Texas LLC

How To Start an LLC in Texas

Once you decide a limited liability company fits your Texas business model and goals, it’s vital to form the business structure properly. Essential tasks include naming your LLC, choosing a registered agent in Texas, filing a Certificate of Formation, creating an operating agreement and securing an employer identification number. GovDocFiling is here to support you through every step of forming an LLC in Texas.

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What Is an LLC?

To get the most from your LLC, it helps to understand how the business structure works. LLC stands for limited liability company. One major benefit of the structure is the low LLC cost in Texas. Another advantage is business owners may easily establish an LLC in Texas.

No matter the industry your business operates in, chances are good that you can set up an LLC for it. It makes no difference whether you plan to bring on several owners or want to operate your business alone; an LLC works for both situations. While learning how to get an LLC in Texas, check that you do not work in a regulated profession with special considerations for forming an LLC.

Steps To Form an LLC in Texas

Include five major steps on your “how to get an LLC in Texas” checklist. We break down those essential items below with an in-depth guide.

Step 1

Name Your Texas LLC

When naming your LLC, it’s best to follow Texas’s naming guidelines. For instance, you must include “limited liability company” or an abbreviation, such as LLC, L.L.C., Limited, Ltd., Company or Co. You may not include words that could make someone mistake your business for a government agency, such as the State Department, FBI or Treasury.

If you want to use forbidden words, such as “university,” “attorney” or “bank,” you may want to submit extra documentation. You could also hire a licensed professional, like an attorney or physician, to be part of your LLC in Texas. It’s a good idea to check the Texas Secretary of State’s LLC naming guidelines.

While narrowing your options for your LLC’s name, search the Texas Comptroller of Public Accounts site to make sure another company has not claimed it. Do you plan to set up a site for your company? If so, check to see whether you may use your business name as a web domain. Buying the URL even if you feel unsure about building a site makes sense. That way, no one else can claim it before you do.

Step 2

Choose a Registered Agent in Texas

Your LLC must have a registered agent, which is an entity or person who receives legal forms, tax documents, lawsuit notices and government correspondence for your company. Registered agents serve as commercial liaisons with Texas.

You must appoint a Texas resident or corporation allowed to operate in the state. If you prefer, you may also choose an employee or yourself to serve as a registered agent. Agents must agree electronically or in writing to the role. The agreement statement should include:

  • The execution date
  • Your LLC's name
  • The agent's signature and name
  • A statement that the individual or entity consents to act as your agent

You need not file the agreement statement with the Secretary of State.

Step 3

File the Certificate of Formation

While learning how to get an LLC in Texas, you should go ahead and secure Form 205. You must complete and file the Certificate of Formation with the Texas Secretary of State in person, electronically or by mail. On the form, specify whether a manager or members oversee your business. Make sure you include the LLC cost in Texas, which is a $300 filing fee.

Step 4

Create an Operating Agreement

Texas calls the operating agreement a “company agreement.” You do not have to draft an agreement to form an LLC, but you could benefit from having one anyway. Areas to cover in your agreement include company organization, voting, management, distributions, capital contributions, dissolution and membership structure changes.

The document helps business owners remain in compliance while operating their company. With a thorough and effective agreement, you limit potential arguments. Sole owners of single-member LLCs may find operating agreements helpful in keeping their limited liability status. Customers, potential business partners and other professionals may consider your company more credible if you have an operating agreement.

Step 5

Get an EIN

The IRS issues nine-digit employer identification numbers to identify commercial entities and track tax reporting. Other names for the number include federal employer identification number and federal tax identification number.

Companies need an EIN to open business bank accounts, hire employees and file taxes. You need not worry about adding your identification number to your LLC cost in Texas because you get one for free. Secure your number online or by mail.

Frequently Asked Questions About LLCs

Here are common questions and answers regarding LLCs. Because of the questions’ general nature, consider speaking with an experienced legal or financial professional for personalized counsel. We only want to give you a general overview, not advice.

One of the best things about forming an LLC is you limit your legal liability, and that includes all members of the organization. Unlike a corporation, you need not hold regular meetings with your shareholders or board of directors. This benefit may reduce complications and the paperwork you must file.

If you form an S-corporation, you cannot have over 100 stockholders. All stockholders must be U.S. citizens or residents. LLCs may have as many stockholders as they wish. Another difference between LLCs and S-corporations is LLC members may place their interests in a living trust while S-corporation members cannot.

LLCs are not without their disadvantages. For instance, LLC employees who receive benefits like medical reimbursement and group insurance must treat them as taxable income. LLCs do not qualify for double taxation, which means all members must include company profits as part of their income.

No. Most LLCs operate under their legal company name, using it for all aspects of their business. However, if you want to conduct your business under a name that is different from your limited liability corporation name, you can register your DBA name.

Business owners do not need a business license to form an LLC in Texas. However, some industries require a statewide license. Most counties and cities do not require local business licenses, but it’s a good idea to check county and city government sites for the latest requirements.

If you collect sales tax or sell goods, you may want to register with the Texas Comptroller of Public Accounts. Depending on the tax, you may register by mail, online or in-person at a Comptroller field office. The state also mandates a yearly franchise tax on most LLCs.

Once you form an LLC, it’s a good idea to separate company assets from personal assets. By mixing the two, you risk your home, car and other assets if someone takes legal action against your business. Other than protecting your personal assets, another good reason to divide company and personal assets is to make filing taxes and accounting simpler.

You could also open a business credit card account after forming your LLC. Business credit cards further separate personal and commercial assets and build your commercial credit. Business owners need great business credit to secure commercial loans and other capital.

Think about hiring a business accountant once you form an LLC. Financial professionals ensure you do not pay too much in business taxes and help you sidestep unnecessary penalties and fines. While you may navigate business accounting on your own with software, leaving the task to a business accountant makes the job easier and may help ease anxiety. While the accountant takes care of the books, you’re free to invest more time and attention in your business.

Forming an LLC helps you limit your liabilities, but you can go one step further. Business insurance further limits your risk. General liability insurance shields your company from lawsuits. If you provide professional services, such as accounting or consulting, professional liability coverage protects you from business error and malpractice claims. If you have employees, workers’ compensation insurance covers them for job-related injuries and illnesses.

Consider setting up a website for your business. Having an online base makes your company more credible to consumers and other professionals you may want to work with. Plenty of options let you easily create your site yourself, or you may hire a professional web developer.

Put Your LLC in GovDocFiling's Hands

By leaving your LLC formation to GovDocFiling, you enjoy the fastest and easiest way to structure your business online. While you tend to your business and employees, our partners take care of all the heavy lifting and business formation paperwork for you. After choosing your business entity, all you have to do is complete an online business formation application with our partners at Inc Authority.  Receive one year registered agent services, free formation services, you only pay state fees, and rest easy knowing that your trusted partner is taking care of the mundane, yet critical filings necessary to run your business.  

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