If you’re starting a business in the Lone Star State, there are some steps you must take to establish your LLC. This guide will walk you through everything you need to know.
We’ll cover naming your LLC, obtaining a registered agent and even how to file your taxes. By the end of this article, you’ll be ready to start your own LLC in Texas.
1. Choose a Business Name
As part of the LLC formation process, you’ll need to choose a business name. State law requires that business names be unique to prevent confusion with other businesses and protect consumers.
You’ll also need an Employer Identification Number, which is like a tax ID number for your LLC. Incfile can help you get one quickly and easily.
2. File Articles of Organization
The next step is to file articles of organization. These documents state the basics about your company.
These include the legal name (which must include “limited liability company” or an abbreviation of this) and the initial mailing address. The state also wants to know whether your LLC will be manager-managed or member-managed.
You must also provide the organizer, who is the person completing and filing the paperwork. This can be the same person or a different person.
3. Obtain a Registered Agent
A registered agent is a person or company authorized to receive service of process and official correspondence for an LLC. Its address is publicly listed in state records.
An owner can be their own Texas registered agent, or hire a third-party service for privacy and convenience. Some services also offer compliance reminders and other business tools.
4. Open a Business Bank Account
Having a separate business bank account will help keep your personal and business expenses separated. When talking to a banker be sure you have the articles of formation, EIN number and other documents they may request.
It is also a good idea to have an operating agreement in place. While not required in Texas, it will help to prove your LLC is a separate legal entity and protect your personal assets from any liabilities the company may incur.
5. File the Certificate of Formation
Using the Online Filing System, enter your LLC’s name and select whether you’ll be member-managed or manager-managed. Also indicate your LLC’s purpose.
Designate a registered agent with an address in Texas (this can be another business or an individual resident of the state—including yourself). It must be able to receive legal documents during business hours.
Enter any supplemental information or provisions you want to include with your filing.
6. File the Annual Franchise Tax
If your LLC has employees or elects to be taxed as a corporation for federal purposes, it will need its own Employer Identification Number (EIN). This is the same as a social security number.
You will also need to enter your LLC’s address (office and place of business) and the names of the Members and Managers (if applicable). You can change your registered agent inside of WebFile for $15.
7. Create an Operating Agreement
An operating agreement is not required by Texas law, but it’s a good idea for many reasons. It establishes financial agreements and helps preserve your LLC’s limited liability status.
The document should include the registered agent’s name and address, how the LLC will be managed (member-managed or manager-managed), capital contributions, and other important details. You can download an operating agreement template from the state website.
8. Apply for an Employer Identification Number
An EIN is a unique nine-digit number that identifies your LLC for federal tax purposes. You can apply online or by mail using Form SS-4.
During the application, you’ll need to provide the name of your business and the address where it is located. You also need to select whether your business is owner-managed or manager-managed. You’ll then need to indicate your state of incorporation.
9. Apply for a Business License
If your LLC is subject to state taxes, it will need a business license. This is especially true if it will sell products and have a physical presence in Texas.
Matt Horwitz is an expert on LLCs who founded LLC University to translate complex legal information into easy-to-follow instructions anyone can follow. He’s cited by Entrepreneur Magazine and Yahoo Finance, among others.
10. Maintain your LLC
Having a unique name that passes the State of Texas business entity search is essential. You’ll also want an EIN (Employer Identification Number) for your LLC, which is similar to a social security number and will help the IRS identify your business.
You’ll need a registered agent, which is the person or business that will receive lawsuits and state paperwork on your behalf. You can serve as your own registered agent or use a service.
