Our picks for LLC formation services

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FAQs

Do I need an attorney to form an LLC in Texas?

While not mandatory, an attorney can be helpful for complex business structures or specific legal needs. It’s generally fine to use online business formation services or file yourself for simple setups, but complex tax situations or structures could benefit from legal counsel.

How long does it take to form an LLC in Texas?

Processing time varies depending on filing method (online or mail) and any expedited fees used. Typically, it takes 2-3 weeks for online filings and longer for mailed submissions.

What are the tax implications of operating an LLC in Texas?

Texas doesn’t have a state income tax, but the owners claiming profit and losses on their personal income tax will need to pay federal tax rates. You might also encounter sales and use tax, franchise tax (for professional LLCs or LLCs exceeding $1 million in revenue), and payroll taxes if you hire employees.

What is a series LLC and is it right for my business?

A series LLC allows you to create separate legal entities within your LLC for different business ventures. It can offer personal liability protection and tax advantages in certain situations, but consult with an attorney to determine if it’s suitable for you.

What is an operating agreement and what should it include?

An operating agreement is a crucial internal document outlining ownership, profit-sharing, management structure, and other essential operating rules for your LLC. Consult with an attorney for customized drafting, or there are templates available online.

Can I use a DBA in Texas?

What some states call a DBA ( or “doing business as”) is called an assumed name in Texas. If you want to operate under a company name other than the one on your Certificate of Formation, you can file for an assumed name certificate and pay a $25 fee.

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When starting a new company, choosing a business entity is the most important decision that the founders must make. For most businesses with more than one founding member, forming an LLC is often the best option for a number of reasons.

An LLC is an uncomplicated business structure that affords small business owners legal protection by separating personal assets from business debts. Moreover, LLCs often enjoy a lower tax rate than corporations. Nevertheless, creating an LLC can get complicated depending on where you are based, with the formation process, filing fees, and continuing legal obligations differing from state to state.

1. Select a name for your Texas LLC

Follow naming requirements

There are two major guidelines to follow when naming your LLC in the State of Texas:

  1. An LLC’s name must be distinguishable from the names of existing business entities on file with the Texas Secretary of State.
  2. An LLC’s name must contain one of the following phrases or abbreviations: “Limited Liability Company”, “Limited Company”, “LLC”,  “L.L.C.”, “LC”, or “L.C.” The abbreviations “Ltd.” and “Co.” may be substituted for the words “Limited” and “Company”, respectively.

Check the availability of your LLC name

You may confirm that the name you’ve chosen for your LLC is available in the state by performing a search with the Texas Secretary of State website. Note that each search costs $1.

Need help coming up with a business name? Check out our free business name generator.

Reserve your LLC name with the Secretary of State

Reserving your LLC name is a good idea since it prevents another Texas business entity from making use of it before you legally form your LLC in the state. File an Application for Reservation or Renewal of Reservation of an Entity Name with the Texas Secretary of State online or by postal mail. There is a $40 name reservation filing fee.

2. Designate a registered agent

As in every U.S. state, forming an LLC in Texas requires the appointment of a registered agent to handle state and federal legal documents and service of process on the business’s behalf. The registered agent must either be a state resident or business entity with a street address (not a P.O. box) in Texas OR if the individual or business is based out-of-state, they must have a registered office in Texas.

Our picks of the best registered agent services

  • Northwest Registered Agent: Starting a business requires a lot of state-mandated paperwork, which can be confusing for new business owners. Northwest offers business services that can help entrepreneurs find the right documentation, fill it out, and file it on time with the right government agency. In addition to helping you set up an LLC, Northwest has a host of additional services, like registered agent services, that new owners will find useful too.
  • ZenBusiness: There’s no need to stress about filing paperwork when you work with ZenBusiness. This company offers a great variety of LLC services, the focus of which is to ensure your business is set up correctly with the proper paperwork filled out and delivered to the right branch of your state government. Of course, ZenBusiness does charge for their services, but customers say they get the most bang for their buck.
  • Harbor Compliance is a great fit for organizations that register in multiple states and for those who don’t want to pay excessive service fees. With their network and electronic document delivery, they help ensure your business never misses a legal notification.

FAQs

Do I need an attorney to form an LLC in Texas?

While not mandatory, an attorney can be helpful for complex business structures or specific legal needs. It’s generally fine to use online business formation services or file yourself for simple setups, but complex tax situations or structures could benefit from legal counsel.

How long does it take to form an LLC in Texas?

Processing time varies depending on filing method (online or mail) and any expedited fees used. Typically, it takes 2-3 weeks for online filings and longer for mailed submissions.

What are the tax implications of operating an LLC in Texas?

Texas doesn’t have a state income tax, but the owners claiming profit and losses on their personal income tax will need to pay federal tax rates. You might also encounter sales and use tax, franchise tax (for professional LLCs or LLCs exceeding $1 million in revenue), and payroll taxes if you hire employees.

What is a series LLC and is it right for my business?

A series LLC allows you to create separate legal entities within your LLC for different business ventures. It can offer personal liability protection and tax advantages in certain situations, but consult with an attorney to determine if it’s suitable for you.

What is an operating agreement and what should it include?

An operating agreement is a crucial internal document outlining ownership, profit-sharing, management structure, and other essential operating rules for your LLC. Consult with an attorney for customized drafting, or there are templates available online.

Can I use a DBA in Texas?

What some states call a DBA ( or “doing business as”) is called an assumed name in Texas. If you want to operate under a company name other than the one on your Certificate of Formation, you can file for an assumed name certificate and pay a $25 fee.

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3. File a Certificate of Formation

An LLC is formed in Texas through the filing of a Certificate of Formation for a Limited Liability Company with the Texas Secretary of State.

The Certificate of Formation must provide the following information:

  • LLC’s name and chosen designation
  • Registered agent name and address
  • General purpose clause
  • Whether the LLC is member-managed or manager-managed (include every managers’ and members’ names and addresses)
  • The effective date of the certificate (if different than the filing date)
  • The name, address, and signature of the LLC organizer

You can file the certificate online or by mail. The filing fee is $300.

4. Create an operating agreement

Although not a legally mandated step for forming an LLC in Texas, drafting a comprehensive LLC operating agreement is strongly recommended for all nascent limited liability companies.

The operating agreement should do the following:

  1. Describe the LLC’s business structure
  2. Establish the individual responsibilities and obligations of LLC members
  3. Detail how the LLC will be run

Without an operating agreement clarifying the specific duties of its members, an LLC may face significant legal and operational difficulties.

5. Obtain an IRS Employer Identification Number (EIN) 

All newly formed LLCs in the United States must acquire an Employer Identification Number (EIN) from the Internal Revenue Service (with the exception of single-member LLCs). The nine-digit EIN is like a social security number for a business and is necessary to pay income tax, file tax returns, open business bank accounts, and perform many other important functions.

You can apply for an EIN online on the IRS website without paying a filing fee.

6. Fulfill your legal obligations

Once an LLC is registered, its members must devote attention to fulfilling legal requirements that apply for the duration of the company’s existence.

Obtain business licenses and permits

In Texas, LLCs do not require a general business license, but it’s essential to be aware of potential licensing or permit requirements based on your industry, location, and activities. The state imposes specific licenses for certain professions and industries, which are issued by various state agencies such as the Texas Department of Licensing and Regulation (TDLR).

  • Check with the state: These licenses cover various fields like cosmetology, construction, food service, and real estate. Check out the Texas Department of Licensing and Regulation website and the Texas Business Licenses & Permits Guide for information on occupational licenses and permits in the state.
  • Check with the local government: In Texas, there are few local licensing requirements, but some cities and counties within Texas have their own unique licensing requirements. You should contact your local government office to determine the specific permits needed. These local requirements may include zoning permits to ensure your small business operates within the correct zone, sign permits for business signage, health inspections for those handling food or regulated products, and fire safety permits, depending on your business activities.
  • Obtain a seller’s permit: Most businesses will need to file for a seller’s permit, which allows for sales tax to be collected and paid. Application fees can range from $25 to $100, depending on your type of business, and will need to be renewed every two years.

Understand state taxes

As an LLC owner in Texas, there are several tax obligations to be aware of, despite the absence of a state income tax and LLCs being a pass-through entity.

Franchise tax: Firstly, the franchise tax may apply to certain LLCs. Professional LLCs, such as doctors or lawyers, are subject to an annual franchise tax, as are LLCs with gross receipts exceeding $1 million in the preceding calendar year. The tax rate for qualifying entities is 0.25% on gross receipts, with a cap at $12,500, and the deadline for filing and paying the franchise tax is annually on May 15th.

Federal and state tax filings: Additionally, LLCs with employees must register for and pay federal and state employment taxes, including FICA taxes for Social Security and Medicare, self-employment taxes, FUTA tax for unemployment benefits, and state unemployment tax and payroll taxes for state-mandated programs. These obligations require timely registration for employer accounts and compliance with filing and payment deadlines.

Depending on the specific industry and activities of your LLC, you may also encounter other state or local taxes, such as hotel occupancy tax for lodging businesses, alcohol beverage tax for businesses selling alcohol, or motor vehicle taxes for businesses related to vehicles.

Register with the Texas Comptroller of Public Accounts: LLCs active in Texas (including foreign LLCs) may be required to register with the Texas Comptroller of Public Accounts for the purpose of satisfying various state tax obligations. This includes LLCs that collect sales tax on retail goods and LLCs that have employees.

In most cases, you can register with the Comptroller in person at a tax office, online, or by postal mail. Forms are available at the Comptroller website.

File a BOI Report

Effective January 1, 2024, the Corporate Transparency Act (CTA) mandates that most corporations, LLCs, and similar entities in the U.S. report their beneficial owners’ information to FinCEN. In Kansas, a beneficial owner is identified as someone with significant control or at least 25% ownership of the entity. Required information includes the owner’s name, birth date, address, and ID number from an approved document, along with its image.

Entities established or registered before the 2024 cutoff must file their initial reports by January 1, 2025.

For businesses formed in 2024, there is a 90-day window after confirmation of formation to file, while those established afterward have 30 days from their creation or registration date to comply. Filings are processed electronically via FinCEN’s BOI reporting portal.

Learn more about BOI Reporting.

LegalZoom can help you file a compliant and stress-free BOI Report for only $149.

FAQs

Do I need an attorney to form an LLC in Texas?

While not mandatory, an attorney can be helpful for complex business structures or specific legal needs. It’s generally fine to use online business formation services or file yourself for simple setups, but complex tax situations or structures could benefit from legal counsel.

How long does it take to form an LLC in Texas?

Processing time varies depending on filing method (online or mail) and any expedited fees used. Typically, it takes 2-3 weeks for online filings and longer for mailed submissions.

What are the tax implications of operating an LLC in Texas?

Texas doesn’t have a state income tax, but the owners claiming profit and losses on their personal income tax will need to pay federal tax rates. You might also encounter sales and use tax, franchise tax (for professional LLCs or LLCs exceeding $1 million in revenue), and payroll taxes if you hire employees.

What is a series LLC and is it right for my business?

A series LLC allows you to create separate legal entities within your LLC for different business ventures. It can offer personal liability protection and tax advantages in certain situations, but consult with an attorney to determine if it’s suitable for you.

What is an operating agreement and what should it include?

An operating agreement is a crucial internal document outlining ownership, profit-sharing, management structure, and other essential operating rules for your LLC. Consult with an attorney for customized drafting, or there are templates available online.

Can I use a DBA in Texas?

What some states call a DBA ( or “doing business as”) is called an assumed name in Texas. If you want to operate under a company name other than the one on your Certificate of Formation, you can file for an assumed name certificate and pay a $25 fee.

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how to start an llc step by step infographic

Post LLC tasks

Set up business bank accounts

While not mandatory by law, starting a business bank account for your LLC is essential for several key reasons.

The benefits of separate bank accounts: It provides legal separation, ensuring your personal assets remain protected from business debts and lawsuits. Mixing personal and business finances could compromise this separation, putting your personal assets at risk.

In addition, it facilitates financial management by simplifying the tracking of income and expenses, categorizing transactions, and generating accurate financial reports. This clarity is crucial for informed decision-making, tax preparation, and potential funding opportunities, all of which contribute to a professional image projected to customers, vendors, and potential investors.

Research financial institutions: You’ll want to find the bank that is best aligned with your LLC’s needs, but you can start by looking at options like Found, Relay, and Mercury, which are all popular among small businesses like Texas LLCs.

Obtain a Certificate of Account Status

What some states call a Certificate of Good Standing is called a Certificate of Account Status in the state of Texas. You may require this certificate for specific licensing processes, certain government contracts, or to satisfy potential investor requests. The Texas Secretary of State issues these certificates with no cost associated.

Build a website

Creating a website for your new LLC offers numerous advantages that can greatly contribute to your business’s success. Most importantly, it establishes credibility and legitimacy, enhancing your professional image and building trust with potential clients or customers.

To launch a business website, follow these steps:

  1. Check on domain name availability
  2. Purchase a domain name.
  3. Sign up for web hosting.
  4. Pick a web builder like Domain.com or GoDaddy to create a DIY website.
  5. Tailor your site to your customers, adding appropriate pages, content, and images.
  6. Add an e-commerce section to your site to sell products.
  7. Review and publish your site.

Why is a website necessary: Your website also allows you to showcase your brand, offerings, and unique selling points while providing a platform for direct communication with your audience. It enables you to collect valuable data, track performance, generate leads and sales, build brand loyalty and community, and remain flexible and adaptable as your business grows.

In general, having a website has become necessary for most businesses, offering a cost-effective marketing tool and a means to stand out from the competition. Building a website is a strategic decision that empowers your LLC to thrive online and effectively engage with your target audience.

Consider costs to set up an LLC in Texas

Average cost to set up an LLC in Texas: $335-$535

To establish an LLC in Texas, expect to pay a handful of fees just to get started. Fees include:

  • Incorporation fees: When starting a Texas LLC, mandatory state fees include a $300 filing fee for the Certificate of Formation (sometimes called Articles of Organization). Every state charges a filing fee when submitting formation documents. Texas charges $300 whether you send them in through the mail or file them electronically.
  • Annual Report filing fees: To remain in good standing with the state, you must file an Annual Report by May 15 each year. The cost to file this report is $35.
  • Registered agent fees (optional): Small business owners may decide to hire registered agent services. If you do so, a professional company serves in the role of registered agent for your company. You’ll list the company’s name and address on the Certificate of Formation that’s filed with the state. You’ll pay an annual fee for these services, which is usually between $50 to $200.

Foreign LLC registration

An LLC formed in a state other than Texas intending to do business in the state must register with the Texas Secretary of State.

Complete these steps to do business in Texas as a foreign LLC:

  1. Comply with Texas LLC naming rules and confirm that the LLC’s name is available using the Secretary of State’s SOSDirect search tool (must pay $1 per search).
  2. Appoint a Texas registered agent.
  3. File an Application for Registration of Foreign Limited Liability Company with the Texas Secretary of State online or by postal mail. The filing fee is $750.

FAQs

Do I need an attorney to form an LLC in Texas?

While not mandatory, an attorney can be helpful for complex business structures or specific legal needs. It’s generally fine to use online business formation services or file yourself for simple setups, but complex tax situations or structures could benefit from legal counsel.

How long does it take to form an LLC in Texas?

Processing time varies depending on filing method (online or mail) and any expedited fees used. Typically, it takes 2-3 weeks for online filings and longer for mailed submissions.

What are the tax implications of operating an LLC in Texas?

Texas doesn’t have a state income tax, but the owners claiming profit and losses on their personal income tax will need to pay federal tax rates. You might also encounter sales and use tax, franchise tax (for professional LLCs or LLCs exceeding $1 million in revenue), and payroll taxes if you hire employees.

What is a series LLC and is it right for my business?

A series LLC allows you to create separate legal entities within your LLC for different business ventures. It can offer personal liability protection and tax advantages in certain situations, but consult with an attorney to determine if it’s suitable for you.

What is an operating agreement and what should it include?

An operating agreement is a crucial internal document outlining ownership, profit-sharing, management structure, and other essential operating rules for your LLC. Consult with an attorney for customized drafting, or there are templates available online.

Can I use a DBA in Texas?

What some states call a DBA ( or “doing business as”) is called an assumed name in Texas. If you want to operate under a company name other than the one on your Certificate of Formation, you can file for an assumed name certificate and pay a $25 fee.

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