Starting a Limited Liability Company (LLC) in Texas is one of the best ways to protect your personal assets while running a business. This guide walks you through every step of the process, from initial planning to ongoing compliance.
Step 1: Choose Your Business Name
- Your Texas LLC name must include 'Limited Liability Company,' 'LLC,' or 'L.L.C.'
- The name must be distinguishable from other business names registered in Texas
- Check name availability using the Texas Secretary of State's SOSDirect database
- Consider reserving your name for 120 days while you prepare your formation documents ($40 fee)
Step 2: Appoint a Registered Agent
- Every Texas LLC must have a registered agent with a physical address in Texas
- The registered agent receives legal documents and official correspondence on behalf of your LLC
- You can serve as your own registered agent, but using a professional service offers privacy and reliability
- Your registered agent must be available during normal business hours
Step 3: File Certificate of Formation
- File Form 205 (Certificate of Formation) with the Texas Secretary of State
- The filing fee is $300 for online filing or $300 plus $50 for paper filing
- Include: LLC name, registered agent information, management structure, and purpose
- Processing typically takes 2-5 business days for online submissions
Step 4: Create an Operating Agreement
- While not legally required in Texas, an operating agreement is essential for protecting your limited liability status
- The agreement outlines ownership percentages, profit distribution, and decision-making procedures
- It establishes rules for adding or removing members
- A well-drafted operating agreement can prevent costly disputes and protect your personal assets
Step 5: Obtain an EIN
- Apply for an Employer Identification Number (EIN) from the IRS—it's free
- You'll need an EIN to open a business bank account, hire employees, and file taxes
- Apply online at IRS.gov for immediate issuance
- Single-member LLCs may use the owner's SSN, but an EIN provides better liability separation
Step 6: Ongoing Compliance
- File an annual Public Information Report with the Texas Comptroller (no fee)
- Pay the Texas Franchise Tax if your LLC exceeds the no-tax-due threshold
- Maintain separate business and personal finances
- Keep your registered agent information current with the state
Why Work with an Attorney?
While you can form an LLC yourself, working with an experienced business attorney ensures your operating agreement properly protects your interests and your entity is structured correctly for your specific situation.