How to Form an LLC in Texas: Step By Step
Forming a Limited Liability Company (LLC) is an excellent option to protect your personal assets and enjoy numerous benefits. Forming your LLC in Texas is a relatively straightforward process, and this guide will walk you through the necessary steps to help you establish your business entity successfully on your own. See the end of the blog post for an easier way!
Step 1: Choose a Name for Your LLC
The first step in forming an LLC in Texas is selecting a unique and distinguishable name for your business. Ensure that your chosen name complies with the Texas Secretary of State’s guidelines and doesn’t infringe upon any existing trademarks. You can verify name availability through the Secretary of State’s online database. If you want an easy way without all the fuss, just use your last name in the name of the LLC. That way you will avoid having to file for a fictious name.
Step 2: File Certificate of Formation
To officially establish your LLC, you’ll need to file a Certificate of Formation with the Texas Secretary of State. The document requires essential information about your business, such as the LLC’s name, purpose, duration, registered agent, and members’ names and addresses. You can file the Certificate of Formation online or mail a completed form along with the appropriate filing fee.
Step 3: Appoint a Registered Agent
A registered agent is an individual or business entity responsible for receiving legal and official documents on behalf of your LLC. The registered agent must have a physical address in Texas and be available during regular business hours. You can choose to act as your own registered agent or hire a professional registered agent service. Most companies charge $99/year just to collect your mail! If you are not good at compliance, it may be worth it to hire one.
Step 4: Create an Operating Agreement
While not a legal requirement in Texas, it is highly recommended to draft an operating agreement for your LLC. This document outlines the ownership structure, member roles and responsibilities, decision-making processes, profit distribution, and other essential details. An operating agreement helps establish clear guidelines, prevents disputes, and ensures smooth operations within your business.
Step 5: Obtain an Employer Identification Number (EIN)
An Employer Identification Number (EIN) is required if you plan to hire employees or if your LLC has more than one member. You can obtain an EIN from the Internal Revenue Service (IRS) by completing an online application or through mail. An EIN is crucial for tax purposes and enables you to open a business bank account. You can get an EIN number at https://www.irs.gov in about 5 minutes.
Step 6: Comply with Texas State Tax and Regulatory Requirements
Depending on your business activities, you may need to obtain additional licenses or permits at the local, state, or federal level. Ensure compliance with Texas state tax obligations, such as sales tax and franchise tax, by registering with the Texas Comptroller of Public Accounts. On their site, they list the reports you will have to file.
Step 7: File Periodic Reports
To maintain your LLC’s good standing, you must file periodic reports with the Texas Secretary of State. These reports, called “Public Information Reports” (PIRs), require updated information about your LLC, such as member names and addresses. PIRs are typically due every year, and failing to file them can result in penalties or administrative dissolution of your LLC. The best way to find out if you missed anything would be to go to the Texas Comptroller site and search for your LLC. It will show you if you are behind on any requirements.
How Much Does It Cost To Form An LLC In Texas
The cost to file an LLC in Texas is $300. That is the state filing fee. After that, it depends on who you get to do it. You can do it for free yourself or you can hire an attorney or an accountant. This fee can range from $10 to $10,000! See below for the easy and inexpensive way.
The biggest decision is actually why you want an LLC. See my other blog post here to see if you even need one. If you decide to form one, remember to consult with legal and tax professionals to ensure compliance with all relevant laws and regulations. With your LLC established, you can focus on growing your business while enjoying the advantages of limited liability and a solid legal framework.
Here Is The Easy Way!
As promised, there is an easy way to get this done faster and without you going through all the red tape.
As of this writing (2023), Texas charges a $300 state filing fee.
With that being constant, you can get all of the above paperwork done for less than $200. I used to form LLC’s by hand for businesses and it is not fun filling out the necessary paperwork. Believe me, it is time consuming and will take away from you making money in your business. Since I moved to using Incfile, I have formed 26 companies for my clients effortlessly.
I would recommend the GOLD package for Texas LLCs as it will give you all you need without the fancy extras. And yes, I do get a small fee for referring people to them, but it is far less than my fee if I do it! (or a lawyers, which can go as high as $2,000)
Just CLICK HERE to start your LLC in Texas. Type in your state and LLC to start the easiest process ever!