LLC in Texas – How to Start your Limited Liability Company in Texas

This step-by-step guide will help you setup your Texas Limited Liability today!
Denise Elizabeth P
Senior Financial Editor & Contributor
Last Updated: April 26, 2021
Date Published: March 31, 2021

If you have plans to start a Texas LLC, then you may have started to look into what it will take to get your business established and going.

In this step-by-step guide we are going to cover all the steps needed to successfully setup your Texas LLC and get your business going!

We will also cover some of the benefits of forming your business as an LLC and how a formation service can take care of the entire process for you!

Note to LLC Owners: If you need help starting your LLC and want to make sure it is done correctly, you will want to consider using an LLC formation service.

Some of them are free + state fee while others cost a little more and take care of all of your legal paperwork and annual filings so you don’t have to miss a deadline.

How to Start an LLC (Limited Liability Company) in Texas

ZenBusiness$39 + State fee

They charge one of the lowest rates and are an overall best value. Their formation packages are loaded with features for a great price!

IncFile$0 + State fee

For those on a strict budget, this is your cheapest LLC service. You can add on features as needed.

Let’s get started on our step-by-step guide.

LLC in Texas

Choose a name for your New Texas LLC

Choosing a name in Texas is a quick three step process:

1.) Every state has their own requirements for choosing a business name, but in general, they follow these guidelines:

  • Name must include “LLC” “L.L.C.” or the phrase “limited liability corporation.”
  • The name cannot include words that could interfere or be confused with a government agency such as FBI, CIA, Treasury, etc.
  • Certain words such as “bank” or “attorney” may require approval and additional paperwork.

For a complete list of naming rules for the State of Texas, visit their Texas Secretary of State’s guidelines page here.

Texas does not require you to reserve a name before starting your business, but if you are afraid someone else might use the name, then you may want to consider paying the $40 fee.

The $40 fee gives you name exclusivity for 120 days.

2.) Once you decide on a name for your Texas LLC, make sure to double check that the name is not being used by another business. You can do a name search on the Texas Comptroller of Public Accounts website here.

3.) This is not required but recommended – check to see if your businesses name domain is available. Most businesses have a website and it is best to have your website URL match your business name so that customers and clients can easily find you on a google search. You can do this here.

If you are having a hard time coming up with a name for your Texas LLC, by using an online name generator.

Choose a Texas Registered Agent

Appointing a Registered Agent for your Texas LLC is a requirement.

A registered agent is a person or business (other than yourself or your own business) that sends and receives legal documents on your behalf.

The registered agent does not have to be anyone at your company or anyone employed by you, and does not have to be a member of the LLC.

In fact, there is a whole industry of registered agent companies that you can hire to handle this on behalf of your company.

Majority of the states require that an LLC has a registered agent and the agent must be a resident in the state in which you are doing business.

Texas requires that your registered agent be a resident of Texas or a Texas corporation.

Registered Agent Services have registered agents in every State, so they are a great place to start.

If you use a formation service to form your LLC, many of them can act as your registered agent (more on this later).

If you choose to be your own registered agent, your business address and other information will be made public.

Using a Registered Agent other than yourself can protect some of your personal information.

A Registered Agent needs to file a written or electronic form with the following information:

  1. Your LLC’s name
  2. An express statement that the person designated consents to serve as the LLC’s registered agent
  3. The name of the person designated as registered agent
  4. The signature of the registered agent
  5. The date of execution

File your Texas LLC Certificate of Formation

Now that we have covered the prerequisites, you will need to register your Texas Limited Liability Company with the State of Texas.

The formation document is most often referred to as the “articles of organization” but in Texas they call it the Texas LLC Certificate of Formation.

This document along with the payment of your state filing fee are what officially create your LLC.

Once created, the documents can be sent in via mail or online.

Along with the certificates, you will need to provide the following information:

  • Full names, addresses, and contact information for all founding members of the LLC.
  • Business name.
  • Address of the LLC – if your business has multiple addresses, you will need to choose. one that will be your official mailing address.
  • Length of time the company has been in business or has existed.
  • Registered agent information.
  • Information about the LLC – mission statement and explanation of purpose.
  • State whether your LLC is member-managed or manager-managed.

In the State of Texas, the Certificate of Formation fee is $300 for online and paper applications.

You only register your business once, so this is not a fee that you will have to pay annually.

You will receive a Texas Certificate stating that you are allowed to do business in the state and are a registered business entity.

Setting Up a Management Structure

As mentioned above, LLC’s give you the ability to choose your own management structure.

The LLC can be member-managed which means the members are involved in the day to day operations of the LLC.

You can also choose to have the company be manager-managed which means members are not involved in the managerial matters but rather hire managers to take care of the day-to-day functions.

Create an Operating Agreement

Texas does not require an LLC operating agreement but we highly recommend creating one.

An operating agreement is a legal document that outlines the ownership structure and member roles of your LLC.

You can find Operating Agreement templates online or if you use an LLC formation service, they will create this document for you.

Get an EIN for your Texas LLC

An EIN, or Employer Identification Number (federal tax id number), acts like a Social Security number for your LLC. You will need an EIN to hire employees and open business bank accounts.

You can get an EIN for free from the IRS website, or via fax or mail

Again, if you use a formation service, they will do this step for you!

Foreign LLC

If you’ve already formed your LLC in another state and are now expanding to Texas, then you will be completing an “Application to Register” rather than a Certificate of Formation.

This will register you as a Foreign LLC.

This requires a $750 payment which isn’t cheap!

Thankfully, this is only a filing fee that you have to pay once.

This is more involved and may require the help of a formation service or lawyer.

Annual Maintenance

Once your LLC is formed, there are annual deadlines that need to be met.

Make sure you familiarize yourself with these deadlines and add them to your calendar so that they are not missed.

Many people choose to setup their business as an LLC because of the tax benefits and liability protection to the owners.

Harbor Compliance Review

Should I use an LLC Formation Service?

As you can see, there are several steps required to make sure that your LLC is formed correctly.

Hopefully this article helped you better understand what it takes to form an LLC in Texas.

If this all still seems overwhelming, then this is where using a formation service comes in handy.

If you have a little bit of flexibility in your budget or you know that the DIY route is not for you, then we strongly recommend hiring an LLC Formation Service.

An LLC formation service will make sure everything gets filed properly and expediently and they will make sure that all of your annual maintenance deadlines are not missed.

LLC formation services specialize in just that, forming businesses.

They streamline the process for you and are there to answer questions, fix mistakes, and help with legal advice and needs.

Many of them even take care of your yearly maintenance and filings for you and offer registered agent service as well.

You can add on services such as a company agreement, llc agreement, or board member fiduciary duties documents.

They do it all so you don’t have to.

Here are three popular LLC formation service options to give you an idea of what they offer:

ZenBusiness

$39 + State Fee

ZenBusiness is one of the most affordable options and a great value.

They are a little smaller and newer than the other two mentioned below, but have excellent customer reviews and overall features.

Northwest Registered Agent

$225 + State Fee

Northwest Registered Agent also included a year of registered agent service with any LLC formation package. They also offer premium customer support that is unmatched to their competitors.

If you anticipate questions or more complex LLC formation, they are the top choice. You definitely get what you pay for and more with Northwest.

Northwest is our best overall value option.

Incfile

incfile-logo

$0 + State Fee

IncFile will form your LLC for free and include a full year of registered agent service with any LLC formation package.

IncFile is at the top of our list of the best LLC formation services, year after year.

If you decide to go the DIY route and form your own LLC but need help with the Annual Reporting, checkout the following services:

MyCompany Works

For $49, MyCompanyWorks will make sure you don’t miss a deadline. They are the most affordable annual report service out there and they offer a 100% satisfaction guarantee.

Harbor Compliance

Their price varies depending on the service package that you choose, but their fully-managed services take care of everything so you don’t have to.

And if you want it all done for you, LLC formation and Annual Reporintg, then you may want to look into MyCorporation:

MyCorporation

For $99 MyCorporation will form your LLC and also include a full year of their managed annual report service.

Benefits of Starting an LLC

  • Personal asset protection to llc owners – as mentioned above, your personal assets are protected should your LLC go bankrupt or be sued.
  • Tax benefits: Pass-through taxation benefits
  • Simple to set up and maintain – no annual meetings, formal officers, or complicated records.
  • Flexible – LLC’s have very little restrictions regarding the company’s structure. You decide if you want your business to be a single member LLC, multi-member LLC, and so on.
  • LLC’s are a widely recognized business structure and bring credibility to your organization.
  • Access to financing – Once your LLC is formed, you can start to build a credit history which opens the door to business loans and financing to grow your business.
  • Flexible profit sharing – LLC’s can choose how they want to do their profit sharing, they are not required to be equally distributed among members.

An LLC structure protects you, as the business owner, from being personally liable for the company’s debts or other liabilities.

Furthermore, LLC’s can be owned by more than one person known as an LLC member.

If the limited liability business doesn’t do as well as planned or you have a rough year, you as the business owner are personally protected under an LLC.

For example, if your LLC declares bankruptcy or is sued, your personal assets such as your vehicle, personal bank accounts, and house are safe.

An LLC provides some great personal liability protection.

A Single-member LLC is a pass-through business entity which means that profits and losses from the LLC are “passed through” to you and taxed as personal income.

This benefits you as a small business owner because you are not hit with double taxation and are not required to pay both corporate and personal taxes on your earnings.

Multi-member LLC’s are taxed as partnerships and are also pass-through entities.

This means each owner pays personal income taxes on their portion of the profit.

Conclusion

As you can see there are so many reasons by choosing an LLC structure for your business is smart.

Hopefully this guide helped you learn more about LLC’s and gave you the tools you need to get your Texas LLC setup.

Here are a few more resources we think you would be interested in:

Cost to Form an LLC in Texas

Best LLC Formation Services

What is an LLC

What are the Articles of Organization or Certificate of Formation

Best Registered Agent Service for forming your business

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  1. Texas Secretary of State "Selecting a Business Structure" Page 1 . April 7, 2021

  2. Texas Comptroller of Public Accounts "Taxable Entity Search" Page 1. April 7, 2021

  3. Texas Economic Development "Start a Business in Texas" Page 1 . April 7, 2021