How to Start an LLC in Texas

With its business-friendly climate and large workforce, forming a Texas limited liability company (LLC) is an easy choice for many small business owners and entrepreneurs. While operating as an LLC can be a great business decision, you need to understand your state obligations during and after formation.

Use this blog for step-by-step guidance on forming your Texas LLC, what to do after you file, and the one-time and ongoing costs of operating as this entity type.

Why start an LLC in Texas?

Because Texas has no state personal income tax (businesses are still responsible for federal income tax), a Texas LLC formation can be a smart choice over remaining a sole proprietor. Here are some of the top reasons it might be beneficial to form an LLC in Texas for your operations.

1. Texas is one of the most business-friendly states in the country.

2. It has a strong economy built on several industries and ranks among the largest economies in the world.

3. Texas has several large cities that can help your LLC thrive and reach the right audience.

How to Start an LLC in Texas (6 Steps)

Successfully form your LLC in Texas by following these steps in order.

Step 1: Name Your LLC

The first step in starting an LLC in Texas is choosing a name. The state of Texas has a few naming requirements for LLCs that you must conform to:

• Your Texas business name must be available and unique.

• After choosing your business name, you have the option to reserve your name online for up to 120 days.

• Reserving your business name online costs $40.

You also have the option to register your business name by filing a name registration. For LLCs in Texas, this means that other business owners can’t use your business name as a fictitious or legal name.

Name registrations are valid for one year and can be renewed.

Step 2: Choose a Registered Agent

Texas has two requirements for registered agents. The registered agent accepts documents on behalf of your LLC and must have a registered office, as P. O. boxes aren't allowed. The agent's address and information become part of the public record, which is why some LLC owners choose a registered agent service instead of serving as their own.

All domestic LLCs must maintain a registered agent and a registered office in Texas. A Texas registered agent receives any demand, notice, or process required by Texas law.

The registered office requirements for LLCs in Texas include:

• A registered office is the registered agent's business office address.

• The registered office is where the Texas Secretary of State will send correspondence.

• This business address can be the same as the LLC’s place of business.

Step 3: Get an EIN

If you haven’t already, use Internal Revenue Service (IRS) Form SS-4, Application for Employer Identification Number (EIN), to obtain your EIN. The IRS provides every small business an EIN at no cost, and there are three options to apply:

• Fax. If you apply by fax and provide your fax number, you’ll receive an EIN within four business days.

• Mail. If you apply by mail, you’ll receive an EIN within four weeks.

• Online. If you apply online, you’ll receive an EIN immediately after completing your application. You’ll need to complete your application in one session.

Step 4: Draft an Operating Agreement

You’ll draft your Texas LLC operating agreement. An operating agreement describes how your LLC will govern itself, and it focuses on:

• Buyout and buy-sell rules

• Duties and powers of managers and members

• Holding meetings

• LLC member ownership percentage

• Losses and profit distribution

• Voting responsibilities and rights

Texas has no formal requirement for LLCs to have operating agreements, and there’s no requirement to submit the Texas LLC operating agreement to the secretary of state. However, most banks require one to open a business account, which is a practical reason to complete this step even though it isn't legally required.

Step 5: File a Certificate of Formation

In Texas, you’ll also hear articles of organization called a certificate of formation. You’ll file a certificate of formation by completing Form 205, which will allow your LLC to operate in the state of Texas.

You can file online or by mail. Filing a certificate of formation for your LLC costs $300. Texas offers a filing fee waiver for eligible veteran-owned LLCs, along with a five-year franchise tax exemption. SOSDirect generally processes filings in 10 to 12 business days, SOSUpload filings in 13 to 15 business days, and mailed filings in four to eight weeks.

Step 6: File Your Franchise Tax Report

The last step to start your LLC in Texas is to monitor annual reports. In Texas, annual reports are franchise taxes that business owners pay to operate in the state. Annual franchise tax reports are due May 15. If that date falls on a holiday or weekend, the due date will be the next business day.

The current no-tax-due threshold is $2.65 million (2026-2027 biennium), and tax rates are 0.375% for retail and wholesale businesses, and 0.75% for all other businesses. LLCs below the no-tax-due threshold must still file their Public Information Reports annually, even though no tax is owed.

After You File: What to Do Next

Your obligations don't stop once your LLC is officially formed in Texas. Here's what to do next:

• Open a business bank account (most banks require a certificate of formation, EIN, and operating agreement). Separating personal and business finances helps preserve your business's limited liability status.

• Check for required local or industry-specific business licenses and permits.

• Complete the Texas Franchise Tax Questionnaire with the comptroller to establish your LLC's tax filing responsibilities.

• Set up a bookkeeping system to track income and expenses from day one.

How Much Does It Cost to Form an LLC in Texas?

The final Texas LLC cost depends on what you want for your LLC. You must pay a $300 fee to file your business's Texas Certificate of Formation, which allows you to operate your LLC in the state (veterans are typically exempt for up to five years).

You also must pay mandatory fees for a Texas registered agent. Additional fees apply if you want assumed name certificates, certified copies of documents, and name reservations.

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

The time it will take to form an LLC in Texas will depend on whether you request only a certificate of formation or if you want additional, optional documents.

After you receive the certificate, you can operate your LLC. This may take longer depending on whether you request it by mail or online.

LLC Fees in Texas

You may pay five LLC fees in Texas, including an annual franchise tax, articles of organization, a DBA fee, a name reservation fee, and a registered agent fee. Each Texas LLC cost may vary depending on your preferences.

The first fee you will likely pay for your LLC is the annual Texas franchise tax. There are deduction limits, franchise tax rates, and Texas small business taxes to know, which for 2026 are:

• Compensation Deduction Limit: $480,000

• EZ Computation Rate: 0.331%

• EZ Computation Total Revenue Threshold: $20 million

• No Tax Due Threshold: $2.65 million

• Tax Rate (other than retail or wholesale): 0.75%

• Tax Rate (retail or wholesale): 0.375%

Registering a Foreign LLC in Texas

A "foreign" LLC is one formed in one state, but does business in another. If your LLC was formed outside of Texas, but wants to conduct business within the state, you must file Form 304 (Application for Registration of a Foreign Limited Liability Company) with the secretary of state. Apply before you start doing any business in Texas, and don't forget to include the $750 fee with your filing.

LLC vs. Other Business Structures in Texas

While LLCs offer many benefits, they might not fit your current business stage. Compare forming as an LLC to other structures in Texas before finalizing your decision.

FAQs About Starting an LLC in Texas

Do I need a lawyer to form an LLC in Texas?
No, you are not legally required to hire a lawyer to form an LLC in Texas. You can complete and file the paperwork yourself directly through the state. However, consulting an attorney can help you avoid costly mistakes or tailor your legal arrangements.

Can I be my own registered agent in Texas?
Yes, you can act as your own registered agent in Texas. To do so, you must be a Texas resident with a physical street address in the state, like any other agent. You must also be available at that address during normal business hours to accept legal notices.

Does Texas require an LLC operating agreement?
No, Texas law does not legally require an LLC to have a written operating agreement. However, it is still highly recommended because it sets internal rules and protects your limited liability status. Without one, your business will be governed by default state statutes, which may not be favorable.

What is the difference between a certificate of formation and articles of organization?
A certificate of formation is the specific official document used in Texas to create a new business entity. Articles of organization is the term many other states use for the same foundational document. Texas officially calls this form the "Certificate of Formation" under its state laws.

Can one person own an LLC in Texas?
Yes, a single person can entirely own and form an LLC in Texas. This is known as a single-member LLC, and it's taxed similarly to a sole proprietorship. However, Texas law does not restrict the minimum number of owners required.

What happens if I miss the franchise tax filing deadline?
Missing the annual May 15 franchise tax deadline triggers an immediate $50 flat late-filing penalty, even if your revenue is below the tax-due threshold. If you owe tax, additional percentage penalties and interest will also start accumulating. Continued failure to file can lead to the state forfeiting your right to do business.

Do I need to renew my Texas LLC every year?
No, Texas does not require annual renewal or an annual report filing with the secretary of state. However, you must still file an annual franchise tax or Public Information Report with the Texas Comptroller every May 15. Failing to do so, even if you're below the threshold, can result in immediate penalties.

How do I register an out-of-state LLC to do business in Texas?
You must file Form 304 with Texas's Secretary of State. This foreign qualification process requires a $750 state filing fee. You also need to appoint a registered agent with a physical address located in Texas.

Getting Your Texas LLC Off to a Strong Start

While deciding to form an LLC in Texas may seem easy, the process and ongoing responsibilities add complexity that not every owner is equipped for. When tracking forms, costs, and other obligations gets in the way of your day-to-day operations, that's a real sign to start looking for expert support.

Ensure your Texas LLC is formed right the first time with 1-800Accountant's full-service entity formation solution. Let us handle the paperwork while you focus on what matters: growing your Texas LLC.