How to Form an LLC in Texas

Texas is one of the best states for forming an LLC. No state personal income tax, a large and growing economy, and a filing process that is efficient once you know the steps. Here is what it takes.

Step 1: Choose a Name

Your Texas LLC name must:

• Include "Limited Liability Company" or an abbreviation (LLC, L.L.C., Limited Company, LC, L.C.)
• Be distinguishable from other entities on file with the Secretary of State
• Not imply a different entity type or include restricted words without authorization

Search existing entity names through the Secretary of State's SOSDirect system at sos.state.tx.us. Texas offers name reservations for 120 days if you want to hold a name while preparing your filing.

Step 2: Appoint a Registered Agent

Texas requires every LLC to have a registered agent and registered office in the state. The registered agent receives service of process and state correspondence on your behalf.

Your registered agent must:

• Be a Texas resident (if an individual) or an entity authorized to do business in Texas
• Have a physical street address in Texas
• Consent to the appointment

If you sign up with us, we provide the registered agent name and address for your Certificate of Formation.

Step 3: File a Certificate of Formation

File your Certificate of Formation (Form 205) with the Texas Secretary of State.

• Filing fee: $300
• Online filing: Through SOSDirect at sos.state.tx.us
• Processing: A few business days for online filings; expedited processing available for additional fees

The Certificate of Formation requires:

• LLC name
• Whether the LLC's duration is perpetual or a specific term
• Purpose (a general statement is acceptable)
• Registered agent name and registered office address
• Names and addresses of governing persons (managers or members)
• Names and addresses of organizers
• Whether the LLC is member-managed or manager-managed

Step 4: Create a Company Agreement

Texas calls the operating agreement a "company agreement." While not required to be filed with the state, it governs:

• Membership interests and capital contributions
• Management structure and authority
• Voting rights and procedures
• Distributions and profit allocation
• Transfer restrictions
• Dissolution and winding up

Texas courts enforce company agreements as written. Having a clear, thorough agreement prevents disputes.

Step 5: Get an EIN

Apply for an Employer Identification Number from the IRS at irs.gov. It is free. You need one to:

• Open a Texas business bank account
• File federal tax returns
• Hire employees
• Apply for business licenses

Step 6: File Your First Franchise Tax Report

Your first franchise tax report and Public Information Report are due May 15 of the year following the year your LLC was formed. Even if you owe no franchise tax (most small LLCs fall below the no-tax-due threshold), you must file the report.

Ongoing Obligations

Franchise Tax Report + PIR: File annually by May 15 through the Comptroller's WebFile system. Entities below the $2.47 million revenue threshold owe no tax but must still file.

Registered Agent: Maintain a valid registered agent continuously. File a Statement of Change with the SOS if your agent changes.

No State Income Tax: Texas does not tax personal income, which benefits LLC owners taking pass-through income. However, the franchise tax is separate.

Local Permits: Some Texas cities and counties require local business permits or registrations.

Texas LLC Costs Summary

Item	Cost
Certificate of Formation (Form 205)	$300
Annual Franchise Tax Report	$0 (below threshold) to calculated amount
Registered Agent (our service)	$99/year
EIN	Free
Name Reservation (optional)	Check SOS website

Why Texas

• No state personal income tax: Pass-through LLC income is not taxed at the state level
• Large economy: Second-largest state economy in the US
• Business-friendly regulation: Straightforward compliance and formation requirements
• Franchise tax threshold: Most small businesses pay $0 in franchise tax
• Growing market: Strong population growth and business relocation trends

Get Started — $99/year

Need a registered agent for your new Texas LLC? Sign up now.