How to Start an LLC in Texas 2024: Step-by-Step Guide

Vault’s Viewpoint

• Starting an LLC business in Texas helps reduce the owner’s personal liability.
• Registration for a Texas LLC is done with the Secretary of State.
• Make sure that you have a registered agent who is available during business hours to receive legal documents on behalf of the company.

How to Start an LLC Business in Texas

Step 1: Choose a Business Name for the LLC

Before registering your business, ensure its intended name (or something very similar) isn’t already taken in The Texas Secretary of State’s business name search. Texas requires businesses to operate under unique names and not infringe upon one another by being too similar.

When choosing a business name, keep in mind that you must adhere to approved naming schemes to be a compliant LLC. This means that the LLC’s name must contain one of the following designations at the end of the name:

• Limited Liability Company
• L.L.C.
• LLC
• Limited Company
• Ltd. Co
• Limited Liability Co.

The way this works is you choose the company’s name and add one of the aforementioned phrases as the suffix. For example, a company might be called “Mary’s Flower Shop LLC.” Note that the name itself must be different, not just the suffix. If “Mary’s Flower Shop Ltd. Co” already exists, “Mary’s Flower Shop LLC” would be too similar.

Names must not be offensive or misleading. For example, the name cannot insinuate that you are a government agency by containing the word “Treasury” in it. Additionally, names are not allowed to use trademarked or restricted terms such as bank, trust, trust company, Olympic, University, or veteran. The only exception is if the governing committee gives express permission to do so.

Step 2: Select a Registered Agent

Every Texas LLC must have a registered agent, the designated person who will receive legal documents for the company. Legal documents include tax documents or lawsuit notices. The registered agent must have a physical street address in Texas and be there during normal business hours. Documents may be delivered in person or via mail.

Registered agents cannot be the LLC itself. They must be individuals who are Texas residents over the age of 18. This could be you or a member of the LLC, as long as they meet the requirements. If none of the members are willing to be the registered agent, the LLC can hire a third-party agency that is registered as an agent service company authorized to conduct business in the state. Some LLCs will also hire a business attorney to be the registered agent.

Any registered agent should expressly consent to the role and keep this with the organization’s records. In this consent, you will list the LLC’s name, a statement from the registered agent’s consent, the name of the person who will be the registered agent, the signature of the registered agent and the date of execution.

Step 3: File the Certificate of Formation

A certificate of formation (otherwise known as articles of organization) must be filed with the Secretary of State. The articles of organization can be completed online by going to SOSDirec, or you can mail them in directly to the Secretary of State at:

Secretary of State

P.O. Box 13697

Austin, TX 78711

The form may also be filed in person at:

James Earl Rudder Office Building

1019 Brazos

Austin, Texas 78701

The Secretary of State’s business and nonprofit forms have all of the required information for registering each type of business, but in general, you can expect to provide the following information for an LLC’s certificate of formation:

• Organization’s name
• Organization’s type
• Registered agent’s name and street address
• Directors’ name and address
• The value of the authorized shares
• Organization’s purpose
• Mailing address
• The organizer of the entity
• Signature of organizer

Note that the information in the certificate of formation becomes public record after the form is filed. People can search for the company and find details about it from the Secretary of State. To keep information private, a virtual address can be used except for the address of the registered agent, which must be searchable.

Step 4: Write an Operating Agreement for the LLC

An operating agreement is not required in Texas but is generally a good idea, especially if the organization has more than one member. The operating agreement, which may also be called a company agreement, is an internal document that outlines how the company works and states each member’s duties and responsibilities.

An operating agreement is a useful document that can eliminate confusion because it states what each will do, how members can exit the company and whether or not they can decide to sell their shares or must get all members’ approval. The company falls under the default Texas law if there is no operating agreement.

In the operating agreement, make sure to include the following:

• Percentage of members’ ownership
• Voting rights and responsibilities
• Powers and duties of members and managers
• How profits and losses and distributed
• When and where meetings will be held
• Rules on buyouts, sellouts and distributions

Step 5: Obtain an Employer Identification Number (EIN)

Once your business entity is formed, you will want to obtain an employer identification number (EIN). You do this by going directly to the IRS and completing form SS-4 or by completing the online application.

The EIN is a nine-digit number similar to a Social Security number that’s used when filing taxes and opening bank accounts or getting loans for the LLC. It is also required when filing for state unemployment taxes and certain permits and contracts with vendors.

On the subject of taxes, note that the LLC has the option to pay taxes as a pass-through entity to its members or as a corporation. If it is a pass-through entity, the income and expenses are reported on the members’ personal tax returns on Schedule C. Even with this tax structure, it’s a wise idea to get an EIN so that the company is represented on its own and helps avoid members’ personal identity theft.

Step 6: File a Beneficial Ownership Information (BOI) Report

As of January 1, 2024, all new LLCs must file a BOI report to the Financial Crimes Enforcement Network within 90 days of their LLC’s formation/registration. LLCs created before January 1, 2024, have until January 1, 2025, to file their BOI report.

This law is meant to impede criminals who use LLCs as shell companies. Filing your BOI report is free. Failure to comply will result in civil fines of $500 per day and can get as serious as criminal penalties of $10,000 and two years in prison.

Step 7: Open a Bank Account

Once you have an EIN, you will want to open a business bank account. The business bank account should receive all income for the company and pay all expenses. Avoid mixing personal assets with the business. While an LLC limits the liability of personal assets of members, this can be convoluted and diminished if the business owner and the LLC commingle assets.

How Much Does It Cost to File an LLC in Texas?

The cost of registering an LLC varies from state to state, and in Texas, it costs $300 to file an LLC directly with the state of Texas. If you use a business registration service, there will be an additional fee associated with the registration. Note that there are no monthly or annual fees that you must pay in Texas, but, you may need to pay annual franchise taxes instead. Visit the Texas Comptroller’s website and complete Form 05-285 to pay your annual franchise taxes.