Forming a limited liability company (LLC) in Texas can protect your personal assets and give your business credibility. But how do you apply for an LLC in Texas? This comprehensive guide will walk you through the entire process, from choosing a business name to filing your certificate of formation.
To apply for an LLC in Texas, you need to choose a unique business name, appoint a registered agent with a Texas address, and file your Certificate of Formation along with the $300 fee through SOSDirect. You’ll also need to obtain an EIN from the IRS and consider drafting an operating agreement to outline financials and roles for multi-member LLCs. With these steps done, you will have successfully registered your LLC in the state of Texas.
Steps to Apply for an LLC in Texas
Follow these key steps to apply for an LLC in Texas:
Choose an Available LLC Name
The first step is picking a unique name for your Texas LLC. There are a few rules you need to follow:
- Include “LLC”, “L.L.C.”, “Limited Liability Company“, or some variation at the end of the name.
- Make sure the name is distinguishable from other businesses in Texas. Do a name availability search to confirm it’s not already taken.
- Avoid using words that could be confused with government agencies or departments.
Once you’ve settled on an available business name, you can file a name reservation (Form 501) with the Secretary of State to reserve it for 120 days. This optional step costs $40.
Appoint a Registered Agent
All LLCs formed in Texas need a registered agent – an individual or business entity that agrees to accept legal documents on behalf of your LLC.
Your registered agent must have an address in Texas and be available during business hours to receive service of process. Many business owners serve as their own registered agents to save money.
File Your Certificate of Formation
To formally create your LLC, you’ll need to file your Certificate of Formation (Form 205) with the Texas Secretary of State. This document includes:
- Your LLC’s name and registered agent
- The character and purpose of your LLC
- The names and addresses of your LLC’s organizers
- Effective date of the filing
You can file your Certificate of Formation by:
- Filing online through SOSDirect
- Mailing the completed form to the SOS
- Faxing it to (512) 463-5709
- Using a courier service
The filing fee is $300, payable by check, money order or credit card.
Obtain an EIN from the IRS
An Employer Identification Number (EIN) serves as a tax ID number for your business. It’s like a social security number for your LLC.
You’ll need an EIN to open a bank account, pay taxes, and hire employees. Apply online instantly through the IRS website.
Create an Operating Agreement
An operating agreement is a legal document that outlines the internal management procedures, policies, and roles of members within a Limited Liability Company (LLC). It governs the operational and financial decisions of the business. An operating agreement outlines the financial and functional relationships between LLC members.
It’s not required in Texas, but it’s highly recommended for multi-member LLCs. The agreement should cover topics like:
- Member roles, rights and responsibilities
- Profit/loss distribution
- Rules for accepting new members
- Procedures for dissolution
With these main steps checked off, congratulations – your LLC is now officially registered in Texas!
LLC Name Requirements in Texas
Choosing the right name is a crucial first step when forming your LLC.
Here are the key rules for Texas LLC names:
- Must include “Limited Liability Company”, “L.L.C.”, “LLC” or similar phrases
- Should be distinguishable from other business names in Texas
- Cannot suggest affiliation with government agencies
- Can’t include words restricted by other Texas statutes
You’ll also want to check that the URL and domain name align with your LLC name and are available for purchase.
Think carefully about how your LLC name will resonate with your audience. Aim for something unique, memorable and professionally relevant to your industry.
Do I Need a Registered Agent for My Texas LLC?
Yes, all LLCs formed in Texas must appoint a registered agent before filing the certificate of formation.
The registered agent’s role is to be a point of contact for receiving important legal documents on behalf of your business. They must have a physical street address in Texas and be available during regular business hours.
You have two options for your registered agent:
- Hire a Business Registered Agent Service – This is the easiest option. You can have a third-party company serve as your registered agent for an annual fee (typically $100-300). They’ll scan documents daily and forward anything addressed to your LLC. For your help, we have tested and reviewed some of the best registered agent services for you and ranked them accordingly.
- Appoint Yourself or a Company Member – You can designate a member or manager as the registered agent. This saves money but means your address will be public record.
Whichever option you choose, be sure your registered agent is reliable. If they fail to receive legal documents, it could lead to your LLC getting administratively dissolved.
What Forms Do I Need to Apply for an LLC in Texas?
When applying for an LLC in Texas, you’ll need to submit two key forms:
1. Certificate of Formation
This is the essential document that officially registers and establishes your LLC with the state. Here’s what’s included on Texas’ Certificate of Formation (Form 205):
- Proposed LLC name
- Registered agent name + address
- Principal office address
- LLC purpose
- Organizer name + address
- Management structure
- Effective date of filing
You’ll need to file the Certificate of Formation through SOSDirect or by mail/fax. The $300 filing fee is due upon submission.
2. IRS Form SS-4 (EIN Application)
The IRS requires all LLCs to obtain an Employer Identification Number (EIN), even if you don’t plan to hire employees.
Form SS-4 is used to apply for your LLC’s EIN. It’s easy to complete online via the IRS website and get your EIN instantly.
Do I Need to Publish My New LLC Registration?
No, publishing or announcing your new LLC registration is not required by Texas law.
However, you may choose to publish a Certificate of Formation in a local newspaper or the Texas Register within 90 days of filing. This public notification can help strengthen your LLC’s limited liability protections.
Check with an attorney to see if publishing notice would be advisable for your particular business. Some banks may ask to see a published newspaper affidavit before opening a business bank account.
How Much Does It Cost to Apply for an LLC in Texas?
The total costs to form an LLC in Texas are usually:
- LLC Filing Fee – $300 to file your Certificate of Formation with the Secretary of State.
- Registered Agent Fee – Varies, typically $100-300 per year if using a third-party. $0 if appointing yourself.
- Publication Fee – Optional, around $200-300 to publish in a newspaper.
- Operating Agreement – Around $40-150 to create using an online service. Not required.
So in total, the costs directly related to LLC formation will likely range from $400-800. Additional costs like licensing and permits depend on your industry.
Is There an Expedited Filing Option?
Yes, the Secretary of State does offer expedited filing for LLC registrations in Texas.
Instead of the standard 4-7 business day processing time, expedited filing reduces the turnaround to same-day or next business day.
To request expedited filing, select the “Expedite” option when completing your Certificate of Formation through SOSDirect.
The expedited filing fees are:
- $200 for same-day processing
- $100 for next business day
This faster processing speeds up how quickly you can open your business bank account and take other key steps.
Do I Need a Business License for My Texas LLC?
Like most states, Texas does not require a general state business license to form and operate an LLC. However, many businesses need local and federal licenses or permits based on their industry and activities.
For example, an LLC doing construction work would need licenses like:
- Sales tax permit – to collect/remit sales tax
- Contractors license – to provide construction services
- Building permits – to build new structures
Be sure to research the licenses and regulatory requirements for your specific business. You can lookup license requirements on Texas.gov based on your NAICS industry code.
Can a Foreign Entity Register as an LLC in Texas?
Yes, foreign companies and entities can register to do business in Texas by creating what’s known as a “foreign LLC”.
The process is very similar to forming a domestic LLC. You’ll need to file a Certificate of Filing (Form 304) along with an Application for Registration.
The filing fee for foreign LLC registration is $750, higher than the $300 for domestic LLC formation.
Your foreign LLC must be registered and in good standing in its home state before registering in Texas. You’ll also need to satisfy Texas’ publishing requirements.
Do I Need to Renew My Texas LLC Each Year?
No, there is no requirement for Texas LLCs to renew their registration annually. However, you will need to keep your business in good standing by:
- Filing an annual report
- Paying franchise taxes
- Maintaining a registered agent
The Texas Franchise Tax is due yearly based on your gross revenue. LLCs must also submit an Annual Public Information Report (Form 802) to the Secretary of State.
Can I Form an LLC Without a Lawyer?
There is no law stating you must use a business lawyer to form an LLC in Texas. The process is straightforward enough for most people to DIY, especially with good templates and resources.
That said, a business attorney can provide helpful guidance on ensuring your LLC complies with all legal requirements. They can also review your certificate of formation and catch any errors before filing.
Here are some tips if forming an LLC without a lawyer:
- Use an online LLC formation service for TEMPLATES and help filing forms correctly.
- Read the LLC regulations thoroughly so you understand the rules.
- Research the licenses and permits required for your industry.
- Consider having a lawyer review your documents before submitting.
As long as you educate yourself and complete all the steps, forming an LLC without a legal professional is totally possible. Just be thorough!
Conclusion
Forming an LLC in Texas provides your business with crucial liability protections and credibility.
While the process involves some paperwork, following our comprehensive guide makes applying for an LLC in Texas straightforward.
The main steps are choosing a business name, appointing a registered agent, filing your certificate of formation, getting an EIN, and optionally creating an operating agreement.
Be sure to research any licenses and regulatory requirements for your industry as well. With the right preparation, you can have your Texas LLC up and running smoothly. Just take it step-by-step!
Frequently Asked Questions
1. Does my Texas LLC need an operating agreement?
No, an operating agreement is recommended but not legally required in Texas. However, having one helps outline finances, roles, and other logistics for multi-member LLCs.
2. What are the publication requirements for a Texas LLC?
Publishing your Certificate of Formation is optional. Doing so can strengthen liability protections. You’ll need to publish in a local newspaper within 90 days of filing.
3. Do I have to be a Texas resident to form a Texas LLC?
No, Texas does not require LLC organizers or members to be Texas residents. The registered agent is the only role requiring a Texas address.
4. How long does it take to get my EIN number?
Applying online for your EIN takes just minutes, and you’ll get the number immediately after submitting Form SS-4. Filing by fax or mail takes 4-5 weeks.
5. Can I form a single-member LLC in Texas?
Yes, Texas allows single-member LLC formation. There are no requirements around number of members. Even solo entrepreneurs can form an LLC.
Tim Kelly, J.D., is a legal writer for LawInfo.com. He holds a law degree from Mitchell Hamline School of Law in St. Paul, Minnesota. Tim has a background in retail copywriting and entertainment journalism, with his work being featured in various publications, including the New York Times and EW.com. In 2017, he transitioned into the legal industry, specializing in intellectual property and small business law. Tim resides in the Twin Cities and takes great joy in being a husband, father, and passionate record collector.
