How to Form an LLC in Texas? 7-Step Guide to Start an LLC in TX

Jump to Best LLC Formation Services for Texas LLCs

Step #1: Choose a Name for Your Texas-Based LLC

Conduct a name availability search by going to the Texas Comptroller of Public Accounts website and using their Taxable Entity Search. Type your desired name into the search box and see if the name you want is already taken. If it is, you’ll need to try again.

File a Name Registration For Your Texas LLC

If you want to reserve your name, Texas allows this. However, there is a $40 filing fee. Reserving your name does not mean you have your LLC, but it will make sure no one else takes your name. You can file your name registration at the website SOSDirect or fill out Form 502. You can download this form from the Texas Secretary of State’s website.

Texas Legal Business Name

If you use any name other than your legal business name, you will need to file an Assumed Name Certificate. You may need to file one of these documents in each county you do business in. Each certificate you file will cost $25.

Now that you have chosen a business name, it’s time to start considering trademarks. However, if you use any name other than your legal business name, you will need to register it. Often, it is a good idea to trademark your company’s name, logo, names of products, and any other distinct terms you would like to belong to your business. However, if it is too much bother, remember that according to Texas’ secretary of state, these trademarkable properties such as symbols and terms receive a “common law” trademark just by using them.

On the other hand, it can provide some more protection and just be a good idea to make the trademark more official. To get started, download Form 901 from the website of the Texas Secretary of State.

To make sure your trademark is available and not already taken, you can do a web search. A good way to check on the federal level is to perform a search on the United States Patent and Trademark Office (USPTO) website. Here you can use the USPTO’s trademark database and do a search for your trademarkable items.

If you are dealing with complex matters in trademark law, remember it is a good idea to consult an attorney. They can provide you with incredibly valuable advice.

Step #2: File Your Texas LLC Certificate of Formation

• The name and address of the LLC’s organizer, which is generally your own
• Your companies name
• The organizational designation of your company
• The name of your company’s designated Registered Agent
• Your Registered Agent’s address
• Your company’s designated management structure either member-managed or manager-managed
• The purpose of your LLC formation and this will normally be very general, such as for “all lawful purposes for which an LLC could be organized.”

You will have to pay a $300 fee for filing a Certificate of Formation in Texas.

Also, remember if you are using a fictitious business name when you file your Certificate of Formation, which is a name other than your own, you will need to submit this information as well. This information will take an Assumed Name Certificate as well as a $25 filing fee.

After you finish filing your business’s Certificate of Formation, you will need to file an Assumed Name Certificate as well as a $25 fee for filing. Additionally, you must file an Assumed Name Certificate in every county in which you conduct business or have an office. These certificates will be filed with the county clerk.

Step #3: Get a Registered Agent in Texas

So, your business will have to choose someone to act as the registered agent. This can be one of the members and would keep any notices or tax documentation private. However, your address will become a part of the public record.

An alternative is to hire a professional registered agent provider. These services are capable of professionally receiving documentation on your company’s behalf. Because this is what they exist to do, you can likely trust them to handle your documentation and keep it private. A final option would be to hire an attorney to act as your registered agent, but this can be costly.

Step #4: Make an Operating Agreement for Your Texas LLC

• The formation date of your LLC, as well as where it is located
• The names of all your LLC’s members
• Your company’s ownership structure, as well as the percentage owned by each member
• The capital contribution to the company of each member
• The voting power of the LLC’s members
• Whether your company’s management structure is management or member-managed
• How your company will add members or transfer ownership
• How members can exit and how your LLC can be dissolved

Reasons to Create an Operating Agreement For Your TX LLC

There are several reasons an operating agreement is important for LLC’s and here are a few of them.

• An operating agreement outlines the owners of the LLC as well as their capital contributions, rights, and responsibilities.
• It records and shows the ownership percentage of all the owners of the LLC.
• It creates rules for how the company will address changes of and transfers of ownership.

Without an operating agreement, business disputes can easily occur. This can lead to lawsuits as well as disputes between members that can be costly or destroy the company. No matter how many members your LLC has, an operating agreement is important. Even for an LLC with one member, it could help distinguish your obligations as an LLC member from you as an individual.

How to Create an Operating Agreement

Creating an operating agreement is a big deal, so make sure to discuss it thoroughly with any members of the LLC. To start with, there are many templates out there you can use to get an idea. You can check our guidelines on creating an Operating Agreement and download a form here.

For a good operating agreement, it can be a good idea to get help, and obviously, a lawyer can help you craft a strong operating agreement. However, there are also many services on the web that can help you craft an operating agreement for far cheaper.

Step #5: Acquire a Federal EIN

How to File For an EIN In Texas?

Filing for an EIN can be done online through the IRS website, and it is free to submit. Alternatively, you can fill out and submit IRS Form SS-4 to acquire an EIN as well.

If you choose to fill out the form online, ensure you have enough time to complete it because it will not save your progress. Also, the website will log you out after 15 minutes of inactivity, losing any information you have entered.

Another option is to pay an EIN registration service to file for you. Many LLC formation services offer this as a service as well.

Step #6: Acquire a Company Bank Account in Texas

• Your LLC Filing Documents: This could be a copy of your articles of organization or certificate of formation.
• Federal Tax Information: This is your LLC’s Employer Identification Number, or as it’s typically known, EIN.
• Business Operating Agreement: This will need to be signed by all members.
• Two Forms of Personal Identification: The specific kinds of identification documents required vary, but generally, this includes examples such as a driver’s license.

Step #7: Register Your Business With the Texas Workforce Commission

How to Register Your Texas LLC with the State Employment Department?

It is possible to file your Texas LLC with the state employment office online. But, beforehand, you must have hired and paid employee wages to actually register your LLC.

Registering an LLC with the Texas Workforce Commission requires an account and this information:

• Your LLC’s mailing address
• An email address
• For every separate business location, a trading name and address
• For every member of the LLC, the names, addresses, and social security numbers
• Your Texas LLC’s primary products, activities, and services
• If you are not the original owner and it was instead transferred, the name and address of the LLC’s previous owner will be required.
• The date your LLC first hired an employee
• The date when your LLC’s employee was first paid wages
• The total sum of all quarterly wage payments your LLC has made from all locations

Pay Your State Taxes

The type of tax most important to keep an eye on is the Texas Franchise Tax. A Texas Franchise Tax applies to every taxable entity in the state. This tax is due annually on May 15. According to Texas’ tax laws, an LLC pays its franchise tax rate based on its margin. However, you will not have to file an annual report with Texas’ Secretary of State.

The minimum threshold to be required to pay Texas’ franchise taxes in the years 2020 and 2021 is $1,180,000. For retail and wholesale businesses, this will be a 0.375% tax rate. Other entities will be required to pay a 0.75% franchise tax unless they are qualified for EZ Computation. If so, they qualify for a lower tax rate of 0.331%.

For help figuring out what tax rate applies to you as well as any other fees and taxes you owe, the best option is to contact a certified public accountant (CPA). A good place to start finding a CPA is to contact the Texas Society of Certified Public Accountants. They can help you find a CPA to help you calculate your franchise tax burden in addition to any other taxes and fees you may owe to form an LLC in Texas.

Licenses and Permits in TX

Pay Your Local Business Taxes in Texas

As a business owner, it’s essential you keep up with your business taxes. Although you may already have paid a lot in federal and state taxes, you may still have local or county taxes to pay.

In order to make sure you pay these obligations, you may have to contact the county or local tax officials. You don’t want to find out what you owe when you’re already late. You don’t want to have to pay late penalties.

Best LLC-Formation Services to Help Start Your Texas LLC

Forming an LLC can be time-consuming and complicated. So, many people like to have help with the process. We will list some of the pros and cons of two of the best LLC formation services.

#1: Start an LLC in Texas With ZenBusiness

ZenBusiness is one of the newer LLC formation services, but they have quickly gained a reputation as one of the best. We will list some of their good and bad attributes below.

#2: Start an LLC In Texas With IncFile

Incfile has been in business since 2004 and has an excellent reputation. We will discuss why they are a good choice for helping you form your LLC, along with a couple of their shortcomings.

FAQs About Texas LLCs

Learn How to Form an LLC in Any U.S. State:

Get Some More Knowledge About Business & LLCs