Start a Texas LLC in Four Easy Steps
They say everything is bigger in Texas, and we know for sure you can find big opportunities for entrepreneurs in the Lone Star State. Starting a Texas LLC is very simple if you know what you’re doing, but it’s important to ensure you’ve given the proper attention to each step to avoid mistakes that can cost you time and money during the process. You can follow PRIME’s four-step guide to get started with your Texas LLC, or reach out to one of our expert advisers for a free consultation. Whichever path you choose, you’ll need to pay a $300 filing fee to the Texas Secretary of State before your Texas LLC is official.
Read on for the 411 on starting an LLC in Texas from PRIME Corporate Services. (Want more info about LLCs? Check out our Guide to LLCs or set up a call with one of our advisors.)
STEP 1: Choose a Name for Your Texas LLC
Your company’s name is one of the most important early choices you will make when setting up your LLC in Texas. You will want to choose a name that helps you be found by clients (easily searchable), one that isn’t already taken by another Texas business, and one that complies with all guidelines in the state of Texas.
The state of Texas has several important guidelines when it comes to naming your LLC:
- Your Texas LLC name cannot include any words that might confuse your business with a government agency. This includes words like Treasury, State Department, FBI, etc.)
- If your Texas LLC name includes restricted words such as Bank or University, you may be required to fill out additional paperwork and prove that a properly licensed professional is part of your LLC.
- Your Texas LLC name must include the phrase “limited liability company,” or one of its common forms or abbreviations or words (“LLC, L.L.C., Limited, Ltd., Company or Co.”)
- Under Texas law, “a filing entity or the name under which a foreign filing entity registers to transact business in this state must be distinguishable in the records of the secretary of state from the name of another filing entity, foreign filing entity, name reservation, or name registration filed with the secretary of state.” This means that you cannot name your Texas LLC something that is already taken by another business, or something that could be confused with another Texas business. You can check the availability of a name by searching the State Comptroller of Public Account’s Taxable Entity Database.
- You can find a comprehensive list of naming rules in Texas on the Texas Secretary of State’s website.
Recommended—but not required—steps when naming your Texas LLC:
- If you’ve chosen a name for your Texas LLC but you’re not quite ready to file your Certificate of Formation, you can quickly and easily reserve the name on Texas’s SOS Direct site.
Check to make sure the URL for your desired name is available. Even if you’re not ready to build a site for your Texas LLC, you may want to consider purchasing the domain so that you have the ability to add that in the future, and prevent others from purchasing it.
STEP 2: Choose a Registered Agent for Your Texas LLC
When forming an LLC in Texas, you must appoint a registered agent to receive important legal communications such as tax forms, notice of lawsuits, and official government correspondence. The registered agent can be an individual or a business entity (registered agent service) that serves as a registered agent for many businesses. The registered agent you choose must be a resident of Texas or a business that is authorized to conduct business in this state of Texas. Any individual who meets these criteria can be the designated registered agent, including yourself. If you are selecting a business entity as your registered agent, it must be a different entity, not your LLC.
The state of Texas offers an Acceptance of Consent form (401A) that you should have your designated registered agent fill out electronically or in written form. You should keep this document on hand to protect yourself in the event that your registered agent does not perform all of their duties, but you are not required to file this document with the Secretary of State. If you do choose to file it as part of your legal records, you can include it with your Certificate of Formation (free) or file it separately ($15 filing fee).
You can learn more about choosing a registered agent here.
STEP 3: File The Texas LLC Certificate of Formation
The most important step when forming your Texas LLC is filing the Certificate of Formation (Form 205) with the Secretary of State. You can file this document online, by mail, or in person. To register your Texas LLC, you’ll need to file Form 205 – Certificate of Formation with the Texas Secretary of State. You can apply online, by mail, or in person.
Texas LLC Certificate of Formation – What Information is Required?
Texas Form 205 has ten sections:
- Entity Name and Type – This is where you will provide the name you have chosen and indicate that your entity will be an LLC.
- Registered Agent and Registered Office – In this section you will indicate the person or business you have chosen to serve as your registered agent.
- Governing Authority – Here you will indicate whether your LLC will be governed by a group of managers or by an individual. If it will be a group of managers, you will provide the name and address of each manager.
- Purpose – this section of the form does not require any information, it simply states that your LLC may be formed for any lawful purpose, or any purpose not legally prohibited.
- Initial Mailing Address – You must provide an initial address where the Comptroller of Public Accounts will send tax information and correspondence. This can be a PO box or a physical address.
- Supplemental Provisions/Information – This is a space for providing any other supplemental information you are required to or would like to provide.
- Duration – This section is purely information, stating that unless otherwise indicated, your LLC will exist in perpetuity. If you would like your LLC to have a limited duration, indicate the duration in the Supplemental Provisions/Information section.
- Organizer – In this section, you will indicate the individual who is organizing the LLC. The organizer can be any person older than 18 or any entity. There are no residency requirements for the organizer.
- Effectiveness of Filing – In most cases, your Texas LLC paperwork will be officially filed as soon as it is received and processed. If you wish to delay the effective date of your filing, you can indicate that information in this section. You can set up a date-based delay, or you can set up the filing to be triggered upon an event, occurrence of fact, or action that may occur in the future.
- Execution – In this section you will sign the paperwork to make it official. The Texas LLC Certificate of Formation does not need to be notarized.
Texas LLC Certificate of Formation Filing Options
If you prefer to file your Texas LLC Certificate of Formation online, click here for the SOS Direct portal.
If you want to print and mail or return your Texas LLC Certificate of Formation, click here for a printable version of Form 205.
You can mail your printed and filled out Certificate of Formation to the following address:
Secretary of State
PO Box 13697
Austin, TX 78711
If you want to bring your Certificate of Formation in person, you can bring it to the following location:
James Earl Rudder Office Building
1019 Brazos
Austin, TX 78701
If you already have a business in another state and you’re expanding your existing LLC to the state of Texas, you’ll need to register as a Foreign LLC.
STEP 4: Get an EIN for your Texas LLC
The Employer Identification Number (EIN) is a nine-digit number issued by the Internal Revenue System (IRS) to identify your Texas LLC for federal purposes and keep track of tax reporting.
An EIN number is required to open a business bank account for your Texas LLC, to pay federal and state taxes, and to hire employees.
- To open a business bank account for the company
- For Federal and State tax purposes
- To hire employees for the company
Once you have formed your Texas LLC by filing your Certificate of Formation, you should obtain an EIN from the IRS. This can be done online or through the mail, and it is free of charge.
You can apply for an EIN online here.
For a downloadable form that you can print and mail, click here.
Mail your SS-4 Application for Employer Identification Number to:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax:
(855) 641-6935
Forming a Texas LLC—Next Steps
Create a Texas LLC Operating Agreement
An operating agreement—a legal document outlining the ownership and operating procedures of an LLC— isn’t technically required when forming a Texas LLC, but it’s definitely best practice to have one. In Texas, many people call the operating agreement the “company agreement.” A comprehensive operating agreement is an important document that helps ensure business success and reduce the risk of disputes and conflicts in the future.
If you decide to create a legal operating agreement for your Texas LLC, you do not need to file that with the Secretary of State. Retain the document with your own LLC records for future reference.
Open a Business Account for Your Texas LLC
Like the operating agreement, a business account is optional but highly recommended. Keeping your personal finances separate from your business accounts will ensure that your finances are always organized and record keeping and tax preparation will be much easier. (Need help with that tax prep? We can handle it all, and we’ll even do your personal taxes along with your business filings for no additional fee!)