How to start an LLC in Texas

What are the steps to form an LLC in Texas?

1. Pick a name that meets Form 205's rule

   Texas requires the name to contain "limited liability company," "limited company" or an abbreviation of one of them. A name search on SOSPortal costs $1, and you can hold a name for 120 days with Form 501 for $40 if you are not ready to file.

2. Line up a registered agent and registered office

   The agent can be an individual Texas resident or a business entity allowed to act in Texas, and must consent to serve. The registered office must be a physical Texas address where the agent can be handed papers during business hours, not just a mailbox or answering service.

3. Decide who governs the company

   Article 3 of Form 205 asks whether the LLC has managers. If it does, list each initial manager; if it does not, list each initial member. Each needs a name and an address on the form.

4. File Form 205 and pay $300

   File online through SOSPortal, which takes filings 24 hours a day, or mail the form to the Secretary of State in Austin. The certificate takes effect when filed, or on a later date you choose up to 90 days after signing.

5. Write your company agreement

   Texas calls the operating agreement a company agreement. The Secretary of State does not accept internal governing documents for filing, so the LLC keeps it at its principal office.

6. Get an EIN and set up state tax accounts

   The Secretary of State does not issue EINs; apply free with the IRS once the LLC exists. Then put the Comptroller's May 15 franchise tax report on your calendar, and apply for a sales tax permit if you sell taxable goods or services.

How much does a Texas LLC cost?

The main cost is the one-time $300 filing fee. The Secretary of State's fee schedule (Form 806) lists the other charges a small LLC is likely to meet:

The Secretary of State's instructions add that card payments carry a convenience fee of $0.25 plus 2.25% of the total. There is no yearly Secretary of State fee for an LLC. What recurs is the franchise tax reporting below, plus any registered agent service you pay for and local licenses.

Does a Texas LLC owe franchise tax?

Texas franchise tax is a privilege tax on each taxable entity formed in Texas or doing business there, and LLCs are taxable entities. The annual report is due May 15, or the next business day when May 15 falls on a weekend or holiday. Most new LLCs owe nothing, because of the no tax due threshold:

• At or below the threshold: for the 2026 and 2027 report years it is $2,650,000 of annualized total revenue. Since 2024 these entities do not file a No Tax Due Report, but they still must file a Public Information Report (Form 05-102).
• Above the threshold: file the EZ Computation Report (total revenue of $20 million or less, rate 0.331%) or the Long Form. The rates are 0.375% for retail or wholesale and 0.75% for other businesses.
• Your first report: the Comptroller's examples show the first annual report falls in the year after the entity registers; an LLC formed in December 2023 filed its first report in 2024.
• New veteran-owned businesses that qualify skip both the report and the information report for their first five years.

Skipping the information report is the trap. The Comptroller warns that an entity that fails to file a completed, signed Public Information Report can forfeit its right to transact business, lose the right to sue or defend in a Texas court, and leave its officers, managers and members personally liable for certain debts. A late report also draws a $50 penalty.

Does my Texas LLC need an assumed name certificate?

Only if it trades under a name other than its legal name, for example "Hill Country Candle Co." for an LLC registered as "HCC Ventures LLC". In that case the LLC files an assumed name certificate (Form 503) with the Secretary of State for $25. Points to know:

• Since September 1, 2019, an LLC files only with the Secretary of State; the county filing that used to be required no longer applies to LLCs.
• The certificate lasts up to ten years and can be renewed in the six months before it expires.
• There is no amendment: if the information becomes materially misleading, file a new certificate within 60 days.
• It is a notice filing. The Secretary of State does not check it against other names, and it gives you no ownership of the name; for that, look at a trademark.

What else should a new Texas LLC owner know?

• You do not need to live in Texas. The Secretary of State says Texas law does not limit who can form or own an entity, beyond the organizer being able to enter a contract.
• No newspaper notice. The old rule to publish an intent to incorporate was repealed in 2003.
• Agent changes go to the Secretary of State. The Comptroller notes you cannot change your registered agent on the Public Information Report.
• Keep a stamped copy. To receive a file-stamped copy of a mailed filing, send a duplicate copy with it.
• Sales tax is separate. If you sell taxable items, see seller's permits and sales tax.