How to Form an LLC in Texas: Step-by-Step Guide
Forming an LLC in Texas is straightforward — but there are specific steps you need to follow. Here's a complete guide to forming your Texas LLC correctly.
Texas is one of the best states to form an LLC — no state income tax, a business-friendly legal environment, and a straightforward formation process. Here's how to do it.
Step 1: Choose a Name
Your LLC name must:
- Be unique — not already in use by another Texas business
- Include "Limited Liability Company," "LLC," or "L.L.C."
- Not include words that imply it's a government agency or bank (without special approval)
Search the Texas Secretary of State's SOSDirect database to check name availability.
Step 2: Choose a Registered Agent
Every Texas LLC must have a registered agent — a person or company with a physical Texas address who can receive legal documents on behalf of the LLC. You can be your own registered agent, or use a registered agent service ($50–$150/year).
Step 3: File a Certificate of Formation
File Form 205 (Certificate of Formation for a Limited Liability Company) with the Texas Secretary of State. The filing fee is $300.
You can file online through SOSDirect or by mail. Online filing is faster (typically processed within 2–3 business days).
Step 4: Get an EIN
Apply for an Employer Identification Number (EIN) from the IRS at irs.gov. It's free and instant online. You need an EIN to:
- Open a business bank account
- Hire employees
- File business tax returns
Step 5: Create an Operating Agreement
Texas doesn't legally require an operating agreement, but you should have one. It documents:
- Ownership percentages
- How profits and losses are distributed
- How decisions are made
- What happens if a member leaves
Without an operating agreement, Texas default rules govern your LLC — which may not reflect your intentions.
Step 6: Open a Business Bank Account
Use your Certificate of Formation and EIN to open a dedicated business checking account. This is essential for maintaining the liability protection your LLC provides.
Step 7: Consider an S-Corp Election (Optional)
If you expect to earn $40,000+ in net profit, consider filing Form 2553 to elect S-Corp tax treatment. This can save thousands in self-employment taxes. The deadline is 75 days from formation for the election to apply to the current year.
Ongoing Requirements
- Annual franchise tax report — Texas LLCs must file an annual franchise tax report (most small LLCs pay no tax but must still file)
- Maintain your registered agent — Keep your registered agent information current
Want us to handle your Texas LLC formation? The Gap ProAdvisors manages the entire process — Certificate of Formation, EIN, and optional S-Corp election — for a flat $700. Pay now or contact us.
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