Start an LLC in Texas [Steps & Costs Involved]
The process needed to start an LLC in Texas is, for the most part, simple and straightforward.
Even still, though, the process can feel intimidating at times. Especially if you haven't ever registered or started an LLC in Texas before. That's why we've put together this guide, though.
We walk you through figuring out the right name for your new LLC, registering an agent with the state of Texas for your business, filing the right Certificate of Formation paperwork, and all the other details you'll need to cover.
By the time you're done with the inside information below you'll know exactly how to get your new Texas LLC up and running.
Take Time to Name Your Texas LLC Correctly
Though there are a lot of “ducks in a row” you'll need to take care of when starting your Texas LLC, everything begins with choosing the right business name.
Texas has a handful of rules and laws on the books that determine how you should name your business, including (but not limited to):
- That your registered LLC name includes the words “Limited Liability Company” or any of the authorized abbreviations of that phrase
- That your registered LLC name not contain any words or phrases that could confuse people with state or federal government agencies
- That your registered LLC name not include any “restricted words” – like bank, university, etc. – unless fully licensed, authorized, and legally able to use those words in a business name
On top of that, you'll only be able to start an LLC in Texas if the business name you've chosen is 100% unique to the business community in the state.
The Texas Comptroller of Public Accounts website has a business name database that is 100% searchable online. Use that tool to find out whether or not the business name you'd like to use is available.
It's not a bad idea to choose a name for your Texas LLC that is unique to the state of Texas but also can be registered as a domain name. This'll help you big time with building your business going forward
Register an Agent with the State of Texas
The next phase of figuring out how to start an LLC in Texas is the registration of an official agent. Texas state law requires that all LLCs have a registered agent appointed, with that agent added to the state databases (with up-to-date contact information included).
Registered agents are individuals or businesses in the state of Texas that take on the responsibility of receiving legal documentation, tax paperwork, notices of lawsuits, and official state and federal correspondence on behalf of an LLC.
In Texas, registered agents can either be residents (current residents) of the state of Texas as well as corporations that act as registered agent services.
Registered agents must provide a filled out form of consent to appointment as well. This information needs to include:
- The name of the LLC and agent is registering for
- A full, expressed statement of the fact that this individual is consenting to be a registered agent for that LLC
- The full name of the individual or organization designated as the agent
- The contact information for that agent
- A signature from the registered agent themselves
You can find information on Texas commercial registered agents here.
Once that is all taken care of you can move on to the next step!
Be Sure to File the Correct Certificate of Formation
The correct Certificate of Formation needs to be filled out by business owners and entrepreneurs looking to start an LLC in Texas.
LLCs (prospective LLCs, anyway) will need to fill out Form 205 – the standard Certificate of Formation for this type of corporation with the Texas Secretary of State. It's important to make sure that this form is filled out accurately and completely that can also be done online.
One of the big decisions that business owners will have to make when filling out this form is how they are going to have their new LLC managed.
There are two options for LLCs in Texas:
- Member managed
- Manager managed
Both of these options have pros and cons for sure. But it's better to speak to legal professionals with a lot of experience in the formation of LLCs in Texas to decide which one makes the most sense for you.
It's not a bad idea to have those legal professionals look over the Certificate of Formation just to confirm that everything is good to go, either.
Secure a Federal EIN
After the Certificate of Formation has been handed in it's time to secure a Federal Employer Identification Number (EIN).
This nine digit number come straight from the IRS and opens up a lot of business features for LLCs that wouldn't have been available (easily, anyway) otherwise.
For starters, business banking becomes a whole lot easier when LLCs have EIN information to provide banking institutions.
Secondly, EIN information is necessary to hire employees. This information has to be transmitted to the IRS for tax purposes.
Finally, businesses can use their EIN for their own federal and state tax purposes, too. This is a huge piece of the puzzle to business success in the modern world. Contact the IRS to get the ball rolling on your free EIN after the rest of the LLC process has been taken care of.
Fees and Filing Timeline Info for LLCs in Texas
On top of filling out the Certificate of Formation, the Form 205, and drawing up Operating Agreements it's important to make sure that all filing fees are paid to the Secretary of State in Texas, too.
The majority of the money spent on filing to start an LLC in Texas is going to be spent when filling out the Certificate of Formation (Form 205). As of 2021 that form needs to be attached to a payment of $300 (nonrefundable) – and if expedited processing is selected that's another $25 fee on top.
For-profit LLC operations are also going to be assessed a $15 fee during the filing stages of the Acceptance of Appointment and Consent paperwork. Nonprofit LLCs in Texas will only be charged five dollars.
Businesses that wish to reserve a unique name for their LLC will have to pay a nonrefundable fee of $40.
The Secretary of State in Texas accepts all major credit cards, personal checks, and money orders for the payment of these fees, too.