Texas LLC Setup Guide

Complete step-by-step formation process for starting your LLC in Texas

Quick Facts

State Filing Fee$300

Annual Renewal$0

Start Your Texas LLC

Launching a limited liability company in Texas is manageable when you have expert guidance at your fingertips. Our Texas LLC Setup Guide covers each vital step of the formation journey with precision and ease. From initial planning to filing your official paperwork, this Texas LLC Setup Guide offers the core knowledge necessary to set up your business entity correctly. Trust this Texas LLC Setup Guide to serve as your trusted resource for starting your venture with assurance.

How to Start an LLC in Texas

Forming an LLC in Texas requires five sequential steps. Before you begin, gather the necessary information and materials to streamline the process.

What You'll Need:

Your desired business name (plus 2-3 backup options)
Business address and mailing address in Texas
Names and addresses of all LLC members/owners
Ownership percentages for each member
Registered agent's name and physical address in Texas
Payment method for Texas's filing fee
EIN application information (Social Security Number or existing EIN)

The 5 Steps to Form Your Texas LLC:

Step 1: Name Your Texas LLC - Choose a unique business name that meets Texas's requirements and verify it's available.

Step 2: Designate a Registered Agent - Appoint someone with a physical Texas address to receive legal documents on behalf of your LLC.

Step 3: File Articles of Organization - Submit official formation documents to the Texas Secretary of State along with the filing fee.

Step 4: Create an Operating Agreement - Draft internal rules that govern how your LLC operates.

Step 5: Obtain Your EIN - Apply for a federal tax identification number from the IRS.

Let's walk through each step in detail.

Step 1: Choose a Business Name

When forming your Limited Liability Company (LLC), selecting the right name is a crucial step in establishing your brand and legal identity. You have several options for guidance: handle it independently, consult with a business attorney for specialized legal advice, or join the 70% of readers who choose EZ Entity Setup (recommended).

Name Requirements

Your LLC name must meet specific criteria:

Unique and distinguishable from other businesses registered in Texas
Cannot include government-affiliated words such as State, Treasury, or other terms that could imply government association
Cannot contain restricted words like Bank, University, or Olympic

Domain Availability Check

Check online to ensure your business name is available as a web domain. Even if you don't plan to create a business website immediately, securing the domain is extremely important as it prevents others from acquiring it, potentially saving you both time and money long-term.

Name Selection Strategy

Since names are approved on a first-come, first-served basis, prepare 2–3 name options before submitting your application. This ensures you have alternatives available if your first choice is already taken or doesn't meet Texas naming requirements.

Verification Process

Once you've selected your preferred options, verify availability through Texas's business registry or request an official name search to confirm your final choice.

Step 2: Select a Registered Agent

When establishing your LLC, you will be required to designate a registered agent. The registered agent serves as the official point of contact for receiving legal documents, compliance notices, and other important correspondence on behalf of the business.

Requirements

The agent must have a physical address within Texas where the LLC is formed.

Professional Registered Agent Service

Many business owners choose to use a professional registered agent service. Doing so helps ensure that:

Important documents are received promptly
Deadlines are not overlooked
The business remains in good standing with Texas
Privacy is maintained by keeping your personal address off public records

Self-Service Option

While you may act as your own registered agent, appointing a professional service is often a more reliable and secure option.

Step 3: File the Articles of Organization

The Articles of Organization are the foundational documents used to officially form an LLC with Texas. Depending on the state, these documents may also be referred to as a Certificate of Formation or Certificate of Organization, but they all serve the same purpose.

What's Included

The Articles of Organization outline key details about your business, such as:

The LLC's legal name
Business address
Registered agent information
Management structure

Purpose and Benefits

The primary purpose of the Articles of Organization is to legally establish your LLC as a recognized business entity. Once these documents are filed and approved by Texas, your company gains its legal status, along with the benefits and protections provided to LLCs—such as limited liability for owners and formal recognition for conducting business.

Step 4: Create an Operating Agreement

An Operating Agreement is an internal legal document that outlines the ownership, management structure, and operating procedures of an LLC. While requirements vary by state, it is strongly recommended for all LLCs, even in states where it is not legally required.

What It Covers

The Operating Agreement establishes:

How decisions are made
How profits and losses are shared
The roles and responsibilities of members
The process for adding or removing members

Why It's Important

The importance of an Operating Agreement lies in the protection and clarity it provides. It helps prevent misunderstandings among members by setting clear expectations and guidelines from the beginning. Additionally, having a formal Operating Agreement reinforces the LLC's status as a separate legal entity, which helps maintain limited liability protection for its owners.

Consequences Without One

Without this document, your business may be subject to default Texas rules that may not align with how you intend to operate.

Step 5: Get an EIN Number

An Employer Identification Number (EIN), sometimes referred to as a Federal Tax ID Number, is a unique nine-digit number issued by the Internal Revenue Service (IRS). The EIN is used to identify your LLC for federal tax reporting purposes, similar to how a Social Security Number identifies an individual.

Why You Need an EIN

Obtaining an EIN is an important step for a new LLC. In most cases, an EIN is required to:

Open a business bank account
Hire employees
File federal and state taxes
Apply for certain licenses or permits

Benefits for Single-Member LLCs

Even if your LLC has only one member and no employees, an EIN helps separate your personal finances from your business operations, supporting the legal distinction between you and the company. This separation is a key component in maintaining your LLC's limited liability protection.

Next Steps after Forming Your LLC

Texas has several additional requirements beyond the standard LLC formation process. These state-specific obligations must be completed to ensure your LLC is fully compliant with local regulations.

Franchise Tax Payroll Withholding Registration: If your LLC will have employees, you must register with the Texas Workforce Commission (TWC) for unemployment insurance and obtain a Texas Employer ID Number within 15 days of hiring your first employee.
Sales Tax Permit: If your LLC will sell tangible goods or taxable services, you must obtain a Sales Tax Permit from the Texas Comptroller of Public Accounts before conducting business.
Texas Franchise Tax Registration: Most LLCs in Texas must file a Franchise Tax Return annually with the Texas Comptroller, regardless of income. The filing fee ranges from $0 to $1,350 depending on your revenue.
Assumed Name Registration (DBA): If you operate your LLC under a name different from your registered legal name, you must file an Assumed Name Certificate (DBA) with the county clerk where you have your principal office in Texas.

Benefits of LLCs in Texas

Texas offers several compelling advantages for LLC formation that make it an attractive choice for business owners. These benefits can provide significant value for your business operations and growth.

No State Income Tax: Texas has no state income tax, allowing LLC members to keep more of their business earnings. This is one of the most significant tax advantages and helps businesses retain more capital for reinvestment and growth compared to other states.
Affordable Filing Fees: The Texas LLC Certificate of Formation filing fee is $300, a one-time cost with no annual registration or renewal fees. This provides a cost-effective entry point for business formation compared to states with ongoing annual compliance fees.
Strong Limited Liability Protection: Texas law provides robust personal asset protection for LLC members. Personal assets like homes and savings are shielded from business debts, lawsuits, and creditor claims, protecting individual members' wealth from business liabilities.
Management Flexibility: Texas LLCs can choose between member-managed (where all members participate in management) or manager-managed (where designated managers handle operations) structures. This flexibility allows business owners to customize governance based on their specific needs and preferences.
Pass-Through Taxation: Texas LLCs benefit from pass-through taxation, where business income and losses pass through to individual members' personal tax returns. Members can also elect S Corporation tax treatment to potentially save on self-employment taxes for profitable businesses.
Series LLC Option: Texas allows Series LLCs, which provide compartmentalized liability protection by creating separate series within a single LLC. Assets of each series are shielded from liabilities of other series, offering enhanced asset protection strategies.
Pro-Business Environment and Strong Economy: Texas boasts a robust economy with strong economic growth, making it ideal for mid-to-large businesses. The state has a business-friendly regulatory environment that supports entrepreneurship and business expansion.
Optional Tax Elections: Texas LLCs have the flexibility to be taxed as sole proprietorships, partnerships, S Corporations, or C Corporations, providing tax optimization opportunities based on the business structure and profitability.