How to Start Your Own LLC in Texas in 8 Steps

How to Start Your Own LLC in Texas

Written by:

Carolyn Young has over 25 years of experience in business in various roles, including bank management, marketing management, and business education.

Reviewed by: Sarah Ruddle

For over 15 years, Sarah Ruddle has been a noteworthy leader in the business and nonprofit world.

How to Start Your Own LLC in Texas

When starting a new business, one of the first big decisions is which type of business entity to form. Many entrepreneurs choose a limited liability company (LLC) because of its many benefits. An LLC provides personal liability protection, for example, so that your assets are not at risk if your business is sued or cannot pay its debts. 

Also, an LLC is a “pass-through entity” in taxes, meaning income passes through the company to the LLC owners or members, who report it on their tax returns. 

LLCs also offer flexibility in management and tax status, yet another reason it’s popular in Texas.

Here are the steps that you need to take to form an LLC in Texas.

LLC Overview in Texas

1. Name Your Texas LLC

Naming your business can be challenging. You need a name that’s unique and easy to remember and conveys what your business does. To choose a name, you can try a few different methods:

  • Decide on a Business Concept: Before you name your LLC, you need to have a clear idea of what your business will do.
  • Ask People You Know for Suggestions: Reach out to people whose opinions you value and trust. Explain your business concept and ask for their thoughts on a name.
  • Do a Web Search: Once you have a few name ideas, check their online presence. Is the domain name available? Are there companies with similar names that could create confusion?
  • Use an Online Business Name Generator: They can provide inspiration and help you think about your business from different angles. Keep in mind, though, that these generators can’t replace human creativity and may not understand the nuances of your business as well as you do.

Your business name is your business identity and the first impression people will have of your company, so be sure to take your time with this step and get it right.  

Once you have a few business name ideas, you’ll want to ensure they’re available. First, do a business name search on the Texas Comptroller’s website. You should also search for similar business names, as you don’t want a name that can be easily confused with other businesses in Texas.

Also, check your Texas’ LLC naming regulations to ensure you comply. 

In Texas, your LLC name must include the phrase “limited liability company” or one of its abbreviations (LLC or L.L.C.). In addition, your LLC name cannot have words that could confuse your Texas LLC with any government agency or other business in the state or imply that you are engaged in unlawful activity.

Your business name cannot imply that the LLC was created by or for the benefit of war veterans or their families. Therefore, the following words are prohibited: veteran, legion, foreign, Spanish, disabled, war, and world war. It also cannot include “lotto” or “lottery.”

Next, check with the US Patent and Trademark Office to ensure the name is not trademarked and is thus available nationally. 

Here are additional tips and suggestions provided to assist in the process of choosing a name for a Texas LLC.

Once you’ve confirmed these, it’s a good idea to reserve the name with the state. To reserve an LLC name in Texas, start by visiting the Secretary of State’s website, creating an account, and completing the online application.

image

You’ll need your proposed name, the business entity you plan to form, and your name and address.

Enter all the required information and your electronic signature, then move on to payment.  Alternatively, you can complete and mail a paper form

The cost to file a name reservation in Texas is $40. Once your application is processed, your LLC name will be reserved for 120 days.

Doing Business As (DBA)

You may want to do business under a name other than your LLC name. You’ll need to register a “doing business as” or DBA name. There are two main reasons you might want to use a DBA.

  • Suppose you want to add new product lines. For example, if your business name is “JJ’s Waffles,” you want to expand and offer “JJ’s Muffins.” You can have multiple DBAs under the umbrella of your one LLC. 
  • When you have a DBA, you can have a business bank account under that name. So if you add “JJ’s Muffins,”  customers can pay “JJ’s Muffins,” and you can deposit those payments into the bank account with that name.

In Texas, a DBA is known as an assumed name. To register an assumed name in Texas, go to the Secretary of State’s website and download the form. Unfortunately, you cannot file online, only by mail.

You’ll mail the completed form to:

Secretary of State
P.O. Box 13697
Austin, TX 78711-3697

The registration fee for registering a DBA in Texas varies by county but generally costs $25 for corporations and LLCs and $15 for sole proprietors and partnerships. Your assumed name is suitable for ten years.

2. Select a Registered Agent

Texas requires LLCs to appoint a registered agent, a person or company authorized to accept and respond to official business correspondence, such as legal, tax, or financial documents. 

The registered agent ensures all important notices and documents are received. In Texas, the registered agent can be an LLC member, individual, or entity that meets state requirements. In Texas, a registered agent must: 

  • Be 18 years or older
  • Have a physical address in Texas
  • Be available during regular business hours 
  • Be registered to operate in Texas, if it’s a business

Many business owners hire a registered agent service to ensure their LLC stays fully compliant and for convenience. 

If you choose to be your registered agent, you must be at your registered agent’s address for all business hours. A registered agent service allows you to be wherever you need to be to run and grow your business. 

3. Determine Your Management Structure

Members or managers can manage LLCs. In a member-managed LLC, members handle all management duties. In a manager-managed LLC, non-member employees oversee operations and management duties. 

Note that with a manager-managed LLC, a member can be a manager, but only in cooperation with another manager who is not a member. 

Member-managed LLCs generally work best for LLCs with few members, all of whom can take an active role in day-to-day operations. Conversely, manager-managed LLCs are best for LLCs with multiple members, some of whom want to be “silent” or passive members and not involved in day-to-day operations.

Most LLCs are member-managed, as they are small businesses that cannot afford a management team. In Texas, your LLC is considered member-managed if it’s not otherwise specified in the Certificate of Formation. 

Discover the difference between member-managed and manager-managed LLCs, and gain insights on selecting the appropriate management structure for your LLC.

4. File a Certificate of Formation with the Texas Secretary of State

To start, visit the Secretary of State’s website and create an account to access the articles of the organization online. 

image

In Texas, the certificate of formation requires the following information:  

  • LLC name
  • Registered agent information
  • Registered office address
  • Governing authority information
  • Business purpose
  • Mailing address
  • Organizer contact information
  • Effective date

Once you’ve created your account, log in and enter your payment information. You’ll need to do so to proceed to the online filing, and you will not be charged until you’re finished entering all of your information. When finished, click Continue.

image

Once you’ve entered your payment information, click “SOSDirect-Business Filings” and “Let’s Do Business” from the dashboard page. Next, click “Use SOSDirect for Online Business Filings and Searches” and the “enter site” button. 

From the Business Organizations Menu, scroll down to Web Filings, select Domestic Limited Liability Company from the drop-down menu, and click File Document. Then, select certificate of formation. 

image

You’ll first be prompted to look up your desired business name to confirm it’s available. Next, you’ll enter all the information in the bulleted list above. Once complete, you’ll have a chance to review your entries before confirming and moving to the payment screen.

image

You can also complete and submit a paper form if you wish to file by mail. The filing fee is $300, and you should receive confirmation of formation within 5-7 business days.

Contact Information for the Texas Secretary of State

Texas Secretary of State Website

Phone: (512) 463-5555

Mailing Address:
Business & Commercial Section
Secretary of State
P.O. Box 13697
Austin, TX 78711-3697

5. Draft an Operating Agreement

An Operating Agreement is a legal document that outlines the ownership and member duties of your Limited Liability Company (LLC).

Texas does not require an operating agreement, but it’s still a good idea to have one, even for single-member LLCs, as it can provide legal protections and more established operating procedures.

Here are the elements an LLC Operating Agreement should typically include:

  • LLC’s name and principal address (primary location where business is registered)
  • Duration of the LLC
  • Registered agent name and address
  • Membership Information
  • Management and voting
  • Financial matters (e.g. the way profits and losses will be divided)
  • Changes and amendments (e.g. procedures for adding or removing members)
  • Disputes, legalities, and policies
  • Record keeping and communication

You can find operating agreement templates online, but it’s best to have them drawn up or reviewed by an attorney. The language of an operating agreement is crucial and can often help determine how member disputes will be resolved. For more information about the operating agreement, refer to our comprehensive guide on the Texas LLC operating agreement, and you can also obtain a free template.

6. Get Your Employer Identification Number (EIN)

The IRS uses an EIN to identify your company for tax filing purposes. An EIN is required if your LLC has more than one member or if you are hiring employees. 

Obtaining an EIN simply requires applying on the IRS website, as detailed here:

All EIN applications (mail, fax, electronic) must disclose the name and Taxpayer Identification Number (SSN, ITIN, or EIN) of the true principal officer, general partner, grantor, owner or trustor. This individual or entity, which the IRS will call the ‘responsible party,’ controls, manages, or directs the applicant entity and the disposition of its funds and assets. Unless the applicant is a government entity, the responsible party must be an individual (i.e., a natural person), not an entity.

Learn how to get a Texas Tax ID (EIN) for an LLC.

7. Obtain Business Licenses and Permits

Depending on the nature of your business, you may need to apply for various licenses and permits at the federal, state, and local levels. 

At the federal level, licenses and permits are generally industry-specific and may include health licenses and permits from the Occupational Safety and Health Administration (OSHA). Check the SBA guide for specific licenses required for your business.

Texas doesn’t require a general business license. However, your business may need a state-level  licenses, permits, certifications depending on your industry.

For information on the appropriate statewide licenses, head to the Business Permit Office’s Texas Business Licenses & Permits Guide or directly to the Texas Department of Licensing and Regulation website.

If you sell tangible goods or services subject to sales tax, you’ll need a sales tax license, also known as a seller’s permit. 

To find out more about local business licensing, visit your city or county clerk’s website or office.

Here are some standard licenses and permits you may need:

  • Industry-specific licenses for certain professions and industries, such as construction, plumbing, electrical, childcare, food handling, liquor, architecture, and finance
  • Building and zoning permits
  • Doing business as (DBA) permits using a name other than your LLC.
  • Health licenses and permits at federal, state, and local levels
  • Fire permits
  • Sign permits

This is a significant step in the LLC formation process, so make sure that you check with your state and local government offices to find out all the licenses and permits you need.

You could face steep fines and penalties if you operate without the proper licenses and permits.

It’s a good idea to consult with a business attorney to make sure you’re in full compliance. You can also use a service like MyCorporation to do the research and provide you with all the forms you need to license your business entirely.

8. Determine Your Tax Status

By default, an LLC is a “pass-through” entity, which means the business itself does not pay income taxes. Instead, the business’s profits or losses are passed through to the members’ individual tax returns. The taxes are then paid at each member’s individual tax rate.

  • Single-Member LLCs: If the LLC has only one member, it’s taxed like a sole proprietorship by default. This means the income from the LLC is reported on the member’s personal income tax return on Schedule C, and they’re responsible for paying self-employment taxes (Social Security and Medicare taxes) on that income.
  • Multi-Member LLCs: If the LLC has more than one member, it’s taxed as a partnership by default. The LLC must file an informational tax return (Form 1065), but the income and deductions are passed through to the members. Each member reports their share of the income and deductions on their personal tax return. As with single-member LLCs, members must also pay self-employment taxes on their share of the profits.

An LLC can also choose to be taxed as a corporation by filing an election form with the IRS (Form 8832 for a C-Corp and Form 2553 for an S-Corp). This can be beneficial under certain circumstances:

  • C-Corporation Taxation: Electing to be taxed as a C-Corporation can offer benefits to an LLC, particularly if the members want to retain earnings in the company. The corporation pays tax on its profits at the corporate rate (which was 21% as of 2022). If the profits are distributed to the members as dividends, the members must report these dividends on their tax returns and pay tax on them. This is known as “double taxation.” However, members aren’t subject to self-employment taxes on their dividends.
  • S-Corporation Taxation: Choosing S-Corporation status can also be beneficial for an LLC. Under this scenario, the LLC does not pay corporate income tax. Instead, the income, deductions, and credits pass through to the shareholders, who report them on their individual tax returns. However, unlike a standard LLC, an S-Corp is required to pay its members a “reasonable” salary for the work they perform for the company. This salary is subject to payroll taxes, but any additional profits distributed to the members aren’t subject to self-employment taxes. This can result in significant tax savings, especially for businesses with high net income.

Other Requirements

Open Your Business Bank Account

When you have an LLC, it’s important to keep your business and personal finances separate for accounting and tax purposes. Commingling your business and personal funds can threaten your liability protection since the line between business and personal assets will not be clear.

Most banks offer business bank accounts, so check with your local bank. You’ll need your EIN and a copy of your Certificate of Formation. Your bank may require other documents as well. 

Apply for a Business Credit Card

A business credit card can help establish business credit so that if you apply for a business loan or line of credit in the future, you’ll have a better chance of getting approved. A business credit card can also help pay startup expenses, reducing out-of-pocket costs. 

Get Business Insurance

Insurance is the right choice to protect the investment you’ve made in your business. There are several different types of insurance you may need.

  • General liability: A comprehensive type of insurance covering many business elements. It includes coverage against bodily injury and property damage.
  • Professional liability: Protects against claims from a customer who suffered a loss due to an error or omission in your work. It’s also known as errors and omissions (E&O) insurance. 
  • Workers’ compensation: Provides compensation to employees injured on the job.
  • Property: Covers your physical business space.
  • Business Property: Covers equipment and supplies.
  • Equipment Breakdown Insurance: Covers the repair or replacement of broken equipment due to mechanical issues.
  • Commercial auto: Covers your company-owned vehicles.
  • Business owner’s policy (BOP): This option combines the above insurance types.
Types of business insurance

LLC Records

You’ll want to keep copies of your formation documents and operating agreement in a safe place. Any other official documents, such as vendor contracts and legal or financial documents, should also be kept in your records. 

Annual Reporting

In Texas, LLCs must file an annual report to keep their business in good standing.

The report is due each year on May 15th. The filing fee is based on the total revenue of the business. For more information, visit the Texas Comptroller’s website

FAQs

How much does It cost to start an LLC in Texas?

RequirementCost
Name Reservation Fee$40
LLC Registration Fee$300
Business License FeesVary by localities and type of business
Assumed Name Fee$25
Annual Report Fee$0

How to dissolve an LLC in Texas

To close a Texas LLC you must first finish all “wind-up” tasks—stop doing business, notify claimants, settle debts, and dispose of assets—then file a $40 Certificate of Termination with the Secretary of State.

The form asks for basic entity details, the names and addresses of all governing members, the reason for dissolution, and a choice of when the termination should take effect (immediately, a future date, or a specified future event within 90 days).

You must also attach a tax-clearance certificate from the Texas Comptroller and have an authorized person sign the filing. If you prefer, a third-party service can handle the paperwork for you.

How much does it cost to dissolve an LLC in Texas?

Dissolving a Texas LLC costs $40, the statutory fee to file a Certificate of Termination with the Secretary of State.

How long does it take to get an LLC in Texas?

Filing online is fastest: SOSDirect approvals arrive in about 10-12 business days (SOSUpload 13-15), so you’ll usually have a Texas LLC in roughly two weeks.

Mail filings take much longer—about 2-3 months end-to-end—though you can pay an extra $25 for “expedited” mail processing that still runs 10-12 business days.

Once approved, the state emails your Welcome Letter, Certificate of Filing, and stamped Certificate of Formation, and you can track status online.

How to change your LLC address in Texas

To update your Texas LLC’s address, first decide which one you’re changing. A business mailing address is easy: log in to the Texas Comptroller site (or note the change on your annual Franchise Tax Report) and update it for free—even a P.O. box is fine.

Changing the registered office (the physical street address where your registered agent accepts legal papers) requires filing a “Statement of Change of Registered Agent/Registered Office” with the Secretary of State; it costs $15 and can be submitted online via SOSDirect, by mail, fax, or in person.

Skip the far pricier $150 Certificate of Amendment unless you’re making other formation changes at the same time. Remember, both addresses become public record, and the registered office must be staffed during business hours.

How to add a DBA to an LLC in Texas

Adding a “doing-business-as” name to a Texas LLC simply means filing an Assumed Name Certificate with the Secretary of State, listing the LLC’s legal name, file number, principal address, counties of use, and the period (up to 10 years) that you’ll use the name, and paying a $25 fee by mail or in person—Texas doesn’t yet accept these filings online.

How to change an LLC name in Texas

To rename a Texas LLC, first confirm the new name is available, then file a Certificate of Amendment (Form 424) with the Secretary of State and pay the $150 fee—online filings via SOSUpload are approved in about 13-15 business days, while mail filings can take 4-8 weeks.

Once the amendment is approved, update the IRS (so the EIN matches), your bank and credit accounts, state or local licenses, and any branding or marketing materials.

Changing the name on these secondary records doesn’t have to happen the same day, but should be completed in due course to keep everything consistent.

How to look up LLC in Texas

Start by running the free Taxable Entity Search on the Texas Comptroller’s site (omit “LLC,” try singular/plural and partial phrases) to see if any existing business already uses a name that’s identical or confusingly similar to yours.

For extra certainty, you can phone the Secretary of State’s business-info line at 512-463-5555 or email a name-availability request—both are quick and cost-free.

Texas doesn’t require a name reservation, but you may lock a name for 120 days for $40 if you won’t file right away.

Be sure your proposed name uses an allowed designator (LLC, L.L.C.) and avoids restricted words such as “Bank,” “University,” or anything implying government affiliation.

Do you have to renew your LLC every year in Texas?

You don’t pay an annual “renewal” fee for a Texas LLC, nor do you file the kind of standard annual report many states require.

Instead, every Texas LLC must submit a franchise-tax report and Public Information Report to the Comptroller by May 15 each year (even if no tax is owed).

File the “No Tax Due,” “EZ Computation,” or regular long-form report, depending on your revenue; late or missing filings trigger a $50 penalty, interest on any tax due, and eventual loss of good standing.

Keep those two filings current and your LLC remains active without any separate yearly registration step.

Can a minor own an LLC in Texas?

A Texas minor can legally own an LLC interest, but they’ll need an adult to organize the company and to handle any contracts until they reach the age of majority.

What is a series LLC in Texas?

A Texas Series LLC is a cost-efficient asset-protection tool when you need distinct liability “buckets” under one roof, but it only works if you preserve clear corporate formalities and understand that recognition outside Texas isn’t yet universal.

How to transfer LLC ownership in Texas

To transfer ownership in a Texas LLC you generally follow the procedures set out in the company’s Operating Agreement:

  1. for a partial transfer, the departing member sells their interest under a buy-sell agreement—often to the remaining members, who must unanimously consent unless the OA says otherwise;
  2. for a full transfer, all members typically approve selling either the entire entity or its assets to a new owner through a purchase agreement.

After the sale, update state records by listing the new governing persons either in your next Public Information Report or via a Certificate of Amendment; you’ll also need to revise the IRS “responsible party,” bank accounts, and any licenses.

If no Operating Agreement exists, Texas default law requires unanimous member approval for any ownership transfer, which can be cumbersome, so drafting a clear OA up front is critical.

Do i need a registered agent for my LLC in Texas?

Yes. A domestic or foreign filing entity is required to continuously maintain a registered agent and registered office in Texas.

Can I be my own registered agent for my LLC in Texas?

Yes. You can serve as your own registered agent in Texas if you’re 18 +, maintain a physical street address in the state (no P.O. box), and are consistently available there during business hours to receive legal notices.

Just note your address becomes public and you must never miss deliveries, so some owners choose a professional service for privacy and reliability.

How to remove a member from an LLC in Texas

Texas law doesn’t let you simply “kick out” an LLC member. Removal must follow your operating agreement; if it’s silent, you either (1) dissolve the LLC by majority vote and re-form without that member or (2) obtain a court-ordered involuntary dissolution. Document the decision, settle the departing member’s interest, and update state filings as needed.