Texas LLC Requirements

How to start an LLC in Texas

The following highlights some of the critical steps you will need to complete when forming a limited liability company (LLC) in Texas.

Step 1: Decide on a name for your Texas LLC

Naming your business requires careful consideration. There are many business and compliance requirements to weigh before making the final decision. Texas has very specific regulations when it comes to LLC names:

• Required words. The name of the Texas LLC must end with "Limited Liability Company" or "Limited Company", or with an abbreviation of one of those phrases, such as "Ltd. Co.", "L.C.", "LLC", or "L.L.C".
• Unique. The name of the Texas LLC must be distinguishable in the records of the Texas Secretary of State from the name of any domestic or foreign filing entity (including LLCs or corporations) or reserved or registered name. However, a name already in use may be used if the LLC gets written consent from the existing name holder.
• Prohibited and restricted words. Names submitted with superscript letters or numbers or subscript letters or numbers will not appear in that format in the official company name. (For example, H2 O would appear as H2O.) The name may not contain the word “Lotto” or "Lottery". The name must not imply a purpose other than that stated in the Certificate of Formation. Use of words tied to education (such as but not limited to "College," "School", and "Seminary") cannot be used without approval from the Texas Higher Education Coordinating Board. Use of words such as "Bank" and "Trust", and those implying ties to veterans ("Veterans," "War," etc.), also require approvals prior to use.

Step 2: Determine management structure (member vs. manager)

One of the reasons you may have selected an LLC as your business type is management flexibility. With LLCs, there are two management structure options: member-managed, or manager-managed. (“Member” is the term used to mean an owner of an LLC.) The difference between the two options comes down to the relationship between management and ownership:

• Member-managed. All members (owners) are active in the decision-making processes for day-to-day operations.
• Manager-managed. Designated managers make the day-to-day decisions for the LLC.

Read our article LLC members vs. LLC managers for more information on LLC management structure.

Step 3: Select your Texas registered agent

A registered agent (sometimes referred to as an agent for service of process) is a person or business you appoint to receive and forward important legal and tax information. Texas requires the designation of a registered agent and registered office at the time of an LLC’s formation, and the LLC must maintain a registered agent throughout its existence.

If the registered agent is an individual, then that person must reside in Texas and have consented to serve as the registered agent for the LLC. If using a professional registered agent service, that organization must be registered or authorized to do business in the state. Texas registered agents must maintain a business office at the same address as the entity's registered office. The registered office must be a physical address (i.e., not a PO box nor a telephone answer service).

Texas does not allow the LLC to act as its own registered agent.

Step 4: Prepare and file a Certificate of Formation

The formation of an LLC in Texas requires filing a Certificate of Formation with the Texas Secretary of State.

You should also create an operating agreement for your LLC. While Texas does not require you to file an operating agreement with the state, it is important for every LLC to have this document. It is a private agreement establishing the rules and structure of the business, including how it will be managed. Read our article on LLC operating agreements for more information.

Step 5: Obtain a federal employer identification number (EIN)

A federal employer identification number, or EIN, is a unique, nine-digit number issued by the IRS that is used to identify a business for tax reporting purposes. It is also referred to as a FEIN or federal tax ID number.

An EIN is used for other important business activities, such as opening a business bank account, obtaining a loan, or paying invoices. Check out our article on Federal EIN for more information.

Step 6: Meet your license, permit, and registration requirements in Texas

Your Texas LLC may be required to complete additional compliance steps in order to legally operate in Texas.

• State tax registration. Many Texas LLCs will need to obtain a sales and use tax permit from the Texas Comptroller of Public Accounts. The Comptroller’s office oversees 100 separate taxes, fees, and assessments, including state franchise taxes. (Texas LLCs must file an annual Franchise Tax Report and/or Public Information Report with the Comptroller’s office.)>/li>
• Employees. Employers are required to report new hires and rehires to the Texas Office of the Attorney General.
• Business licenses and permits. Your Texas LLC may need to obtain licenses and permits at the federal, state, and local levels before it can legally operate.
• Assumed name filing. If a Texas LLC plans to transact business under an assumed name, it must file an assumed name certificate with the Texas Secretary of State.

With our business license research service, you receive applications for the business licenses, permits and tax registrations your business needs.

Texas (TX) LLC filing basics and FAQs

What is the cost to form a Texas LLC?

At BizFilings, we clearly outline our fees and the Texas state fees. When you view our pricing to form an LLC you plainly see:

• BizFilings’ package prices. BizFilings offers three incorporation service packages from which you can choose.
• State fee for standard turn-around. Our pricing clearly shows the state fee to incorporate in Texas with standard turn-around.
• Expedited turn-around. You will see the BizFilings and state fee, if any, for expedited turn-around.
• 24-hour turn-around. Texas has a 24-hour filing option, which is outlined in our pricing.
• Certified copy. Our pricing also clearly displays the BizFilings and state fee, if any, for issuing a Certified Copy of the Certificate of Formation.