurs must file Articles of Formation with the state. This paperwork will require the following steps:
1. Name the company
What’s the name of your company? While you may have a company name in mind, you’ll have to see if it’s available first. In Texas, like most states, each business has to have its own name. If a company already has the name you want, you’ll be forced to select another one.
You can run a name search on the Texas Comptroller of Public Accounts website.
While naming the company, consider searching for a matching domain name too. Most businesses want their website to match their name. If the domain isn’t available, entrepreneurs may want to think of a new name.
In addition to checking the name’s availability and domain potential, there are a few rules that must be adhered to. When picking a name, it must:
- Include the words “limited liability company” or “LLC” in the name
- Not include any reference to a government agency like FBI
- Use caution when referencing to education or financial sectors. Names with words like “Academy” or “Bank” may be subjected to further approvals.
2. Pick a registered agent
The next step in setting up a Texas LLC is to select a registered agent. A registered agent services as the company’s point person with the state. If official documents need to be sent to your company, the registered agent will receive them.
When it comes to picking a registered agent, a company has several choices. We’ll explore who can be a registered agent in more detail below.
3. File the Certificate of Formation
To start an LLC, a company must file documentation called Certificate of Formation. The documents that officially declare an LLC as an established company have different names in different states. In Texas, the paperwork is called a Certificate of Formation. In other states, it’s called Articles of Organization.
In Texas, this paperwork can be filed online, by mail, or in person.
Expect to provide the company’s name, registered agent, the purpose of the company, the date of the company’s launch, and the name of the LLC’s organizer.
In addition, the state of Texas charges a filing fee of $300. If you’re paying by check, it should be made payable to the Texas Secretary of State.
Expect the state to take about three days to approve online applications and about 5-7 days to approve paper applications.
Once approved, all of the information becomes a matter of public record.
4. Create a company operating agreement
The state of Texas doesn’t require you to file an operating agreement but encourages all businesses to create one to reduce the potential for problems. An operating agreement explains how the business is run. It details who’s in charge, who the investors are, what the management hierarchy is, how profits are doled out, and how losses are handled.
An operating agreement is tied to a company’s success, which is why it’s often created immediately after establishing an LLC or corporation.
5. Obtain an EIN
To conduct business in Texas, the business needs an EIN, or an employer identification number. This number is issued by the IRS and can be obtained quickly through the IRS website. Businesses need an EIN to:
- Open business bank accounts
- Hire employees
- File taxes
6. File an annual report and pay a franchise tax
All Texas businesses must file an annual report with the Texas Comptroller of Public Accounts. In addition, the company must pay a franchise tax, which is based on a company’s income.
What is a Texas registered agent?
A registered agent is an official point of contact. This person or business entity is the person who will receive important documentation regarding your LLC or corporation. Important documents could include tax forms, legal documents, and a notice of a lawsuit known as service of process documents.
Do I really need a registered agent in Texas?
Yes. The state law requires all companies to declare a registered agent. There must be a point of contact listed on the LLC formation paperwork so documents can be delivered to the company as needed.
If a registered agent is not selected, your company won’t be in good standing with the state and could be subject to state fees or penalties.
Can I be my own registered agent in Texas?
Yes. A business owner or the LLC organizer can be the company’s registered agent. This is the easiest option for a business to take, but there are other people or businesses that can fill this role as well.
Who can be a registered agent in Texas?
In addition to the business owner or LLC organizer, there are others who can be assigned as a company’s registered agent. A registered agent can be a trusted friend, coworker, a neighboring company, or even a registered agent service.
In Texas, a registered agent can be:
- Any Texas resident or company with a physical address (not a P.O. box) in the state, and;
- Someone who is available during normal business hours to accept document’s on your company’s behalf
Texas also requires the person or business to consent to be a registered agent in written or electronic form. This document can be added to your Certificate of Formation paperwork for an additional fee, or it can be kept on file in your office. The state does not require the consent to be filed, just to be signed and kept in the event it’s needed.
This statement should include the following information:
- The name of the LLC
- A statement that proves the registered agent gives consent to receive official documentation on the company’s behalf
- The registered agent’s name
- The registered agent’s signature
- The date in which the registered agent assumed the role
Why would a company choose to work with a registered agent service?
As mentioned, a Texas LLC or a Texas corporation can also appoint a registered agent service. An agent service serves as the point of contact on a company’s behalf. If you’re wondering why a company would opt for a registered agent service as opposed to selecting a person, here are a few reasons:
- Convenience. Entrepreneurs are busy and may want someone else to get their official mail. The service forwards any important documents to the owner as needed.
- Multi-state company. Entrepreneurs with multiple companies in different locations may want a registered serve agent to collect their official mail to make sure nothing is missed.
- Privacy. A service provides a layer of privacy for owners. In the event of a lawsuit, papers are served to the registered agent service, not the owner. While the service will reach out discreetly to the owner about the documentation, the papers aren’t served to an owner in front of their employees or customers.
List of registered agents services
There are several registered agent services in Texas. To find one that suits your company, a simple Google search will provide a list of choices. To expedite your search, here are a few choices:
Lone Star Registered Agent
This company can serve as your registered agent and offers additional services like company formation services that might be of help to your company. The registered agent services are offered at a flat yearly fee of $50.
For a basic registered agent service, InCorp offers a $67 multi-year deal to act as your company’s registered agent.
Northwest Registered Agent
This company accepts documents on your behalf, contacts you about them, and uploads them to your online account for immediate review. A mail forwarding service is also part of the deal for $125 a year.
The popular legal website can serve as a registered agent for companies in Texas. The site charges $299 a year for the service.
How much does a registered agent service cost in Texas?
Registered agent services charge an annual fee for their services. If a basic service is selected, which simply forwards any official mail to your company, fees are usually below $50. For more advanced services with mail forwarding, online accounts, and reminders regarding annual reports, prices hover around $100-250 annually.
How does an owner select a registered agent in Texas?
A business must decide if they’d like to appoint a person or a business to the role of a registered agent. A person must have a Texas address, a business that’s appointed must have a registered office in the state, and both must be readily available to accept mail and other documents during regular business hours.
The registered agent is then listed on the Certificate of Formation.
Can a company change its registered agent?
Yes. A registered agent can be changed at any time. To do so, a company must complete the Change of Registered Agent form with the Texas Secretary of State. The statement of change can be completed online, sent by mail, faxed, or delivered in person.
To complete this business filing, expect to pay $15.
What’s a statutory agent?
A statutory agent is another term for a registered agent. Additional terms for a registered agent include resident agent and service of a process agent. The names vary by state.
What’s a commercial registered agent?
The LLC owner might be asked if the appointed registered agent is commercial or non-commercial. A commercial registered agent is a registered agent service, a non-commercial agent is a person or company that holds the title that isn’t paid to do so.