How to form an LLC in Texas

On Behalf of | Dec 30, 2021 | Business Formation

Incorrectly setting up an LLC can cause problems, so it’s important that you follow the correct procedure. Each state has its own process and rules for establishing an LLC. In Texas, you have to choose a valid business name, select a registered agent and pay a filing fee.

File a Certificate of Formation

You need to file a Certificate of Formation with the Texas Secretary of State to set up an LLC. It will cost $300, so you’ll want to make sure that you fill out the form correctly. You can submit the Certificate of Formation online, by mail or in person. If you have an existing LLC that’s expanding into Texas, you need to register the business as a foreign LLC.

Texas has rules for what you can name your LLC. No other business in the state can have your name, and “LLC” must be in your business name. Other acceptable phrases include L.L.C., limited liability company, Limited and Ltd. You can’t use words that would associate your business with a government agency, such as the FBI or the State Department. Words like university, bank and attorney might require a licensed member and additional paperwork.

Create a Texas LLC operating agreement

Texas doesn’t require you to create an LLC operating agreement, but it’s something you should do. An operating agreement reduces and prevents conflict in your business. It sets guidelines for how the business operates and what the penalties are if a member breaks the agreement. Guidelines for dissolution of the LLC and a member withdrawing from it are especially important to declare in the operating agreement. You should also check Texas business organization law to ensure that your stipulations are valid.

Get an EIN

An employer identification number, or EIN, is necessary for hiring employees and opening a business bank account. You’ll also use the EIN when you file your state and federal taxes. You can go to the IRS website to request an EIN.

Designate a registered agent

Texas law requires LLCs to have a registered agent who is responsible for receiving official government correspondence, notice of lawsuits, tax forms and legal documents for the business. Any member of your LLC could be the registered agent. You could also use a registered agent service.

Forming an LLC in Texas is a simple process, but it may take time for you to make some of the decisions involved. Prepare yourself and make these important decisions before filing your Certificate of Formation.