Forming a Limited Liability Company (LLC) in Texas is a straightforward process that offers personal liability protection, flexible management, and favorable tax treatment. This guide walks you through each step required to organize and maintain your LLC under Texas law. Plan to budget roughly $300 in state filing fees and a few hours of focused work spread over one to two weeks.

Step 1: Choose and Reserve Your LLC Name

Your name must be distinguishable from any existing Texas business entity and must include “Limited Liability Company,” “LLC,” or “L.L.C.” Search the Texas Secretary of State’s SOSDirect or SOSUpload portal (sos.texas.gov) to confirm availability. If you are not ready to file immediately, you can reserve a name for 120 days using Form 501 for a $40 fee.

Before committing, also check that the matching domain name and any necessary social handles are available, and run a quick federal trademark search at uspto.gov to avoid future conflicts.

Step 2: Appoint a Registered Agent

Every Texas LLC must designate a registered agent to accept legal documents on behalf of the company. The agent must be a Texas resident (18 or older) or a business entity authorized to do business in Texas, and must have a physical street address in the state—not a P.O. box. The agent must consent to the appointment in writing (Form 401-A), which you should retain in your company records.

You may serve as your own registered agent, but many owners prefer a commercial service ($50–$300 per year) for privacy, reliability, and to keep their home address off the public record. We recommend using Corpnet for a service like this, or handling on your own.

Step 3: File the Certificate of Formation (Form 205)

This is the document that officially creates your LLC. File Form 205 with the Texas Secretary of State and pay the $300 filing fee. You can file online through SOSDirect (fastest, typically 2–3 business days), by mail, fax, or in person. The form will ask for:

• The LLC’s legal name
• Registered agent name and Texas street address
• Management structure (member-managed or manager-managed)
• Names and addresses of initial members or managers
• Purpose of the LLC (a general business purpose statement is acceptable)
• Organizer’s name, address, and signature

Once approved, the Secretary of State will return a stamped Certificate of Formation and assign your LLC a unique file number. Keep both with your permanent records.

Step 4: Draft an Operating Agreement

Texas does not require an operating agreement, but you should have one. This internal document governs how the LLC is run, how profits and losses are allocated, how new members are admitted, and what happens if a member exits. Without one, your LLC defaults to the rules of the Texas Business Organizations Code, which may not match your intent. Even single-member LLCs benefit from an operating agreement because it reinforces the legal separation between you and the company—a key factor in preserving liability protection.

Step 5: Obtain an EIN from the IRS

Once you have all of your LLC documents from the the state of Texas, you need to obtain your EIN from the IRS. An Employer Identification Number (EIN) is the federal tax ID for your business. Apply directly with the IRS at irs.gov—it’s free, takes about ten minutes online, and you receive the EIN immediately. You’ll need it to open a business bank account, hire employees, and file federal and state tax returns. By default, the IRS classifies single-member LLCs as disregarded entities and multi- member LLCs as partnerships, but you can elect S-corporation or C-corporation taxation using Form 2553 or Form 8832 if that better fits your situation.

Step 6: Open a Business Bank Account

Keeping business and personal finances separate is essential to maintain the limited liability shield your LLC provides. Open a dedicated business checking account using your stamped Certificate of Formation, EIN confirmation letter, operating agreement, and a government-issued ID. Most banks will also ask for a corporate resolution authorizing the account, which can be a short page from your operating agreement.

Step 7: Register for Texas Franchise Tax and File Your Public Information Report

Every Texas LLC must file an annual Franchise Tax Report and Public Information Report (PIR) with the Texas Comptroller of Public Accounts by May 15 each year. Most small businesses owe no tax thanks to the “no tax due” threshold (currently $2.47 million in annual revenue), but the report itself is still required. Just let your CPA know you have created an LLC, send them your LLC documents, and your EIN, and they will handle it from there.

Step 8: Secure Business Licenses, Permits, and Insurance

Texas has no general statewide business license, but most industries require some combination of professional licenses, a sales-and-use-tax permit (also issued by the Comptroller, free of charge), and city or county permits such as a Certificate of Occupancy. If you will hire employees, register for unemployment insurance with the Texas Workforce Commission and obtain workers’ compensation coverage or properly elect non-subscriber status. Finally, look into general liability insurance—and, where relevant, professional liability or commercial property coverage — to protect the business.

Estimated Costs and Timeline

• Certificate of Formation filing fee: $300
• Optional name reservation: $40
• Registered agent service (optional): $50–$300 per year
• EIN application: free
• Typical formation timeline: 1–3 business days online; 2–4 weeks by mail

Disclaimer

This guide is provided for general informational purposes only and does not constitute legal, tax, or financial advice. Filing fees, forms, and regulatory requirements change over time. Confirm current requirements with the Texas Secretary of State, the Texas Comptroller, and the IRS, and consult a licensed attorney or CPA before acting on any of the information above.