Forming a Limited Liability Company (LLC) in Texas is one of the most popular ways to protect your personal assets while operating a business.
Texas offers a business-friendly environment with no state income tax, making it attractive for entrepreneurs nationwide.
This comprehensive guide walks you through every step of forming a Texas LLC, from choosing a name to filing with the Secretary of State, creating an Operating Agreement, obtaining an EIN, and maintaining compliance.
Whether you are a solo entrepreneur or launching with partners, this step-by-step process will help you form your LLC correctly and avoid common pitfalls.
Step 1: Choose a Name for Your Texas LLC
The first step is selecting a name that complies with Texas law. Your LLC name must include the words "Limited Liability Company," "LLC," or "L.L.C." The name cannot imply that the company is organized for an illegal purpose, and it must be distinguishable from existing business names on file with the Texas Secretary of State (SOS).
Use the SOS website's business name search tool to check availability. If the name is available, you do not need to reserve it unless you are not ready to file immediately; name reservations cost $40 and last 120 days.
Avoid prohibited words like "bank," "trust," "insurance," or "university" without additional approvals. Also ensure the name does not infringe on existing trademarks—check the USPTO database to avoid future legal disputes.
Step 2: Appoint a Registered Agent
Every Texas LLC must have a registered agent with a physical street address in Texas (not a PO Box).
The registered agent is responsible for receiving legal documents, service of process, and official government correspondence on behalf of the LLC.
You can appoint an individual (including yourself or an employee) as long as they are at least 18 years old and have a physical address in Texas.
Alternatively, you can hire a professional registered agent service (such as Northwest Registered Agent, LegalZoom, or ZenBusiness) which costs between $50 and $300 per year.
Using a professional service offers privacy protection since your personal address does not become public record.
The registered agent must sign a consent to appointment, either on the Certificate of Formation or in a separate document.
Step 3: File the Certificate of Formation (Form 205)
The core document to form an LLC in Texas is the Certificate of Formation – Limited Liability Company (Form 205).
This form is filed with the Texas Secretary of State, either online through SOSDirect or by mail.
The filing fee is $300. The Certificate requires the following information:
- The name of the LLC
- The purpose of the LLC (you can state "any lawful purpose" for broad flexibility)
- The duration of the LLC (usually "perpetual" or a specific number of years)
- The registered agent name and street address
- The management structure: member-managed (all members participate) or manager-managed (designated managers operate the company)
- The name and address of each organizer (the person signing the Certificate)
- Optional provisions such as restrictions on powers or indemnification clauses
Filing online via SOSDirect provides instant confirmation and faster processing (usually 2-3 business days).
Mail filings take 5-7 business days plus mailing time. Expedited processing is available for an additional fee ($25 to $1,000 depending on speed).
Once approved, the Secretary of State issues a filing receipt confirming the LLC's existence.
This receipt serves as your Certificate of Formation proof until you order certified copies.
Step 4: Create an Operating Agreement
Texas law does not legally require an LLC to have a written Operating Agreement, but having one is highly recommended.
The Operating Agreement is an internal document that outlines ownership percentages, profit distribution, voting rights, management structure, capital contributions, procedures for adding or removing members, dissolution rules, and buyout provisions.
Without an Operating Agreement, Texas default rules (Chapter 101 of the Texas Business Organizations Code) will govern your LLC—which may not align with your intentions.
For single-member LLCs, an Operating Agreement helps prove the corporate veil and separates personal assets from business liabilities.
For multi-member LLCs, it prevents disputes by clarifying expectations. The Operating Agreement does not need to be filed with the state; keep it with your business records.
Step 5: Obtain an EIN from the IRS
An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is required for most LLCs.
You need an EIN to open a business bank account, hire employees, file federal taxes, and apply for business licenses.
Sole proprietors with no employees may use their Social Security Number, but using an EIN is better for privacy and professionalism.
Apply for an EIN for free through the IRS website. The online application takes about 15 minutes and provides the EIN immediately after verification.
You will need the LLC's legal name, the managing member's Social Security Number or Individual Taxpayer Identification Number (ITIN), and the Certificate of Formation filing receipt.
Non-US residents without an SSN or ITIN can still obtain an EIN by mail using Form SS-4.
Step 6: File the Public Information Report (PIR) and Pay Franchise Tax
After forming your LLC, you must file an annual Public Information Report (PIR) with the Texas Comptroller of Public Accounts.
Texas imposes a franchise tax on most LLCs, but small businesses with annual revenue below the "no tax due" threshold (currently $2.47 million for 2026) owe $0 in tax but must still file the PIR annually.
The PIR requires basic information about your LLC: name, address, registered agent, management structure, and names of all members and managers.
The filing deadline is May 15th each year. Late filings incur penalties of $50 to $500.
The first PIR is typically due the year after formation, not in the formation year (unless you formed before January 1st).
File online through the Comptroller's WebFile system. Failure to file for two consecutive years results in forfeiture of the LLC's right to transact business and may lead to administrative dissolution.
Step 7: Obtain Local Business Licenses and Permits
Texas does not have a general state business license, but your city or county may require specific permits.
Check with the city clerk's office where your business operates. Common local requirements include: Certificate of Occupancy (for physical storefronts), zoning permits, health department permits (for restaurants, salons, food trucks), signage permits, and professional licenses (for contractors, real estate agents, etc.).
If you sell physical goods, you may need a Texas Sales and Use Tax Permit (see separate article).
Home-based businesses may need a Home Occupation Permit. Many counties also require a county registration or fee schedule filing.
Search your city's municipal code or contact a business licensing consultant to ensure full compliance.
Step 8: Open a Business Bank Account and Maintain Compliance
Once you have your EIN and Certificate of Formation, open a separate business bank account to maintain the liability protection of your LLC.
Comingling personal and business funds is the fastest way to "pierce the corporate veil," making you personally liable for business debts.
Most Texas banks require the EIN, Certificate of Formation, and Operating Agreement to open an account.
After formation, maintain ongoing compliance: file the annual PIR and franchise tax (even if $0 due), keep minutes of member meetings (for multi-member LLCs), update the Secretary of State if you change registered agent or address (amendment filing fee $150), and renew any local permits annually.
Consider hiring a registered agent service to handle state document forwarding and deadline reminders.
Pro tip: The total cost to form a basic Texas LLC is approximately $300 (state filing fee) plus $0 to $300 for registered agent services.
You can file yourself without legal help using the SOS forms. Online LLC formation services charge $0 to $500 plus state fees.
Avoid paying for unnecessary extras like "expedited shipping" or "operating agreement templates" – free templates are available from the Texas Secretary of State and legal websites.
Always verify your business name availability before paying any filing fees.