How to Create an LLC in Texas

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How to Form an LLC in Texas:
5 Simple Steps to Get Started
According to the IRS, each state may use different regulations around forming an LLC, and you should check with your state if you’re interested in starting a Limited Liability Company. To simplify the process of forming an LLC in the state of Texas, we’ve put together a step-by-step guide to detail each step of the process and answer any questions you may have.

Step 1
Name Your Texas LLC

Your first consideration when choosing a name for your LLC is to be unique from any other business in the state of Texas. You can quickly and easily check your company’s potential name options at the Texas Secretary of State SOSDirect website. For a $40 fee through the SOS website, you can also reserve a company name for 120 days. To do this, you’ll need to submit the Application for Reservation or Renewal of Reservation of an Entity Name form.

In order to comply with Texas state law, your company’s name must end with the words “Limited Liability Company” or the abbreviation “LLC.” You must also avoid including any words suggesting that your LLC is affiliated with a government agency. Texas’s Secretary of State page provides a more extensive list of business naming rules here.

Step 2
Choose a Registered Agent in Texas
The state of Texas requires that all LLCs have a registered agent for service of process. This means your LLC must have an agent that agrees to physically accept any legal papers on the company’s behalf should it be sued. The registered agent does not have to be an individual person; it can be any resident of the state of Texas or a business entity authorized to do business in Texas so long as the agent has a physical street address within the state.

Step 3
File the Texas Certificate of Formation
To officially create your LLC in the state of Texas, you will need to complete and file a Certificate of Formation with the office of the Secretary of State. For a $300 filing fee, this can be done online, in person, or by mail. To complete this form you will need to know the following:
  1. The final name of your LLC
  2. The address associated with the company’s registered agent
  3. Whether your LLC is member-managed or manager-managed
  4. The name and address of any governing person associated with your LLC
  5. The name and address of the LLC’s organizer

Step 4
Create an Operating Agreement

You may want to consider preparing an operating agreement to outline the ownership and operating procedures for your LLC. Though not required by the state, an operating agreement will set the guidelines for running your company. This does not need to be filed with the state, but it can go a long way to ensuring your company’s success.

Step 5
Apply for an EIN and Review Tax Requirements

An IRS Employer Identification Number (EIN) is required for your LLC unless it is a single-member LLC with no employees. Obtaining an EIN is as easy as completing the application on the IRS website.

Most limited liability companies and corporations will need to register with the Comptroller of Public Accounts. Unlike most states, Texas does not require single-member LLCs to file annual reports with the Secretary of State; however, your LLC will be required to file an annual franchise tax report. The details for computing the franchise tax amount can be complicated, so it is important to check the Comptroller of Public Accounts website for accurate and updated information.

If your LLC will be selling a physical product, you’ll need to register for a sellers permit through the Texas Comptroller of Public Accounts. This will allow you to collect sales tax on taxable sales. Additionally, if you have employees, you’ll need to register for Unemployment Insurance Tax on the Texas Workforce Commission website.

Other Considerations
Foreign LLCs and Business Licenses
Foreign LLCs

If your company is a foreign LLC, also referred to as an out-of-state LLC, wanting to do business in the state of Texas, you’ll need to follow all the steps outlined above with a few minor differences.

The difference for a foreign LLC is the Application for Registration of Foreign Limited Liability Company form required to make your LLC legal to operate. Once all the other requirements are met, your foreign LLC will be fully operational.

Business Licenses

Some industries will require you to secure federal, state, and/or local licenses to legally operate in the state of Texas.

The location and type of your business will ultimately determine what is required. Visiting the Texas Department of Licensing and Regulation website can help you find the appropriate licensing at the state and local level, and this page by the U.S. Small Business Administration can help you on the federal level. You can also hire a professional service to find out what all of your licensing requirements are.

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