If you wish to create a Limited Liability Company (LLC) in the state of Texas, then it’s just a few steps away. To create the same you must know what needs to be done exactly this will save you time. To file a Limited Liability Company in Texas you have to fill the Texas certificate of formation. This is one of the most important things that you should consider while filling an LLC in the state of Texas. So for helping the reader who wants to create Texas LLC, I have created this page. Here you will get all the steps that can help you in creating your LLC for Texas.
A simple procedure must be followed in order to create a Texas LLC. All the states might have a similar procedure but some of the details can vary from state to state. For creating a Limited Liability Company (LLC) in Texas you must have the certificate of formation. Although you can directly go to filing that certificate. You must follow a few steps that will lead you to it and also make your task much easier by following the complete flow of the process. You must file this form online and an amount of $300 will be charged. To create your LLC in Texas smoothly you have to follow the following instructions.
Step 1 – Texas Secretary of State (Name Search)
The first and essential step is to name your LLC. You cannot take any name for your Texas LLC, you must select a name that follows the instruction provided by the Texas state and the name must be unique. It is recommended that you choose a name that can be easily searchable by the clients. Here is the Texas naming requirement that you must follow before selecting your LLC name.
Guideline For Naming An LLC
- The name must include the abbreviations such as, “limited liability company,” “LLC,” “L.L.C.,” “Limited,” “Ltd.,” “Company.” or “Co.”
- Confusing words must not be included in your name of the LLC. (FBI, Treasury, State Department, etc.).
- Words like Bank, Attorney, University requires extra paperwork along with the licensed individual such as doctors, lawyer, etc.
- You should select a name that is unique and not used by any other entities.
Name Reservation & Availability
The name you choose for your Texas LLC must be unique and not used by any of the LLC. To make sure that your name is totally unique you have to perform a name search. If you are new to this process, just take a look at the complete business entity search process here. If you are through that process and have selected a name for your LLC, then you must reserve the name and it will cost you. The cost would be $40 for 120 days.
The domain name is another most important thing after the name search. As you know nowadays online presence is the most important thing. It is mostly recommended that you choose a domain name that is the same as the name that you have used for the name of the LLC. This would only help your LLC to increase its reach easily. People won’t find it difficult to search for your website. This seems small but can provide you an edge over your competitors.
Step 2 – Choose Your Registered Agent
Now, at this step, you must select a registered agent for your Texas LLC. Here you might think what is a registered agent right? It is who receives all the essential notice, tax forms, legal documents, and official government correspondence on behalf of your LLC. He or she will follow all your rules and regulation and will help to fill up the gap and allow your business to work smoothly. An agreement must be made with the registered agent that must contain the information such as, name of the LLC, Statement of the person. Name and the signature of the registered agent along with the date.
Who can be your registered agent for Texas LLC?
To become or have a registered agent must compile with two conditions only then he or she can become a Texas-registered agent. The first thing is that the registered agent must be a resident of Texas, and another thing is that the registered agent must be authorized to perform all the business transactions in Texas. There are the persons which you can select as a registered agent.
- You can become a registered agent of your own LLC.
- A friend or any family member can be a registered agent.
- A professional registered agent can also be hired as a registered agent of your LLC in Texas.
A registered agent should give his consent in written form or electronic form.
This will act as proof that he or she is officially a registered agent for your LLC. You should form consent and it is important to know what are the contents of this consent. So, when you draw up consent for your registered agent, it should include:
- The name of your LLC
- A statement expressing the person designated to serve as a registered agent.
- The name of your registered agent.
- Registered agent signature.
- The date when the consent is executed.
This consent is not required to be filed to the Texas SOS. If this consent form is forged in any way, then the registered agent may decline to provide any kind of service to that LLC. If you are looking for more details about this consent, you may take a look at form 401-A.
Step 3 – Filing Certificate of Formation
A certificate of formation with the secretary of the state must be filed in order to create a Texas LLC. You can fill the form in three ways that are online, mail, or in-person. A certificate of formation is a legal document for your business. In this form, you have to fill out the information such as the name of the LLC, name of the registered agent, date of the effectiveness along the purpose of forming this LLC. At the time of filing, you also have to provide the information on whether the LLC will be managed by a member or manager.
Method 1 – How to File Online
For filing an LLC online in the state of Texas, you can do it through the SOSDirect. This is a government system that enables you to create your Texas LLC online. In order to do so, you need to provide your credit card information first. Your card will only be used when your form is submitted.
You have to fill in all the details regarding your LLC that must include the name of the LLC, its purpose, its member’s name, by whom it will be managed, date of starting, and many more. If the actual date of filing and creating will be the same then you have to mention it in the form. You will also have to provide the details regarding the registered agent as well as the address of the registered office. To get started you must know the complete process of how to file the certificate of formation online.
Method 2 – Texas LLC by Mail
To create an LLC, you can process it using the mail system as well. You need to start with filing a form named certification of the formation along with the consent to serve as a registered agent and then take out two copies of it and mail them to the secretary of the state (SOS). You have to attach a cheque or money order of an amount of $300 to the secretary of the state and mail all the document to:
- Mail to:
Secretary of State
PO Box 13697
Austin, TX 78711
Texas LLC Filing Fees
Fees for the certificate of formation varies from one state to another. You have to pay the fees as asked by the government of the state. To form an LLC in the state of texas it will be charged an amount of $300 for domestic companies and $750 for foreign. There is a proper way to file, I have gone through each step with proper images on how to file a certificate of formation for Texas LLC.
Step 4 – Create Your Texas Operating Agreement
An operating agreement is a document that acts as a written contract among all the members of the LLC. This agreement is highly recommended as it contains all the details along with the rules and regulations of Texas LLC. It will also state which member has how much share and who is the owner of the LLC. It also includes information such as how the LLC is being managed and in what way the profits are split. There is much more to an operating agreement. Let me help you to know more about Texas operating agreement in particular.
Things to be included in the Operating Agreement
To create an operating agreement is one of the most important things. Though the government does not require the agreement, it is highly recommended it may help you with many aspects of LLC.
- Name of the LLC
- Duration of the LLC
- Address of the LLC
- Name & principal place of Business
- Purpose of the LLC
Step 5 – Get Your EIN For Texas LLC
You can obtain the EIN from the IRS after your LLC has been approved. This EIN helps you to perform certain tasks for your business. It will also help your entity to be identified by the IRS. You can obtain your EIN in two ways that are online or by filling the form SS-4. EIN is one of the most important things that you will be required as you will be identified by the IRS for paying your required taxes.
Why EIN is helpful?
- EIN allows you to create a company’s bank account and make transactions.
- It will help you to file your taxes and track them.
- You can hire employees as well.
If you are looking to know about the content of the EIN, you should start with understanding how to apply for an EIN. If you are ready to apply for it, you can do it online on the IRS website. If you are having trouble applying for your EIN online then you can mail it to them too. Although this process will take longer than online. You can mail them to this address:
- Mail to:
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Cost To Form Texas LLC
To get an idea about how much it can cost to create a Texas LLC will come in handy throughout the LLC formation process. I will outline all kinds of expenses that you may incur while forming your LLC in Texas. After this, you will have a solid idea about the cost and your plan can run smoother. All the cost shown below is not a must incur costs. A few can be eliminated according to your need.
|Texas Registered Agent||Starting from $39
|Registered Agent Consent Form||$15 (LLC), $5 (Non-Profit Org.)
|Texas LLC Name Search||$1 for online search
|LLC Name Reservation Fee||$40 online/paper filings
|Texas LLC Domestic Fees||$300 online/paper filings
|Texas LLC Foreign Fees||$750 online/paper filings
The estimated cost for domestic Texas LLC would be between $349 – $399. Now if you not a resident of The U.S. then it would require you to file for the Foreign Texas LLC that would estimate between $799 – $849.
|Texas LLC Important Details
|The Form||Certificate of formation
|Agency||Texas secretary of state
|The Filing Fee||$300/$750
|Registered Agent Fee||Starting from $39
|Franchise Tax Report Due Date||May 15
|State Income Tax||None
After Formation Process For Texas LLC
You should undertake the following steps if your LLC has been successfully filed. Below provided steps are the most important as these steps must be considered after your LLC is formed.
LLC Permits & License – A statewide general business license is not there in the state of Texas. You have to check your local city or town. Many of the cities in the state of texas don’t have a general business license. A business-friendly approach is followed by Texas here. Texas will ask for some licenses for eg: restaurants must have health permits, building permits, signage permits, etc. Professional service may help you better and save you time with your taxes.
Separate Your Personal & Business Assets – When you mix up your personal assets along with the business assets then, your personal assets are at the highest risk. You can start protecting your assets in the following ways. 1) Opening a business bank account. 2) Getting your business credit card.
As we know that running a business means paying taxes. Your tax amount would be dependent on the type of Texas LLC you are running. You can file your tax online, you may need to file it with one or more forms. Let us discuss in detail these taxes.
Charge on Texas sales – This tax is basically levied upon you when you are selling any product using your LLC. You will need a seller’s permit, depending on the products you sell, your taxes will be calculated.
Employer tax in Texas – If you are hiring employees then you must register with Texas unemployment insurance tax. Texas workforce commission can be used to form this on behalf of your employees.
Federal Requirements – Most of the LLCs are required to have a federal tax ID number that is equivalent to a social security number. Most of the LLC have to report their income to the secretary of the state.
One of the important elements after your LLC is formed is to hire employees. To do so you have to comply with government laws. Every Texas LLC must follow these steps when hiring employees:
- Verify whether they are allowed to work in the US or not.
- New employees must be reported as “new hires” to the State.
- You must provide the employees with workers’ compensation insurance.
- Withhold employee taxes. Use the described method.
- Print compliance posters and place them in visible areas of your workspace
Avoid Automatic Dissolution
Yes, the government holds the power to dissolve your LLC at any moment if you do not comply with government laws. Although the government is not that harsh. LLC may be fined if the paperwork for your LLC is not filed with the SOS. This would be easily avoided when you hire a professional registered agent. A professional agent is trained to avoid such circumstances and file all the necessary paperwork at the proper time. It is the duty of a registered agent to notify you of all such deadlines and update you when a particular task is completed.
Tip – Separate Your Personal and Business Assets
One of the most beneficial tips. When you keep your personal and business asset mixed then your personal assets are also at risk in case there is any liability on the business. In business terms, it is known as the corporate veil. So always keep this in mind, once your LLC is formed you must separate your personal and business assets. To protect your Texas LLC, you can do 2 things.
- Open a bank account for your business
- Get a credit card for your business
These two steps will help you to separate your business assets from your personal, it will make your business operation much easier and the credit card will help you to build a strong credit history of your LLC and also help you to raise capital.
Texas Foreign LLC Registration
The procedure for forming a foreign Texas LLC is the same as the domestic LLC. As we do a name search and name reservation for forming a domestic LLC, we also have to reserve the name by searching the availability of the name. The thing which is different is only that the foreign LLC has to submit a Certificate of good standing from the original state of formation.
- Selection and reservation of name
- Downloading the PDF stated by the government for foreign LLC
- Fill in necessary details as asked
- Bring out the certificate of Good standing from the actual state of formation
- Make a cheque made payment of amount $750 to the secretary of state
- Send all document to the given address
How to Obtain a Certificate of Good Standing
In Texas, the certificate of good standing is also known as the certificate of status. It will help to verify whether your LLC is appropriately formed and is adequately maintained. You might need the certificate of formation for several instances that are mentioned below. You can file your Texas LLC certificate online. A certificate of good standing is one of the most important things that should be submitted if you are filing a foreign LLC in the state of Texas.
- You can Seek funds from banks or other lenders
- You will need this if you want to form your LLC in another state as a foreign LLC.
- To obtain or renew specific licenses or permits.
How to Dissolve an LLC in Texas
It is equally important to know how to dissolve your LLC. In case of any unseen event that forces you or gives you a reason to dissolve your LLC, it is important you do it in the right way. If you do not dissolve it in the right manner then it may become a tax liability or some kind of penalty. The 2 processes that you will need to follow would be:
- To close your business tax accounts
- To file the articles of dissolution
These 2 processes must be conducted to dissolve your Texas LLC. In case you come to this situation and are ready to dissolve your LLC, then you would like to know the details of these 2 processes. Therefore follow the Texas LLC dissolution guide carefully.
Frequently Asked Questions
1. Can I become a registered agent for my LLC?
Yes, you can become a registered agent or you can choose anyone from your firm, friends, or relatives.
2. What are the maximum days are taken for creating a Texas LLC?
It will take 2 to 3 days if you file online and it will take 5 to 7 days if filed through the mail.
3. How can we file for an LLC in the state of Texas?
You can file in two ways either online or by mail.
4. Do I need to file an operating agreement with the state of Texas?
No, it is an internal agreement that you should create and keep in a file for future use.