How to Start an LLC in Texas
Texas is one of the most business-friendly states in the US. Companies can take advantage of tax incentives and a robust industrial infrastructure.
It’s important to make sure your LLC meets all legal requirements before filing. Also consider protecting your company with business insurance. You can get a quote in minutes.
Choose a Company Name
The name you choose for your LLC must comply with Texas naming rules. The state requires that the name include the words “limited liability company” or its abbreviation (“LLC”). Your name cannot imply a false government affiliation and you may not use restricted words, such as bank, insurance, college, university, etc. unless your LLC is licensed to do so.
You can check the availability of your chosen name on the Taxable Entity Search page for free or for $1 on SOS Direct. It is always a good idea to call and confirm availability before filing, as the last thing you want is for your articles of organization to be rejected because your name already exists. Besides ensuring that your LLC’s name is available, you should also make sure your proposed name is unique so you don’t run into legal trouble later on. You’ll need a unique name to register your business for a domain and secure an Employer Identification Number (EIN). The EIN is what the IRS uses to identify your LLC for taxes.
Form a Registered Agent
Texas is one of the most business-friendly states in the country and provides a wide range of opportunities for companies. As a result, it’s important that companies take the right steps to start an LLC in Texas and reap the benefits of this structure.
Choosing a company name is an important first step, but you also need to consider how your LLC will be managed and how it will be taxed. The state of Texas allows owners to choose between member-managed and manager-managed structures, and you’ll need to determine which one is best for your business.
If you have a friend or family member who lives in Texas and is willing to serve as your registered agent, you can use them. However, they must be available during business hours and not mind having their address listed on public record. If you don’t have a friend or family member who fits this criteria, a third-party registered agent service can be used.
Filing Your Certificate of Formation
If you are ready to start your LLC in Texas, the first step is to file a Certificate of Formation with the state. You can do so online via the Secretary of State’s SOSDirect website, by mail or fax. The filing fee is $40.
Once the state has approved your LLC, you will receive an EIN number from the IRS. You will need this number to open a business bank account, file taxes and set up employee payroll (if applicable). Your EIN is also known as an FEIN, federal tax ID or Employer Identification Number.
Many new business owners prefer hiring a business formation service to handle all of these steps and other ongoing legal obligations on their behalf. One of the best-known services is Inc Authority, which has helped more than 250K businesses. This company is renowned for its fast, efficient and hassle-free service. Plus, it offers a free registered agent and tax consultation, among other benefits.
Organizing Your LLC
Whether you’ve come up with an amazing new business idea or just want to be your own boss, forming an LLC is a great option. However, it’s important to carefully follow the state’s requirements to ensure your LLC meets all legal expectations. Otherwise, you could face severe penalties and even lose your personal assets.
The first step is to choose a name that complies with state law. You can use the Texas Secretary of State’s business name search tool for free or pay a fee to reserve your name online for 120 days.
Then, you’ll need to file a Certificate of Formation (equivalent to the articles of organization in other states). The form asks for basic information about your company, including the registered agent, owner, and whether it will be member-managed or manager-managed. You must also include the reason for forming an LLC. It’s a good idea to draft an operating agreement as well, although the state doesn’t require it.