How to Form an LLC in Texas
Starting a business is exciting, but it can be confusing and overwhelming. Fortunately, you don’t have to start from scratch when setting up your LLC in Texas. There are many steps you can take to form your own limited liability company (“LLC”) while also meeting all the state’s requirements. In this guide, we’ll show you how to create an LLC in Texas by taking these key steps:
Select a name.
Then, you need to select a name for your LLC. Follow these guidelines:
- Choose a name that is not too similar to another company in Texas. The Texas Secretary of State will reject any application for an assumed name that is so similar to another existing entity that there is likely confusion as to which entity is being referred when the names are used together (e.g., “Smith & Sons Construction Company” would likely be denied because it was so similar to “Smith & Sons Builders”). The same rule applies if you try to use an assumed name with a business already in operation—for example, if you try using the same name as an existing incorporated business and the two entities operate in close geographic proximity (<90 miles apart), this could lead some consumers and customers of one or both businesses into believing they were dealing with one company while actually being dealt with by two different companies (which could result in legal liability).
- Choose a name that does not include words like “corporation,” “limited,” “corp.,” “incorporated,” or “limited liability company.” If your chosen name includes such words, then Texas law requires that your LLC file its articles of organization with the secretary of state using its full legal corporate name (e.g., XYZ Corporation).
File the articles of organization.
You will file the articles of organization (Form 201) with the Texas Secretary of State’s office. You can find the form and instructions on the Secretary of State’s website. Make sure you include all required information and fees (see below).
Once your LLC has been formed, a certificate of formation will be sent to you in 7–10 business days along with a tax identification number. You may use this number as your Employer Identification Number (EIN), also known as a Federal Tax ID Number or Federal Employer Identification Number.
Create an operating agreement.
An operating agreement is a document that defines the rights and responsibilities of business members, as well as the relationship between them and their company. It also helps you avoid conflicts by allowing you to set rules (such as how long someone can hold an office) and procedures for resolving disputes related to those rules.
For example, if two partners have different ideas about how they should run their company or disagree on whether or not they should expand into new markets, these types of issues can be addressed in the operating agreement before they become an issue later on. An operating agreement also makes it clear who manages what aspects of your business so that no one feels like they’re being taken advantage of or excluded from important decisions that affect them personally.
An LLC’s operating agreement must include:
- The name and address of each member;
- The name and address of each manager (if there are any);
- Provisions regarding: 1) distributions from profits; 2) voting rights; 3) dissolution/liquidation procedures; 4) appointment/election process for managers/officers during periods when no members are available to do so themselves;; 5) annual meetings required by law
File a registered agent notice.
When you form an LLC, you must appoint a registered agent to accept legal and tax-related documents on behalf of your company. In Texas, a registered agent is any person who’s been appointed by the state to perform this function.
The following requirements apply:
- The registered agent must be an individual or domestic entity (e.g., corporation). It cannot be a foreign entity or non-resident alien.
- The individual or entity must have a physical address in Texas where they can receive mail—not necessarily where they live but where they have their office or business operations. If you don’t have an appropriate physical address at which to serve as your registered agent, then you may use the home address of one of its members instead.
- You’ll need to file Articles of Organization with the Secretary of State when forming an LLC in Texas using our service; this will be one part of completing your registration process for filing purposes via our online portal.* Please note that this form does not require any information about who will act as your registered agent after filing; we’ll get that information from you on another page once we’ve created it for you!
Comply with other tax and regulatory requirements.
Your LLC will also be subject to a variety of tax and regulatory requirements, including:
- The state franchise tax. While the Texas Franchise Tax is only assessed on corporations, LLCs are required to pay an annual tax based on their profits.
- Annual reports. In addition to paying this state franchise tax, you’ll need to file a report with the Secretary of State every year that details how much money your business made during its fiscal year (July 1-June 30).
- Federal taxes. The IRS requires any business owner who earns more than $400 from their venture in a given year file 1040 Schedule C forms at the end of each calendar year detailing all income earned within that time period as well as expenses incurred during it (something we’ll get into later). If your company makes more than $1 million annually or has employees other than yourself and family members working for it during this time period, federal regulations require additional documentation for filing purposes—but these measures aren’t exclusive just yet! We’ll discuss them in greater detail later on this page as well as what exactly happens when one decides not follow those guidelines set forth by both federal law makers themselves via their respective agencies responsible for enforcing such policies across America’s vast landscape….
You can create your own LLC in Texas by following these steps.
You can create your own LLC in Texas by following these steps:
- Select a name for your business. You must choose a name that is available for use and isn’t too similar to another registered business name. It’s recommended that you also check the availability of domain names incorporating the name you select.
- File the Articles of Organization with the Secretary of State. You can file them online at www.sos.state.tx.us/texas-business-filing-requirements/ (select “New Corporations,” then “Articles of Organization”). After submitting the articles, you will receive an email confirmation with instructions on how to print out a copy of your filing receipt at no charge or how much it costs if you want paper copies sent to you by mail or courier service instead.* Create an Operating Agreement (if applicable). The operating agreement describes how certain details such as ownership percentages and decision making processes will work within your new business entity.* File Registered Agent Notice with Secretary of State’s office; this requirement applies only if all members are not located in Texas and there is no registered agent for service of process located within Texas.* Comply with other tax requirements; depending on what type of entity you have formed, additional compliance may be necessary through state sales tax filings or other licensing requirements
Whether you’re creating a business to sell products and services or you want to start a personal project, forming an LLC is an excellent way to protect yourself from legal liability. We hope that this article has helped demystify the process of forming an LLC in Texas for you and given some insight into what steps are involved. If you have any questions about how to form your own company, we encourage you to reach out so we can help!