How to Form an LLC in Texas: 7 Steps and $300 Filing Fee

How to form an LLC in Texas starts with choosing an available name and ends with filing the right tax and compliance documents after approval. You can complete the process yourself, but the formation filing does not replace required licenses, permits, or tax registrations.

Key Takeaways

• File a Certificate of Formation with the Texas Secretary of State and pay the $300 filing fee.
• Your LLC needs a compliant name, consenting registered agent, and Texas registered office.
• You may file online through SOSDirect or follow the state's current instructions for mail or in-person delivery.
• An operating agreement is an internal governance document, not the document that creates the LLC.
• After approval, consider an EIN, business bank account, licenses, tax registrations, and annual Texas compliance.
• Multiple owners and customized financial arrangements usually require more planning than a basic filing provides.

How to Form an LLC in Texas: Start-to-Finish Checklist

Use these steps to form a Texas LLC in the correct order:

1. Choose a compliant name. Confirm that the name is distinguishable in the Texas Secretary of State's records and includes an accepted LLC designation.
2. Select a registered agent. Obtain the agent's consent and identify a qualifying Texas registered office.
3. Choose a management structure. Decide whether members or appointed managers will govern the company.
4. File the Certificate of Formation. Submit Form 205 or the corresponding online filing and pay the $300 state fee.
5. Prepare an operating agreement. Document ownership, voting, management, financial rights, and exit procedures.
6. Apply for an EIN when needed. Use the IRS's free application process rather than paying an unofficial filing service.
7. Complete post-formation compliance. Review licensing, sales tax, franchise tax, public information, banking, and local requirements.

A limited liability company separates the business entity from its owners, who are called members. That separation may help protect personal assets from company obligations, but it is not absolute. Personal guarantees, personal misconduct, commingling funds, and failure to respect the entity's separate existence can still create personal exposure.

Before creating an LLC in Texas, also consider whether an LLC fits your ownership, financing, and tax plans. Forming the entity does not by itself determine every tax treatment or eliminate the need for contracts, insurance, and sound business practices.

Step 1: Choose a Texas LLC Name and Registered Agent

Your legal name must be distinguishable from names already on file and contain an accepted designation, commonly "Limited Liability Company," "LLC," or "L.L.C." A preliminary name search is useful, but it does not guarantee acceptance or establish trademark rights. Restricted words may require agency approval, professional credentials, or a different entity type.

You may reserve an available name for 120 days by filing the state's name-reservation application and paying the $40 fee. Reservation is optional. If you are ready to file your Certificate of Formation, you can request the name in that filing instead. An LLC operating under another name may also need an assumed name filing and local filings. Do not assume that a domain registration or assumed name certificate creates the LLC.

Every Texas LLC must designate a registered agent and registered office. The agent may be a Texas resident or an organization authorized to act as an agent in Texas, but the LLC cannot serve as its own agent. The registered office must be a physical Texas address where service can occur, not solely a post office box or mail service.

Obtain the agent's consent before naming that person or organization. The consent generally stays with the company's records rather than being attached to the formation filing. Choose an agent who can reliably receive lawsuits and official notices during normal business hours. Missing those documents can leave the company without enough time to respond.

Step 2: File the LLC Certificate of Formation in Texas

To file an LLC in Texas, submit a Certificate of Formation for a limited liability company to the Texas Secretary of State. The paper version is Form 205, and the filing fee is $300. For a closer review of each field, see these Texas Form 205 filing requirements.

The certificate generally requires the following information:

• The LLC's legal name and entity type.
• The registered agent's name and Texas registered-office address.
• Whether the company will be governed by members or managers.
• The names and addresses of the initial governing persons.
• The company's purpose, which may usually be stated broadly for a lawful business.
• The initial mailing address and organizer's name and address.
• The requested effective date, if it will not take effect immediately upon filing.

The organizer signs the filing. An organizer submits the certificate but does not automatically become an owner or manager. Review every field before filing, especially the name, registered-office address, and management selection. An incorrect management structure can conflict with your operating agreement or authority arrangements.

You can file online through the Texas Secretary of State's SOSDirect system. The state also accepts filings through methods listed in its current instructions, including mail and delivery. Keep the accepted certificate and filing acknowledgment with the LLC's permanent records.

Texas LLC Costs, Filing Times, and Required Actions

The basic state cost to create an LLC in Texas is the $300 Certificate of Formation fee. Optional services and later compliance can increase the total. For example, name reservation costs $40, while registered-agent services, certified copies, expedited handling, professional drafting, licenses, and local permits may involve separate charges.

Processing time depends on the submission method, state workload, and whether the filing contains errors. Online submissions are generally processed faster than mailed documents. Texas also offers expedited handling under its current instructions for an additional charge. Check the Secretary of State's current processing information before relying on a specific launch date. This overview of how long LLC approval can take explains other factors that may affect timing.

Step 3: Prepare an Operating Agreement and Obtain an EIN

The Certificate of Formation creates the LLC. The operating agreement, often called a company agreement in Texas, governs relationships inside the company. You do not file it with the Secretary of State. Although Texas does not require a written agreement, preparing one can prevent uncertainty even for a single-member LLC.

A single-member agreement helps document ownership, authority, and separation between the owner and company. A multi-member agreement should address contributions, ownership percentages, voting thresholds, profit distributions, management powers, transfers, buyouts, departures, death or incapacity, dispute procedures, and dissolution. It should match the management structure stated in the Certificate of Formation.

Next, determine whether the LLC needs an Employer Identification Number. Multi-member LLCs, companies with employees, and entities with certain federal tax obligations generally need one. A bank may also request an EIN before opening an account. Apply through the IRS EIN application, which is free. Avoid websites that appear official but charge merely to transmit the application.

If your LLC has multiple owners, unusual voting or profit arrangements, investor plans, regulated activities, valuable intellectual property, or uncertainty about liability and tax structure, you can post your legal need on UpCounsel's marketplace. An attorney can prepare the formation filing, draft a tailored operating agreement, structure ownership and management rights, and identify applicable compliance obligations. Responses typically arrive within a day.

Step 4: Open Accounts and Check Texas License Requirements

After approval, open a business bank account and keep company funds separate from personal funds. Banks commonly request the accepted Certificate of Formation, EIN, operating agreement, and a resolution or other evidence identifying authorized signers. Requirements vary by institution, so ask for its current account-opening checklist.

Forming the LLC does not give you every license needed to operate. Texas does not issue one universal statewide business license covering all businesses. Depending on your activities and location, you may need occupational licenses, health permits, zoning approval, building permits, professional authorization, or city and county registrations. Review regulated occupations through the Texas Department of Licensing and Regulation and contact the applicable local authorities.

If you sell taxable goods or services, determine whether you need a Texas sales and use tax permit. Businesses in regulated professions should confirm whether an LLC is permitted or whether a professional entity is more appropriate. An Austin business may also find this guide to forming an LLC in Austin, Texas useful for separating state formation from local requirements.

Review insurance and contract needs before operations begin. LLC status does not replace general liability, professional liability, property, workers' compensation, or other coverage appropriate to the business.

Step 5: Maintain the LLC and Avoid Common Filing Mistakes

Texas LLCs must address annual franchise tax compliance and file the required Public Information Report with the Texas Comptroller. The franchise tax report is generally due May 15. The forms required can depend on the current no-tax-due threshold and the company's circumstances, so verify the current rules through the Texas Comptroller's franchise tax resources. Federal estimated or quarterly tax obligations are separate; see the requirements for filing quarterly taxes for an LLC.

Keep the registered agent and registered-office information current. Also update state records when required after changes to the LLC's name, management, or other filed information. Maintain accounting records, tax documents, ownership records, major contracts, written consents, and amendments to the operating agreement.

Common do-it-yourself mistakes include:

• Using a name without confirming state availability or possible trademark conflicts.
• Naming an agent who did not consent or providing an address that does not qualify.
• Selecting member-managed or manager-managed status without understanding the difference.
• Treating the operating agreement as the state formation filing.
• Assuming LLC approval includes industry licenses, local permits, and tax registrations.
• Mixing personal and company funds or signing contracts without identifying the LLC.
• Ignoring Comptroller correspondence because the business had little or no revenue.

If the business stops operating, do not simply abandon it. Settle obligations, approve the closure under the governing documents, address taxes, and file the appropriate termination documents. Review how to check an LLC's status and file dissolution documents before assuming the entity has ended.

Frequently Asked Questions

How Do I Get an LLC in Texas?

You get a Texas LLC when the Secretary of State accepts its Certificate of Formation, not when you obtain an EIN or business license. Save the accepted filing and acknowledgment as evidence of formation. You must then complete any separate tax registrations, permits, bank requirements, and internal governance documents applicable to the business.

How Do I Acquire an Existing LLC in Texas?

You can acquire an existing LLC by purchasing membership interests or buying its assets, but those transactions have different consequences. Review the company's debts, contracts, taxes, lawsuits, licenses, intellectual property, and governing documents before closing. The parties may also need written consents, an amended operating agreement, and updates to state or tax records.

How Do I Apply for an LLC in Texas if I Live Elsewhere?

You may form a Texas LLC without living in Texas, but the company still needs a qualifying registered agent and physical registered office in the state. Forming in Texas also does not excuse the LLC from registering in another state where it conducts business. Each state's activities and registration rules should be reviewed separately.

How Do I Start an LLC in Texas Before the Business Opens?

You may form the LLC before operations begin, which can help with contracts, banking, leases, and ownership documentation. Filing too early may create tax, reporting, registered-agent, and administrative obligations before the company earns revenue. Coordinate formation timing with planned transactions, licensing, financing, and the date you expect to begin business.

How Do You Create an LLC in Texas Online?

You create it online by using the Texas Secretary of State's electronic filing system, entering the required formation information, and paying the applicable fee. Review the submission carefully before authorizing payment. Download and retain the accepted documents after approval because lenders, banks, landlords, vendors, and licensing authorities may request copies.

How Do You Set Up an LLC in Texas Yourself?

You can set up a Texas LLC yourself if you can select the correct entity, prepare accurate formation information, and manage later compliance. Consider legal and tax advice when ownership is divided among several people, investors expect special rights, the company uses valuable intellectual property, or the business faces professional, regulatory, or substantial liability concerns.