How to Form an LLC in Texas

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This guide to starting an LLC in Texas provides step-by-step instructions on filing formation documents, obtaining tax IDs, and setting up company records.

Overview

LLCs are the most popular business structure because they are inexpensive to form, provide flexibility to the owners, and are easy to run. Forming your LLC legally establishes your business, limits your personal liability, and gains tax flexibility. The following step-by-step will help you as you undertake this process.

Fast Facts: Your Budget and Timeline

Here is an overview of the total paperwork, cost, and time it takes to form an LLC in Texas. Be sure to read the final step in this guide - "Ongoing Filings" - to understand your ongoing costs to maintain a compliant Texas LLC.


Paperwork
  • Form 205: Certificate of Formation - Limited Liability Company
  • Operating Agreement
  • IRS Form SS-4: Obtain an EIN
Cost
  • Formation: $300
Time
  • Formation: ~3-5 business days by mail or fax.

Step-by-Step Texas LLC Instructions

  1. Check Name Availability

    The legal name of your LLC may not conflict with any other registered name. Check availability of your desired name by conducting a name search.

    Name Search: Texas Secretary of State - Corporations Section
    Name search
    Name Reservation: Optional
    Suffix:

    The name of a limited liability company or a foreign limited liability company doing business in this state must contain: (1)the phrase "limited liability company" or "limited company"; or (2) an abbreviation of one of those phrases. 
    Texas Business Organizations Code §5.054

  2. Appoint a Registered Agent

    Identify the LLC’s Texas registered agent. This individual or company receives notice of lawsuit and other legal service for the LLC.

  3. File Texas Certificate of Formation

    File the articles of organization to create your limited liability company.

    Agency:Texas Secretary of State - Corporations Section
    Form:

    Form 205: Certificate of Formation for a Limited Liability Company

    Filing Method:

    Mail, fax, in-person

    Agency Fee:

    $300

    Turnaround:

    ~3-5 business days by mail or fax.

    Law:

    Texas Statues - Business Organizations Code - Title 3: Limited Liability Companies

    Notes:
    • Submit original and one copy. The secretary will return evidence of filing and a file-stamped copy of the document.
    • Professional LLCs have other formation requirements.
    Fact Checked:6/13/17
  4. Establish Company Records

    Your filed articles of organization are the first document for your limited liability company records. Your LLC will generate many other official records such as your operating agreement, meeting minutes, and your EIN.

    Office supplies intended for an LLC will help you stay organized and save time. Membership certificate templates should come with your company record book. Each owner receives a membership certificate as evidence of his or her ownership in the LLC.

  5. Create the Operating Agreement

    Draft an Operating Agreement (potentially using a template) which is the governing document for the LLC. It defines the formalities of how the LLC will run itself such as holding an annual meeting. You will review and adopt the agreement at your organizational meeting.

  6. Hold the Organizational Meeting

    The first meeting of the members of the LLC is the organizational meeting. You will need your filed articles of organization and your operating agreement in order to conduct this meeting. Keep minutes of this meeting and store them in your company record book.

  7. Get a Federal Employer Identification Number (EIN)

    If your LLC has more than one member or will hire employees, it must obtain an EIN. An EIN is also often required to open a bank account.

    Agency:Internal Revenue Service (IRS)
    Form:

    IRS Form SS-4

    Filing Method:

    Mail, phone, fax, or online.

    IRS fee:

    $0

    Turnaround:

    Immediately online or by phone. 4 business days by fax. 4-5 weeks by mail.

    Notes:

    The IRS website is only available during certain hours. Print your EIN before closing your session. For additional guidance, see IRS Pub 1635: Understanding Your EIN.

    Fact Checked:8/28/19
  8. Get Texas State Tax Identification Numbers/Accounts

    The Texas Comptroller oversees collection of more than 60 state and local taxes, fees, and assessments. They do not offer a consolidated application. Apply for individual tax accounts / licenses / permits as required.

    Guidance:
    Overview of Texas Taxes
    Submit to:
    Texas Taxes - Texas Comptroller of Public Accounts
    http://www.window.state.tx.us/taxes/
    Forms:
    Texas Tax Forms
    Filing Method:
    Mail or online with WebFile
    Fee:
    Varies based on tax accounts/licenses/permits required.
  9. Consider Electing S-Corp or C-Corp Taxation

    By default, your LLC receives pass-through taxation and the vast majority of LLCs keep this tax classification. Some LLCs benefit from electing S-Corp or C-Corp tax treatment:

    • S-Corp treatment can help owner-employees who earn more than ~$75,000 per year save on self-employment taxes. File Form 2553: S-Corp Election.
    • C-Corps suffer from double taxation: the corporation pays taxes on profits then members pay taxes on their distributions. If profits exceed $250,000 per owner, you provide employee benefits, or you will re-invest most of your profit in the business, you may benefit from the low tax rates on retained earnings under C-Corp treatment. File Form 8832: C-Corp Election.
  10. Obtain Business Licenses & Permits

    To run your business legally, you must obtain applicable licenses and permits. The easiest way to navigate the wide range of federal, state, and local requirements is to search by your business type and locality using the Small Business Administration Business License & Permit look-up tool.

  11. * Ongoing Filings to Maintain Your LLC

    You must file federal and state tax returns. You must also file:

    • Texas LLCs are required to file a Texas Public Information Report and pay Texas Franchise Tax. The tax is usually 1% of gross receipts over $1,000,000. File the Texas Comptroller of Public Accounts by May 15th, starting the year after formation.
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