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How To Start An LLC In Texas?

How To Start An LLC In Texas?

Do you want to give this business thing a go in the Lone Star State?

Then learn how to start an LLC in Texas. It's your best bet to launch a business quickly and strike it rich. Unlike a complex corporate company with a long list of registration requirements, a limited liability company is simple.

In this article, I will show you step-by-step how to get an LLC in Texas.

Let's dive in.

What Is An LLC?

Let's start by asking an essential question: what is an LLC, and how does it work?

A limited liability company (LLC) is a business structure that protects its members against personal liabilities. In a Texas LLC setup, your assets such as your house or car, are 100% safe should your business get sued.

It's a popular flexible business structure that combines partnership and a corporate business structure. 

The owners of an LLC are called members. 

There are two types of LLCs.

  • Single member LLC

As you can tell from the name, a single member is owned by one member. Texas LLC law takes a single member LLC as a disregarded entity LLC.

  • Multiple member LLC

A multiple member LLC (MMLLC) has two or more members who run the company together. Unlike a single member LLC, the IRS regards a multiple member LLC as a partnership.

3 Texas LLC Benefits: Why Start An LLC In Texas?

Starting an LLC in Texas has many advantages, including:

Rich Economy

Texas is the second-richest economy in the US after California. Research figures from Statista show that Texas's gross domestic product (GDP) hit 1,985.32 trillion in 2021. 

If you do excellent market research and create an on-demand product, you can make good money if you start an LLC in Texas.

Asset Protection

Running a business carries a lot of risks. You could lose all your stock because of an unforeseen calamity. Or you could get sued because you made a fatal mistake. Your business could incur an enormous debt the state has to recover. Opening an LLC in Texas protects your assets if there is a lawsuit because the law separates business and personal property.

Lower Taxes

High LLC taxes are business killers because they slow your company's growth, as they don't allow you to invest much back into your business. Texas Federal state law regards a single member LLC as a disregarded entity that's taxed at favorable sole proprietorship rates instead of the high corporate rates.

How To Form An LLC In Texas

We've covered the essentials. Let's now get into how to create an LLC in Texas step-by-step, shall we?

Come Up With A Name For Your Texas LLC

There are thousands of companies registered with the Texas Secretary Of State. 

For your filing to succeed, you must come up with a unique name for your LLC that's not in the Secretary Of State database.  Not only should the name be distinct, but it should be catchy and easy to remember. 

The Secretary Of State prohibits the use of these words in LLC names:

  • Health Science Center
  • Medical School
  • School Of Medicine
  • Trust Company
  • Olimpic
  • Bank
  • World War
  • Veteran

The above list isn’t exhaustive. 

Struggling to come up with name ideas? Use online naming tools for tons of instant ideas. Once you’ve found a few solid LLC name ideas, check their availability by:

  • Calling the State Business Information at 512-463-5555 on Monday through Friday during normal business hours.
  • Emailing the Texas Secretary of State at corpinfo@sos.texas.gov and asking for a name availability check.
  • Checking the Texas Comptroller taxable entity online database.

To create LLC in Texas name and complete it, add any of the suffixes below that show you are forming a limited liability company, not a corporation:

  • LLC
  • L.L.C.
  • Ltd. Liability Co.
  • Limited Liability Co.
  • Ltd. Limited Liability

Pick A Registered Agent

Next, pick a registered agent. 

To create an LLC in Texas, the Texas Business Organization Code (BOC) demands that every filing entity must have a registered agent. 

A registered agent must have a physical address or office in Texas where the State can serve them with service of process during business hours. Also, the registered agent's office is where the Office of the Secretary of State will mail correspondence. The BOC requires that your agent be available during regular working hours.

File Your Certificate Of Formation

Once you have secured a Texas-based registered agent, file a Certificate of Formation.

In case you are wondering, a Certificate of Formation is an official document you file with the Secretary of State to create and formally constitute your limited liability company.

A Certificate of Formation contains essential info about your LLC. It covers things like:

  • The LLC’s name and business type
  • Registered agent and registered office address
  • Governing authority: details of the manager or individual who will run the company
  • Share structure
  • The general purpose of the Texas LLC
  • The initial mailing address where the office sends official correspondence
  • LLC duration: an LLC exists perpetually unless its lifespan is specifically stated

Get A Certificate From The State

Created a unique name for your company? Check.

Picked a registered agent to represent you? Check.

Prepared and filed your certificate of formation? Check.

After filing your certificate of formation, wait for approval from the state. If your application to establish LLC in Texas is successful, you will receive a certificate from the Texas office notifying you that your LLC is now a legal entity. 

But it doesn’t end there.

Get An Employer Identification Number

Next, use your certificate to get an Employer Identification Number (EIN).

  • Register your LLC with the state's tax agency.
  • Open a business bank account.
  • Apply for business licenses if needed.
  • Apply for a business credit card.

Once you get your EIN, you are ready to operate.

Some states also demand that you file an operating agreement. It’s a document that outlines how you will run your company. It covers things like your management structure, shares and profit distribution, and paying yourself from an LLC. Another vital aspect is stating the conditions for closing an LLC.

While an operating agreement isn’t a requirement for a Texas LLC filing, it’s a vital document for running a successful business. So creating one will benefit your business and help you establish proper structures and systems for your LLC from the onset.

Get A Texas Business License

Depending on your company type, you may need an LLC license to operate in Texas.

There are 300+ business types that require licensing, among them:

  • Aircraft, drones, and aviation.
  • Agriculture.
  • Cosmetology.
  • Brewery or pub.
  • Catering.
  • Engineering services.
  • Health club or gym.
  • Investment and stock brokerage.
  • Medical laboratory.
  • Florist and greenhouse.
  • Oil and gas.
  • Restaurant and food service.
  • Security or private investigation.
  • Transportation services.

Research whether your LLC business type needs a license before you launch so you don’t get into trouble with the law.

Texas LLC Filing Methods

There are many ways to file your LLC documents with the Texas Secretary of State. Here are the five filing Texas LLC filing methods.

  • Online: You can file your documents online using the SOSDirect system. However, note that electronic doesn't cover all types of documents.
  • Fax: Secondly, you can apply for LLC in Texas by faxing your documents to (512) 463-5709.
  • Mail: You can also file LLC in Texas to the Corporations Section P. O. Box 13697 Austin, Texas 78711-3697.
  • Delivery: Another method to register LLC in Texas is by dropping the files at the James Earl Rudder Office Building1019 Brazos Austin, Texas  78701 
  • Courier: You can also do Texas LLC registration by sending your documents by courier or Federal Express. Send your documents to the delivery address mentioned above. 

Don’t forget to include payment with your documents. Speaking of cost, that's what we are getting into now.

LLC Cost In Texas

Next, let's answer the vital question: how much does an LLC cost in Texas?

The Certificate of formation for a Texas LLC entity is $300 for mail filing. For online filing, you fork out $308.

The good news?

You don't have to pay monthly or annual fees to keep your Texas LLC status.

Still, the Texas LLC filing fee is on the higher end compared to other states. Here's a quick rundown of LLC registration costs in a few states:

Admittedly, the Texas LLC cost is high. But because the Lone Star State is a rich economy, the initial investment is worth it. You can recoup it many times over in no time after launching your business.

How Long Does It Take To Get An LLC In Texas

I'm sure when you pondered on how to register LLC in Texas, one of the key questions you had was how long it takes.

The time frames differ according to the type of service you requested.

  • Nom-expedited documents: The office processes nom-expedited documents within 5-7 business days. 
  • Expedited documents: The Secretary of State processes expedited documents by the close of business the first business day following the date of receipt. The LLC registration Texas expedited service costs an extra $25. 
  • Documents filed online: Texas LLC approval for online filings is 2 to 3 days. 

Clearly, the fastest method for setting up an LLC in Texas is to file your documents online. That said, note that these time-frames are estimates. They can be longer depending on staffing, resources, and workload at the time of filing.

How To Apply For An LLC In Texas Online

As I’ve noted, creating an LLC in Texas is faster online.

Not only that. It’s also available 24 hours a day, 7 days a week. You can do it via SOSDirect, an online business service from the Office of the Secretary of State. You can complete the entire process with no human interaction.

Follow these steps to file your Texas LLC online:

  • 1. Create an SOSDirect account.
  • 2. Enter an account name, either your prospective Texas LLC name or your personal name.
  • 3. Then, enter your contact info and create a password.
  • 4. Put in your credit card information.
  • 5. Review the terms and conditions and click “I Accept” to agree and continue.
  • 6. Once you are finished, you’ll receive an email with your User ID within 1 hour.
  • 7. Go back to the SOSDirect Login Page and log in with your USER ID and password.
  • 8. Enter your credit card information again.
  • 9. Click “Business Organizations” on the menu.
  • 10. Select 'Domestic Limited Liability Company" under “Reservation Formation Registration Documents” and click “File Document.”
  • 11. Select "Certificate of Formation" in the “Filing Type” dropdown menu and click Continue.
  • 12. Follow the prompts and enter:
  • Entity Name and Type
  • Initial Mailing Address (Home address, office address, or your Registered Agent's address)
  • Governors (Choose between manager-managed and member-managed.)
  • 13. Type your full name to electronically sign the Certificate of Formation if you are the LLC organizer.
  • 14. Review your Certificate of Formation info for accuracy.
  • 15. Click “Submit Filing (Fee: $300.00)” to complete your filing and submit it to the Texas Secretary of State. They will charge you a 2.7% convenience fee, so you will pay $308 in total.

That's it.

You have successfully filed your Texas LLC. All that's left now is to wait for the approval.

That, my friend, is how to open an LLC in Texas online from the comfort of your home.

Texas LLC Filing Requirements

Here are the requirements for an LLC in Texas in a nutshell.

  • A unique LLC name.
  • A registered agent.
  • A Certificate of Formation
  • LLC fee in Texas is $300.
  • A business license if needed.

That’s it.

How To Get An LLC In Texas: Summary

Creating an LLC in Texas is straightforward.

While it involves many steps, it's not complicated. It's something you can do on your own without hiring expensive filing companies or agents. It doesn’t take long either, so there’s no need to put it off for later. 

Use these tips on how to register an LLC in Texas to launch your business today. 

Your customers are waiting.

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About the author 

Mike Vestil

Mike Vestil is an author, investor, and speaker known for building a business from zero to $1.5 million in 12 months while traveling the world.

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