What is a Texas LLC?
A Texas LLC is a basic business structure that offers legal protection for your personal assets and access to tax benefits. LLC means limited liability company, and it allows members to separate personal and business assets without forming a corporation (and paying corporate taxes). Creating an LLC in Texas will allow you to legally conduct business.
The phrase “Everything is Bigger in Texas” holds true for Limited Liability Companies (LLC) seeking business opportunities in the Lone Star State.
Flexible membership regulations and minimal record requirements make Texas one of the best states to form an LLC. And as one of the biggest states by population and land mass, you’ll have access to substantial real estate and labor markets.
Setting up an LLC in Texas is simple. We’ll show you how to start an LLC in Texas in 8 easy-to-follow steps.
Let’s get started:
How to Start an LLC in Texas
Regardless of whether you’re a local Texan or an out of state-resident, forming an LLC in Texas is a relatively quick and low-cost process.
However, before you can display your “Open for Business” sign, you need to complete these eight steps:
- Choose a name for your Texas LLC
- Select your LLC members
- Decide on a management structure
- Assign a Texas registered agent
- Create a Texas LLC Operating Agreement (Optional)
- File Your Certificate of Formation
- Register for an Employer Identification Number (EIN)
- Obtain the necessary Texas business licenses, permits, and tax information
1. Choose a name for your Texas LLC
The first step in starting an LLC in Texas is selecting a company name.
Unfortunately, it’s not as simple as choosing a memorable and attractive name. Your business title needs to comply with the following regulations:
- Include either the phrase “Limited Liability Company,” “Limited Company,” or an abbreviation of one of those phrases, as stated in Tex. BOC §5.056(2), such as:
- “LLC” or “L.L.C”
- “LC” or “L.C.”
- Ltd. Company
- Ltd. Liability Co.
- Ltd. Liability Company
- Be distinguishable from the name of other businesses registered in the state of Texas.
- Not include words or phrases suggesting false implications of government affiliation. For example, “Commission”, “Secretary of State”, or “State Department”.
- Can’t contain or consist of grossly offensive language.
You’ll need to perform a Texas LLC search to check the availability of your prospective business name. You can use the Taxable Entity Search, email [email protected], or contact the State Information Business Line at (512) 463-5555.
2. Select your LLC members
The next step in setting up an LLC in Texas is to declare the name(s) of the member(s). According to Section 101.101 of the Texas Business Organizations Code, a limited liability company can have one or more members.
If you’re forming a single-member Texas LLC, you’ll only need to submit one member name — your own. If your LLC has more than one member, also known as a multi-member LLC, you’ll need to contact all members joining your organization.
3. Decide on a management structure
You must report the governing authority of your Texas LLC, also known as management structure, on your Certificate of Formation.
The governing authority of your Texas LLC will manage the business and affairs of the company as stated in the company agreement.
4. Assign a Texas registered agent
According to Tex. BOC § 5.201, you’re required to designate and maintain a registered office and registered agent for your Texas LLC.
Your registered agent must be either a resident of Texas or an organization registered or authorized to conduct business in Texas.
The filling entity cannot also act as the registered agent. However, you may appoint a member of the company as the registered agent.
In order to serve as a registered agent, the individual or entity must accept appointment, and consent to their role in a written or electronic form. The completed document does not need to be filed with the state, but should be kept with your LLC records.
Although your registered office isn’t required to be your organization’s principal place of business, it must be a street address where your registered agent can accept legal forms during regular business hours.
5. Create a Texas LLC Operating Agreement (optional)
An operating agreement is an internal company document outlining ownership and company procedures. Creating an operating agreement protects members from potential disputes by defining roles, decision making processes, and internal profit distributions.
6. File your Certificate of Formation
In order to register your LLC in Texas, you’re required to file a Certificate of Formation with the Secretary of State (Tex. BOC § 3.001).
As stated in Tex. BOC § 3.005, a Certificate of Formation must include the following information:
- Name of your business
- Type of entity being formed
- Name of the registered agent
- Address of the registered office
- Governing authority of your LLC (member-managed or manager-managed)
- Lawful purpose(s) for which your LLC is being formed
- Name and address of the organizer
- Effectiveness of filing (when the document will become effective)
- Signature of the organizer
- Date of signature
There is a designated space for supplemental provisions or information on your Certificate of Formation — if required.
- Mail: Secretary of State P.O. Box 13697 Austin, Texas 78711
- Hand (In-person): James Earl Rudder Office Building 1019 Brazos Austin, Texas 78701
- Fax: to (512) 463-5701
7. Register for an Employer Identification Number (EIN)
You must obtain an Employer Identification Number (EIN) if your LLC has more than one member — even if it has no registered employees.
Also referred to as a Federal Tax Identification Number, an EIN is used by the IRS for taxation and business identification purposes.
Think of an EIN as a Social Security Number for your business — it’s required to:
- Open a company bank account
- Register for taxes
- Hire employees and process payroll
Don’t apply for an EIN number until your Texas LLC application has been approved by the Secretary of State. After receiving approval, submit an online application form or send a completed SS-4 Form to the IRS via fax or mail — no fees are necessary.
8. Obtain necessary Texas business licenses, permits, and tax information
The formation of your Texas LLC isn’t complete until it’s legally ready to operate.
The state of Texas does not have a general, state level business license requirement. However, your Texas LLC must follow relevant federal, state, municipal, and industry-specific permit and license requirements.
Consult the following resources to find out which permits and licenses your Texas LLC may require:
- The U.S. Small Business Administration has provided a list of required federal licenses and permits by industry
- The Texas Department of Licensing and Regulations website
- The Texas Commission on Environmental Quality’s list of permits, licenses, registrations, and other authorizations and industry-specific permits by rule
- The professional licenses listed in the work section of the Texas government website
- Contact your county clerk to find out more about municipal licenses and permits
Texas LLC Tax Information
Your LLC must be compliant with both Texas and federal tax requirements. Consult the following resources to learn about the tax requirements of your business: