LLC in TX: If you want to form a Texas LLC online or by mail, you need to submit the Articles of Organization with the Texas Secretary of State for $300. For details, follow the 6 steps given in this article.
An LLC in Texas basically links an organization’s limited liability (as offered in a corporation or LLP) with the pliability and shortage of formalities of any sole proprietorship.
We would recommend setting up an LLC in TX for any entrepreneur whose objective is to protect personal assets from professional liabilities such as lawsuits and debts.
Not from Texas? Learn to Start an LLC in any other State.
Tip of the Day: Texas LLC formation by yourself is mostly hectic and time taking. Hiring a reliable LLC formation service is an intellegent choice as it saves you from overspending and wasting your time. Therefore we recommend you:
Now, what is an LLC? A Limited Liability Company (LLC) unites the best features of partnerships, sole ownerships, and corporations into one organizational entity.
It only costs only 300 USD to initiate an LLC in Texas.
All you’ve to do is to submit a certificate of formation of your new business with the state authorities. An entrepreneur can either apply online, drop a mail, or visit the office in person to create a new LLC.
In this article, we will explain the LLC formation method in Texas. So let’s get started!
Get a Federal Tax Identification Number (also called EIN)
Obtain Necessary Licenses, Certifications, or Permits
In the subsequent sections, we are going to discuss one by one each step in detail to make it clear for new business owners and entrepreneurs.
Step One
#1: Pick an LLC Name
The first and foremost part of building an LLC in TX is to pick up the right company name. Try to select a name that corresponds to Texas standards and is conveniently accessed by prospective customers.
Instructions to Follow While Naming an LLC
Make sure to choose a unique name for your LLC that is different from other Texas LLCs.
You must include “Limited Liability Company” to his new company or the abbreviation of it, LLC, L.L.C., Ltd., Limited, Company or Co. with your LLC’s name.
Avoid using words that can confuse your LLC name with the government agencies, such as State Organizations, Treasury, FBI, etc.
You may require additional paperwork to use restricted words such as Bank, Attorney, University, etc, or a licensed individual, such as a lawyer, doctor, etc to be part of your LLC name.
Texas Secretary of State’s guidelines have a complete list of naming rules in Texas and help you decide on a suitable name for your Texas LLC.
Checking LLC Name Availability in Texas
After deciding on a suitable name for your Texas LLC, the next step is to verify that your chosen name in Texas is available for your use. Make sure if the name is still available or utilized by another entity.
To check the name availability in Texas, click on the following link to the Texas Comptroller of Public Accounts website:
Furthermore, you can also generate a name through an LLC Name Generator online.
Do I need to get a Trade Name or DBA for my business?
Generally, LLCs do not need a DBA or Assumed Business Name. However, if you want to rebrand your business or move your business to another state and your LLC name is not available in that state, your LLC will need a DBA.
The name of the LLC can serve as your company’s brand name and you can accept checks and other payments under that name as well. Click here to file a Texas DBA.
How do I check if a business name is available in Texas?
To check the preliminary determination on name availability from the Texas secretary of state, call (512) 463-5555 or dial 7-1-1 for relay services. You may also send an inquiry by email to Texas Corporations Section at [email protected].
Step Two
#2: Find a Registered Agent
Another vital step is to appoint a reliable Registered Agent to form an LLC in TX.
A registered agent is a person or entity appointed by your business such as an LLP, LLC, or corporation to receive service of process notices, official mails, government correspondence, and other compliance-related documents on behalf of your business.
There are some limitations when choosing a registered agent in Texas. The person should be a Texas inhabitant and available during business hours. Click here to know more about the requirements of a registered agent.
Important
You need to submit a fillable consent form. View the Acceptance of Consent Form 401-A for a Texas registered agent.
How to Get a Texas Registered Agent?
You may nominate yourself for government correspondence, and also hire affordable services to keep your personal information private. (The registered agent’s name, address, and contact are made public on the government website).
We recommend ZenBusiness due to its registered agent services available in all 50 states at an affordable price and satisfactory customer care. Moreover, if you incorporate your TexasLLC through ZenBusiness, they charge you only $39 plus the state filing fee and offer a free first year of their registered agent services.
What is a registered agent?
A registered agent is a person or entity designated by your business for government correspondence. You appoint a registered agent to receive official mails, service of process notices, and other compliance-related documents on behalf of your LLC.
Who can be a Registered Agent?
You or anyone else can be your registered agent if they fulfill the following requirement: – A registered agent must be 18 years of age or older – A registered agent must be a resident of the state where you wish to register your business – A registered agent must be available during regular business hours – A registered agent must have a physical address (street address usually) to which documents can be delivered. In most states, P.O. mailbox can’t be used.
Can I be my own registered agent?
Yes, you or any of your LLC members can act as your own registered agent. However, you must be prepared for your personal information such as your name as address go public.
Step Three
#3: File an Articles of Organization
During the formation of an LLC in TX, it’s crucial to submit your articles of organization linked with the Secretary of State. A general article should cover the following:
The organizer of LLC (the person who is forming an LLC)
Signature of an authorized person of an LLC
DIY Cost of Forming an LLC in Texas ($300)
The main LLC formation cost through the DIY route is the state filing fee of your Article of Organization. Currently, the state of Texas charges you $300 for filing your LLC and it may be subjected to revision by the state. The filing fee for articles of organization is the same, regardless you submit them online or through the mail.
Form 205 – Certificate of Formation is the official document that you need to file with the Texas Secretary of State to register your Texas LLC. You can apply online, by mail, or in person.
Mailing Address: Secretary of State P.O. Box 13697 Austin, TX 78711
In Person Filing Address: James Earl Rudder Office Building 1019 Brazos Austin, TX 78701
What is the processing time for an LLC certificate of formation in Texas?
Texas Secretary of State usually takes 3 business days to process certificates of formation submitted online and 5 to 7 for documents submitted in papers form.
Is Texas domestic LLC is the same as Texas Foreign LLC?
No, Texas foreign LLC is different from Texas domestic LLC. If you form and operate your LLC in Texas, it is called Texas domestic LLC. Usually, domestic LLCs are referred to as LLC.
Whereas if you register your LLC in any other state and partially operate your business in Texas, the business you moved to texas will be called a Texas foreign LLC. To know more about Foreign entities, read our guide on What is a Foreign LLC.
Step Four
#4: Establish an LLC Operating Agreement
An LLC operating agreement is constitutional paperwork that sketches the rules and regulations for a new company and also outlines the entrepreneur’s operating procedures to form a new LLC in TX.
This legal agreement guarantees all entrepreneurs to remain in the same boat, which ultimately lessens further business clashes.
Does Texas require an LLC to legally adopt LLC operating agreement?
No. the state of Texas does not require LLC owners to officially adopt an operating agreement. However, many states made it compulsory for LLCs to formally adopt an operating agreement.
Regardless of that, there is no obligation to adopt LLC operating agreement in Texas, having one will save you any trouble, disputes, or disagreements in the future.
Do I need to file my operating agreement with the State of Texas?
No. The operating agreement is an internal document that guides how the day-to-day operations of an LLC will be conducted. Unlike articles of organization that must be submitted to state authorities, an operating agreement is not needed to be filed but kept in record for reference.
Step Five
#5: Get an Employer Identification Number (EIN)
Federal Tax Identification Number also known as Employer Identification Number (EIN) like your Social Security Number and is used for paying federal taxes owed to your LLC.
Getting an EIN depends on whether your LLC is a single-membered LLC or multi-membered LLC. If you are operating as single-member LLC and do not have employees, you do not need an EIN.
However, if your LLC has multiple members or if you have employees (regardless of the number of LLC members), your company needs an EIN. To get an EIN from the Internal Revenue Service click the following links:
Mailing Address: Internal Revenue Service Attn: EIN Operation Cincinnati, OH 45999
If you still don’t feel confident and want 100% accuracy in filing, or want to save time while focusing completely on your business, you can get this done through LLC formation services such as ZenBusiness. They charge you $99 for filing your EIN. However, if you take their Pro and Premium LLC creation packages, they will get you an EIN for free.
You can use this nine-digit code to pay taxes, hire employees, and create a new bank account. So, an EIN is not only used to keep track of a business’s tax reporting but also to help identify a business entity.
Why do I need an EIN?
You need an EIN for several purposes such as: – To Pay Federal and State Tax – To open a Business Bank Account – For Your Business Identity – To Hire Employees
Where do I get an EINfrom?
You can get an EIN from the Internal Revenue Service by filing Form SS-4 online or through the mail. However, several LLC registration services can get an EIN for you for a fraction of the cost.
Can I get an EIN without a Social Security number?
Yes, you can file EIN without social security number. To do this, leave section 7b blank while completing the information on IRS form SS-4. After filing this form, call the IRS at 267-941-1099 to complete your EIN application.
Does the LLC tax structure has anything to do with EIN?
Though there are different tax classifications for an LLC, the IRS did not create a new tax classification for the LLC. You have to check one of the options on section 9a of IRD form SS-4 while applying for an EIN.
Most LLCs elect the default tax status as pass-through entities like sole proprietorships. However, many LLCs reduce their federal tax obligation by choosing S corporation status.
Is there any Filing Fee for EIN?
No, the IRS provides you with an EIN for free. There is no EIN filing fee if you apply directly to IRS. However, many entrepreneurs hire LLC creation services to file an EIN for them.
In that case, you will pay them their fee which varies from company to company. For instance, as a stand-alone feature, ZenBusiness charge $99 for filing your EIN. However, if you take their Pro and Premium LLC creation packages, they will get you an EIN for free.
Step Six
#6: Obtain Necessary Licenses, Certifications, or Permits
Though the state of Texas does not require a general business license from LLC owners, you still need registrations or authorizations for specific business activities in Texas.
To successfully operate your LLC in Texas, you must acquire specific certifications, permits, and licenses to comply with federal, state, and local government regulations.
For instance, to operate a pest control business, you need to acquire a license from the department of agriculture and fulfill the state’s certification requirements, etc.
Get Specific License or Permit in Texas
To learn about the specific license or permit, visit the Government of Texas website’s Find Services section helps you learn the state’s license requirements.
The requirements and fees for business licenses and permits vary from state to state. Work thoroughly on prerequisites and compliance-related information for your business before officially filing your LLC with the state. However, the following resources may help;
Hire a reliable, professional service like ZenBusiness to do a license and permit search for you. Many LLC formation services do this as a part of their LLC formation packages.
Limited liability companies in Texas are not obliged to submit their annual (or biennial) reports. For more details on how to file an annual report or state-specific fee, read our article on LLC annual (or biennial) report.
#2. Submit LLC Franchise Tax
In Texas, you do not need to submit an annual report and generally, LLCs do not have to pay annual state franchise tax. Texas’s franchise tax depends on how you choose to be taxed and your LLC’s annual income.
Below is given Texas Tax Rates, Thresholds, and Deduction Limits for 2022. Visit the Texas Comptroller website for more information.
Due Date: LLCs must file Texas annual franchise tax reports due by May 15 every year.
Late Filings: In case you are unable to submit the required annual franchise tax more than 60 days after the due date (May 15) will result in a $50 late fee. If your LLC owes tax, you have to pay an additional penalty of 5% of the due taxes.
After 30 days of passing the due date, another 5% penalty will be incurred. Tax-owing LLCs must pay additional interest after 60 days of delinquency. Further failure to file an annual franchise tax may result in the dissolution of your LLC in Texas.
#3. Pay Sales and Use Tax
As an LLC owner in Texas, you are responsible for collecting sales tax if you:
provide taxable services in Texas
lease or sell tangible personal property in Texas
The basic Texas sales tax is 6.25%. However, most cities in Texas charge an additional sales tax on top of that.
#4. Micileneous Taxes
The state of Texas also applies taxes to many goods. Here is the complete list of such taxes and fees. Some of them are given below:
Coin-operated machines tax
Mixed beverages tax
Battery sales tax
Tobacco tax
Crude oil tax
Manufactured Housing
Natural gas tax
Oyster sales fee
Motor vehicle taxes
Additional Information on LLC in Texas
Business operations never stay static. Anytime in the future, you may need to make changes to your LLC whether they are related to expanding your business to different states, hiring new employees, or termination of your Texas LLC.
Below are explained some of the important LLC-related changes:
Texas LLC Documents or Forms You Need
Forming an LLC in Texas (TX) is simple and easy. However, there are 3 important LLC documents/Forms that must be filed or adopted in order to start an LLC in Texas.
Entrepreneurs often form an LLC in a state other than the state of their residence to have some tax benefits and reduce the LLC formation cost. Moreover, some business owners have their LLC franchises in multiple states.
In such cases, they register their LLCs or franchises as foreign LLCs in all states where they operate their business.
Filing Fee of Texas Foreign LLC
To file a Foreign LLC in Texas you need to submit $750 which is non-refundable and payable to the Texas secretary of state.
If you have an LLC in any other state and wish to open a franchise in Texas or want to form an LLC in Texas while you are a non-Texas resident, you can form a foreign LLC online or can download a foreign LLC application:
Mailing Address: Secretary of State P.O. Box 13697 Austin, TX 78711
In Person Filing Address: James Earl Rudder Office Building 1019 Brazos Austin, TX 7870
Hiring Employees in Texas
To run your business in a compliant manner, you have to follow the State of Texas’ Workforce Commission‘s guidelines while hiring employees for your existing business or new LLC. Some of the major points are stated below;
Verify the employment status of individuals, such as whether the potential employee is a US resident; if not then are they permitted to work in the US, are they of a certain age to work for that particular job, etc
Report new hiring to the state
File quarterly reports on wages and taxes
Report job refusal
Obtaining a Certificate of Good Standing in Texas
A Certificate of Good Standing, aka Certificate of Compliance in Texas, verifies that your LLC has been legally formed and is being operated and maintained in a compliant fashion.
You can request the certificate of good standing known as the certificate of status in Texas from Texas’ Secretary of State’s official website using the following link.
Acquiring or renewing relevant business licenses or permits
Dissolve Your LLC in Texas
In case you no longer wish to continue your LLC in Texas at any point in the future, you must officially dissolve it; otherwise, you may face tax liabilities, penalties, and legal troubles.
In Texas, you can dissolve your LLC by following 3 basic steps:
Comply with your Texas LLC operating agreement
Close all business tax accounts
You can hire the LLC services such as LegalZoom to make the LLC dissolution process seamless and easy for you. If you want to file yourself, follow the Texas LLC Dissolution guide.
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We hope this article has helped you in every aspect of forming an LLC in Texas. If you still have any questions or confusion, please ask in the comment section.
Alfie Wilson, Esq., is a legal content writer with expertise in business formation, criminal law, veterans disability, family law, DUI law, personal injury, animal welfare, and legal writing. He holds a J.D. from Emory University School of Law and has experience in appellate advocacy and regulatory matters. Alfie’s passion lies in breaking down complex legal topics for a non-lawyer audience. He currently writes for law firms and non-profits on various issues and resides in Arlington, Virginia.
