How to start an LLC in Texas in 2024

In this guide, we walk you through the steps of starting an LLC in Texas. As we do, we alert you to any costs associated with each step and free resources that can help you complete them. We end by answering frequently asked questions about Texas’s LLC startup process. 

You can start an LLC in Texas by completing these six steps:

• Choose your LLC’s business name.
• Choose or hire a registered agent. 
• File your certificate of formation. 
• Get an employer identification number (EIN).
• Create an operating agreement. 
• Register to pay sales and use taxes.

Featured LLC service offers

ZenBusiness

Learn More

Via ZenBusiness’ website

Free version available

Yes

Lowest published package price

$199

Live chat

Yes: Human

LegalZoom

Learn More

Via LegalZoom’s website

Free version available

Yes

Lowest published package price

$249

Live chat

Yes

Northwest Registered Agent

Learn More

Via Northwest’s website

Free version available

No

Lowest published package price

$39

Live chat

Yes

6 steps to start an LLC in Texas

1. Choose your LLC’s business name

Texas requires LLCs within the state to have a distinguishable name from other Texas-based LLCs, including names that are reserved but not yet in use. To ensure your business name is different, LegalZoom and Bizee both offer free Texas LLC name search tools. You can also email your name inquiry to corpinfo@sos.texas.gov to ask the Secretary of State to give you a preliminary determination of the availability of your chosen name. 

If your LLC name is in use in Texas, you can distinguish it, then move forward with a similar but acceptable name. Ways to distinguish your name from the one that’s already in use include: 

• Changing one keyword to a synonym (i.e., from “fast” to “quick”). 
• Adding or removing a keyword (not an article such as “the” or “a”). 
• Changing the order of the words.
• Changing a word’s form (i.e., from “magic” to “magical”). 
• Changing a word to the same word in another language (i.e., from “love” to “amor”).
• Changing the spelling of a word (i.e., from “Allan’s” to “Allen’s” or “Craft” to “Kraft”).

However, the following changes do not distinguish two names:

• Adding an article (i,e., “the,” “a,” or “an”).
• Changing the word for a cognate in another language (For example, “hotel” in English is the same as “hotel” in Spanish. You cannot change the pronunciation to make the name distinguishable). 
• Changing a number from its numerical form (i.e., “2” to “two”).

Also, keep in mind that certain words are prohibited for use in Texas LLC names, including: 

• Olympic or olympiad.
• Bank, trust, trust company or a similar word.
• College, university, school of medicine, medical school, health science center, school of law, law center or law school. 
• Veteran. 
• Legion.
• Foreign.
• Spanish.
• Disabled. 
• War or world war.

Once you’ve chosen a distinguishable Texas LLC name, you can reserve it until you form your LLC. To do so, download Form 501 – Application for Reservation or Renewal of Reservation of an Entity Name and fill it out per the instructions. Along with a $40 check or money order payable to the Secretary of State, print the completed form in duplicate and mail them to: 

P.0. Box 13697
Austin, Texas 78711-3697

In return, if your name is still available, you will receive a document stating you filed for the name reservation with a stamped copy of your form. 

2. Choose or hire a registered agent

Texas requires all LLCs to designate a registered agent. A registered agent is a person or registered agent service company with a physical address in Texas that receives legal and official correspondence on behalf of a company. The registered agent must be present at the address listed for the registered agent during all regular local business hours throughout the year. Thus, the registered agent’s address cannot be a P.O. box. 

At this point, you must only decide who your registered agent will be. You have two options for designating a registered agent. You can either have someone within your company serve as your agent or hire a registered agent service. If you designate someone within your company as your registered agent, they must meet the following criteria: 

• Be at least 18 years of age. 
• Be present at the address listed as the registered agent address during all regular business hours throughout the year. 
• Be able to receive notices and correspondence and forward them to responsible parties who are authorized to address them. 

In contrast, hiring a registered agent provides the following advantages:

• Privacy: Because a registered agent must publicly list a business address where correspondence can be delivered, hiring a registered agent service keeps the represented company from having to publish personal information, such as the address where an entrepreneur works from home. 
• Penalty avoidance: Many registered agents receive documents, scan and upload them to an online portal, then alert the client business of its availability for viewing online. In addition, they alert client companies of deadlines or urgent matters regarding received correspondence to ensure the company responds before penalties incur. 
• Flexibility: A designated registered agent must be present at the listed registered agent address during all regular business hours throughout the year. This means no leaving for paid time off, sick days, to meet with a client or for business travel. Hiring a registered agent frees internal personnel from these restrictions. 
• Reputation management: Some paperwork delivered to a registered agent could damage the business’s reputation, such as notices the company is being sued. Hiring a registered agent service ensures that embarrassing notices are not delivered to the company during business hours in front of customers or employees.
• Support: Many registered agent services offer complementary support features that give clients peace of mind, such as access to a consultation with a lawyer should a received document pose a problem to the client’ssiness. 

If you are interested in hiring a registered agent, read our best registered agent services guide. All providers listed operate in all 50 states, including Texas. 

3. File your certificate of formation

A submitted certificate of formation marks the official formation of your LLC. To file a certificate of formation, download and fill out Form 205 — Certificate of Formation — Limited Liability Company provided by the Texas Secretary of State. To fill out the form, you need: 

• Your business’s name. 
• The name of your registered agent and the address where they will be present during all regular business hours to represent you. 
• If you designate an individual, a consent letter stating that they are willing and able to perform the duties of a registered agent is required. 
• The names and addresses of your managers (if you have any). 
• The purpose of your LLC.
• The LLC’s mailing address. (This can be a P.O. box or a street address).
• The duration of the LLC’s operations. (Remember that a Texas LLC is perpetually operating unless stated differently in this certificate of formation). 
• The date you wish your LLC to be formed (called the effectiveness of filing).
• The signature of the person applying for LLC formation (called the organizer). 
• A $300 personal check or money order payable to the Secretary of State.

Print out two copies of your completed form. It is a good idea to have an LLC lawyer look over your form to ensure you included all necessary information for your unique situation. You may submit your form, a duplicate of your form, check and, if applicable, your registered agent letter of consent to: 

P.O. Box 13697
Austin, Texas 78711-3697 

Once you’ve submitted your form, a letter will be sent back to you with evidence of filing, which is a stamped copy of your certificate of formation application.

New LLC reporting requirement alert 

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has implemented a new reporting requirement for all non-exempt LLCs starting on January 1, 2024. 

The requirement is called the Beneficial Ownership Information (BOI) report and it is estimated to only take about 20 minutes to complete. 

Here’s what you need to know:

• LLCs formed before January 1, 2024 have until January 1, 2025 to file.
• LLCs formed between January 1, 2024 and January 1, 2025 have 90 days to file from the confirmed date of the businesses’ registration.
• New LLCs formed after January 1, 2025 will have 30 days to file from the confirmed date of formation.

For all details, FAQs and to file, visit FinCEN’s BOI website. 

4. Get an employer identification number (EIN)

An EIN is a number assigned to business entities by the IRS to identify the business, much like a Social Security number is assigned to identify a person. Also, like a Social Security number, your business’s EIN is used to perform tasks like opening a bank account or filing required business taxes. It is also necessary for hiring employees. 

Filing for an EIN is straightforward and free. You can file online using the IRS Tax ID/EIN Application (SS-4 Form). To fill out the form, you need the following information: 

• The name of your LLC. 
• Your LLC’s street address.
• The date of LLC formation. 
• The number of members (or managers) in your LLC. 
• Whether you want to file as an individual/partnership (not taxed as a separate entity from owners), an S-corporation or a corporation. Most will simply elect to file as an individual/partnership. 
• The state in which the LLC was incorporated.
• The name and Social Security number of the managing member. 
• Your reason for applying (i.e., “started new business”). 
• The industry that aligns with your company’s purpose. 
• Whether your business plans to accept credit cards. 
• Whether you plan to hire and pay employees. 
• Whether your business involves gambling, firearms, tobacco or alcohol. 
• Whether your business pays federal excise tax. 
• Any vehicles your LLC owns. 

After filing online, you immediately receive an EIN. Print out the confirmation form and keep it in your business records for future reference. 

5. Create an operating agreement

An operating agreement is not required to form an LLC in Texas, but it is strongly recommended. It is a legally-binding document between the members of your LLC that outlines how the LLC will be run and by whom. It also includes other pertinent information, including: 

• The purpose of your LLC. 
• Who your registered agent is. 
• The duration of your operations. 
• You members’ names and initial contributions to the company (denoting their share in the company). 
• How new or substitute members will be brought into the LLC. 
• Members’ duties and responsibilities. 
• Members’ voting rights. 
• How accounting will be performed. 
• Board members’ names, duties, powers and restrictions. 
• How board members are elected. 
• How managers are compensated, removed and the powers they hold to dissolve the company. 
• Who your LLC’s officers are, including its president, secretary, assistant secretary and treasurer. 
• Your board members’ and officers’ fiduciary duties. 
• How your LLC can be dissolved. 
• How distributions are dispersed. 
• The legal protections of the LLC against LLC members. 
• The LLC’s insurance requirements. 
• How the articles of organization can be changed or amended.

Many LLC formation companies offer free operating agreement templates, including Rocket Lawyer and Northwest Registered Agent. With a free account sign-up, Rocket Lawyer uniquely offers an online questionnaire that asks you a series of questions. Your answers are then used to fill out your printable articles of operation. Each member can then e-sign the document using Rocket Lawyer’s DocuSign tools. 

When you fill out articles of organization, all members must agree to the terms within, helping to prevent and solve disputes in the future. Their creation also ensures that state rules that contradict how you wish your LLC to operate cannot override your wishes as stated in your operating agreement. 

As a legally binding document that can have large repercussions on the future of your LLC, we strongly recommend having an LLC lawyer advise you as you complete this form. At that point, you should keep the signed document in your business records for future reference. 

6. Register to pay sales and use taxes

All Texas LLCs that are engaged in business, sell tangible personal property, lease or rent tangible personal property or sell taxable services in Texas must obtain a sales and use tax permit. Applying for and obtaining this permit is free. To apply for this permit, you must have the following information: 

• The LLC owner’s Social Security number. 
• The Social Security or federal employer’s identification numbers of each of your LLC’s partners. 
• Your LLC’s officers’ and directors’ Social Security numbers.
• Your LLC’s file number. (You can obtain this number from the Texas Secretary of State’s Taxable Entity Search tool. Input your LLC’s name or Tax ID number and select “Search” to find your file number). 
• Your LLC’s North American Industrial Classification System (NAICS) code. (To find this code, visit the NAICS system online and use the search bars at the left to look up your business’s industry. Find the code from the resulting list that most closely matches the purpose of your business’s operations.)

Once you’ve gathered this information, you can apply for your permit using the Texas Comptroller’s eSystems. Create a profile and follow the steps to apply.  

Cost to start an LLC in Texas

The biggest required expense for starting an LLC in Texas is the fee you must pay when filing your certificate of formation, which is $300. Other costs include hiring a registered agent (if you do not wish to or cannot serve as your own). Hiring a registered agent service costs anywhere from free to $300 a year, depending on the service provider and plan features. To reserve your LLC’s name while preparing to form your LLC, you must pay a $40 fee.

Find the best LLC services for Texas: Best LLC service

Texas requirements for LLCs

During the LLC formation process, Texas requires all LLCs to choose a distinguishable name from that of the existing LLCs and reserved names within the state, file articles of organization, appoint a registered agent and register to pay sales and use taxes. 

Following LLC formation in Texas, LLCs are required to obtain an EIN, pay unemployment taxes (if they have employees) and file an annual franchise tax report by May 15 of each year. Only LLCs with earnings over $1,230,000 must pay franchise taxes. However, all LLCs must file an annual franchise tax report to ascertain whether these taxes are owed. 

Resources for Texas LLCs

The following online resources can help you as you start your LLC in Texas: 

• Texas Economic Development
• Texas Secretary of State
• Texas Comptroller
• Texas SOSDirect
• Texas Workforce Commission
• Texas Unemployment Tax

Featured LLC service offers

ZenBusiness

Learn More

Via ZenBusiness’ website

Free version available

Yes

Lowest published package price

$199

Live chat

Yes: Human

LegalZoom

Learn More

Via LegalZoom’s website

Free version available

Yes

Lowest published package price

$249

Live chat

Yes

Northwest Registered Agent

Learn More

Via Northwest’s website

Free version available

No

Lowest published package price

$39

Live chat

Yes

Frequently asked questions (FAQs)