To start an LLC in Texas, you must file a Certificate of Formation with the Texas Secretary of State. You can file the document online, by mail, or in person. The Certificate of Formation costs $300 to file. There is a small, extra fee if paid online. Once filed with the state, this document formally creates your Texas LLC. However, to ready the LLC to do business, you must complete several additional steps.
To form a Texas LLC, you must complete and file the Certificate of Formation with the Texas Secretary of State. See the document below and click on any number to see what information is required in the corresponding section.
The name must contain the words “Limited Liability Company,” “Limited Company,” or an abbreviation of one of these phrases.
The registered agent can either be a business (but not your own) or an individual Texas resident. The registered office must be a physical address and will be a permanent public record for your LLC. Tip: Hire us as your registered agent and you can use our Texas address as your principal address with the Secretary of State (but don’t use our address for your mail).
How the LLC will structure its management. You can choose between member-managed or manager-managed. Members are LLC owners. Managers are not LLC owners (although they could be). If you want to own your LLC but have an operational manager running it day to day, you can list your manager as the manager and have your LLC be manager-managed so they have authority to run the LLC and make decisions for it. To be clear: if you are manager-managed, you have no right as the member to make decisions for the LLC; your only right is to remove the manager and vote on who the next manager should be. You must also list the address of the person in charge. Tip: Most single-owner LLCs just do member-managed for their LLCs because it’s simpler.
You can form an LLC in Texas for any lawful purpose. This statement is already included on the Certificate of Formation. You can alter it if you want to, but it’s not necessary.
If you have conditions you’d like to put on the LLC like duration of existence (how long the LLC will exist) or some other special restriction, you can put that information in this section. Otherwise, you can leave it blank.
This is just the person filing the LLC and has no real significance. Tip: If you don’t want your name listed you can hire us to form the Texas LLC and we will be the organizer.
Typically an LLC in Texas will be brought into existence when the Certificate of Formation is filed by the Texas Secretary of State. However, if you want your LLC to be formed at a later date, you can indicate so here in this section. Otherwise, you can simply list the date when you’ve completed the Certificate of Formation.
This is where the organizer signs and dates the Certificate of Formation. It is the last and final part of the Texas LLC Certificate of Formation. Once you sign and date, either submit it online or mail it in.
How much does it cost to start a Texas LLC?
The Texas Secretary of State charges a $300 filing fee for Texas LLCs.
How long does it take to start a Texas LLC?
Texas LLC filing times vary depending on your filing method. Online filings will be approved in around 2 business days, and you’ll get an emailed zip file confirmation from the Secretary of State when it’s done. In-person filings also take around 2 business days. Mailed filings can take up to 5-7 business days, but expediting options exist for mailed filings as well. If you submit by mail, you’ll get a stamped copy back in the mail after the state approves your certificate of formation.
If you hire a Rapid Registered Agent to start your LLC, we file online and typically have your Texas LLC formed within 2 business days.
Does a Texas LLC need a registered agent?
Yes, a registered agent is required in Texas, but you can act as your registered agent. You need to list your registered agent on your Certificate of Formation and maintain one at all times. You must publicly list the physical address of your registered agent’s office (this will be part of your LLC’s permanent public record). Your registered agent must also be available during business hours to accept legal notices. Many people forming an LLC in Texas hire us to be their registered agent and use our registered office address for the principal, registered agent, registered office, members, and manager address to show stability as their LLC grows or changes—and not have to update addresses or worry about unwanted visitors at home or their office.
Get an EIN for your Texas LLC
Do I have to get a tax ID number (EIN)?
You will need a federal tax ID (Employer Identification Number or simply EIN) if you want to hire employees or be taxed as a pass-through entity with the IRS. Just about every bank will require you to have an EIN for your new Texas LLC. They are free and easy to get online by using the link above. Generally speaking, it is best to get an IRS EIN even if you don’t think you need it right now. If you run into a situation where a vendor asks for it, then you have it. A Texas LLC EIN will help establish credit with many of the vendors you’ll do business with and give you the option to not provide them with your social security number.
Do I need an Operating Agreement?
Technically, you do not need an operating agreement. There’s no office to file it with. A Texas LLC Operating Agreement is a private document, but it’s an important one to prove you observed corporate formalities.
Why is an Operating Agreement important?
For LLCs that have multiple members or investors, the operating agreement will usually spell out ownership and rights between the members and possibly include buyout provisions. Even though you won’t file it with any state agency, it’s the most important document to your Texas LLC. Even if you’re a single-member LLC, it’s ideal for you to have a Texas LLC operating agreement to show you observed corporate formalities. A bank will want to see your operating agreement before opening a bank account, and if you take on debt, creditors will want to see a copy of the agreement. Although the state filings you submit create the LLC, the operating agreement is very, very important.
The LLC operating agreement is the document that shows how your LLC will function who owns it and what you’ll do if you want to close it down or get in a fight with your investors or other members.
In creating an LLC, you’re starting a venture that involves some amount of risk. You should know and understand your Texas LLC operating agreement.
Open a Bank Account for Your Texas LLC
To open a bank account for your Texas LLC, you will need to bring the following with you to the bank:
- A copy of the Texas LLC Certificate of Formation
- The LLC operating agreement
- The Texas LLC’s EIN
If there are multiple members in the LLC, you may also want to bring an LLC resolution to open a bank account that states that the person going to the bank is authorized by the members to open the account in the name of the LLC.
We recommend calling your bank ahead of time before going in and asking what their requirements are. Most banks don’t open business accounts nearly as frequently as personal accounts, so some bankers may be unfamiliar with their own bank’s requirements. As frustrating as that may be for you, calling ahead will help save you from being super annoyed when you walk into the bank. If you are forming a series LLC, be aware that some banks won’t work with them at all.
Obtain a Business License
Does my Texas LLC need a business license?
Texas does not have a generic, state-level business license. Of course, professional and occupational businesses like lawyers, plumbers and similar kinds of businesses will need to get occupational licenses with the state.
If you are selling tangible goods (clothes, food, or other chattel) or services, you will need to apply for a Texas Sales Tax Permit.
Does my LLC need to obtain a Texas Sales Tax Permit?
If you’ll be selling any goods or services, you’ll need to apply for a Texas Sales Tax Permit. To do so, you must file a Texas Sales Tax Permit Application with the Texas Comptroller’s office. You can file online or by paper. The Comptroller’s office recommends you allow two to three weeks before you receive your permit in the mail. There is no filing fee.
File Texas LLC Franchise Tax
What is a Texas LLC Franchise Tax?
The Texas Franchise Tax is a business tax, which according to the Texas Comptroller of Public Accounts (state tax office), is assessed for the “privilege of doing business in Texas.” The tax is based on a business’s total gross revenue. The tax rates are as follows:
- 0.375% for wholesalers and retailers
- 0.75% for all other types of businesses
You may not owe any tax if your gross revenue is less than $1,130,000. However, you must still complete the filing for informational purposes. Unlike other states, the franchise tax in Texas is not a simple affair. You will likely need the help of a CPA or financial specialist to complete the form and pay the tax. This is a tax return, and you’ll need to complete your federal taxes before filing the Texas LLC Franchise Tax. The Franchise Tax is due every year by May 15. Late fees include a flat $50 fee plus either 5% (if less than 30 days late) or 10% (if more than 30 days late). Failure to file can result in the entity forfeiting its existence.
How much does an LLC in Texas cost each year?
Texas does not technically have an annual report for LLCs, but each year a Texas LLC must file and, if necessary, pay the Texas Franchise Tax.
What are the Texas LLC taxes?
Since Texas has no income tax, only the Texas Franchise Tax, if any, will have to be paid.
The state has a 6.25% sales tax, but cities, municipalities, and even transit authorities can add in their own sales tax (many do, usually to the tune of 2%), so you’ll often see sales tax rates of around 8.25% throughout Texas.