Big ol’ Texas. We are here to talk about starting a business in Texas. I think we all need to start a Texas LLC. It’s one of the biggest and best states (at least according to the people that live there!). Texas has some of the friendliest tax laws and structures for businesses that will make it easy for you to start and file your certificate of formation.
This guide is going to take you through step by step on what you need to do in the lone star state to setup your legal business entity. Whether you’re looking to setup a sole proprietorship, limited liability company or be your own registered agent, this guide will help you through it. There are some Texas LLC naming guidelines you’ll need to follow too so make sure you’re aware of that as you go through this process.
So let’s get started on how to start an llc in Texas. If you have questions on this one, please contact me because this is a big topic and a big state with lots of fun! Below you’ll find the top services to get started so please review and get into the details below.
Name Your Texas LLC
As with any state, before you jump straight into setting up a business bank account, you’ll need to name your business. One of the best ways to do this is through the Taxable Entity Search (which is free). You can also check the SOS portal (Texas Secretary of State) but I believe they charge you for it:
The other options are to check by doing one of the following things:
The Texas State Business line is 512-463-5555. I believe they are open Monday through Friday from 8 a.m. to 5 p.m. Central Time but you’ll need to call and check this too.
If you’d rather email, you can go and email them directly at firstname.lastname@example.org. There isn’t a specific subject line to use or anything but just ask for them to check the name for you.
Does anyone still use this? Well if you are planning on using this, you can but I don’t think you should – it’s too slow and I’m sure you want to get your business setup yesterday.
Once you have your business name and are feeling good about being the business owner, you’ll need to move onto the next step and follow the Texas law of having a registered agent.
Choose your registered agent
Texas requires the appointment of a registrar for your LLC. A registered agent is someone who is authorized to receive official documents and notices for your corporation. You can use one of the recommended services in the sidebar here or find a local law firm that can provide this service. It’s really up to you but if you’re going to setup a Texas LLC you’re going to need a Texas registered agent service.
If your business operates in Texas you’ll need to have an LLC business structure. If you have an existing business coming from another state, you’ll need to have a business address in Texas too.
This is also going to be very important if you have more than one member so make sure your llc’s registered agent is in the state either using one of the services recommended in the sidebar here or find a local law firm.
Prepare and File Certificate of Formation
The Certificate of Formation (usually called Article of Organization) is a document confirming your LLC and providing basic info on your LLC. Obtain and file Texas Secretary of State documents for proper incorporation of your Texas LLC. Although this might seem a large job, this just involves filling out an easy online application and submitting it. You are also able to email it. The Secretary of State will normally check your documents for a certificate of formation. If you don’t have a certificate of formation, you’re not going to be able to move to the next step and conduct business in Texas.
This will help you get business licenses as long as you have a physical street address and are following the state law to do so.
Create an operating agreement
An operating contract outlines how your business entity conducts business. Texas does not mandate LLCs to file an Operating Agreement, but this will help you build a profitable enterprise. It helps in many cases to settle disputes over financial agreements as well as for litigation. A court can decide a business plan without a contract, but not always in accordance with the interests of the LLC or its members. This agreement may include:
Get an Employer Identification Number
The EIN (employer identification number) is digitized to identify an LLC for tax returns. You may also get your employer identification number by mail. EINs are designed to help you in many ways – including helping people in your community.
You can use your EIN to open a business bank account, get a business license, and even hire employees. It’s important as you’re setting up a business website, business accountant and your tax structure that you understand everything that an employer identification number is able to provide to you.
Your Annual Reports
Be sure to file your annual reports on time! The state of Texas requires all LLCs to file an annual report. The good news is that you can do this online. The bad news is that if you don’t do it, your LLC could be dissolved. Without your annual report you may not have a Texas LLC in the following year which is going to be a challenge since that’s the whole point of incorporating it in the first place.
This is different than your certificate of formation, franchise tax or your personal assets. The annual report is required if you’re going to continue with your Texas LLC Operating Agreement and the LLC formation that you’ve made.
Get your annual reports done and use one of the LLC services to help you if you don’t want to do this on your own.
How much does it cost to start an LLC in Texas?
Texas requires a filing fee of $300 as well as a convenience fee. Creating and maintaining LLCs is expensive and requires $40 to complete the registration form. You can do this through written or electronic form if you’d like but you will need to provide registered agent services when you’re doing so.
You can spin up a business credit card to help you in Year 2+ but as small business owners it’s important you have a professional service help you with this and make sure your federal tax identification number and business assets are in line as you continue to build your Texas LLC.
Do LLCs in Texas pay taxes?
By default a company doesn’t pay tax as a whole despite having members. Almost all LLC owners are subject to state franchise taxes in Texas. Taxes are payable through the Texas CPPA. You’ll also want to make sure you’re doing what’s needed for the IRS (Internal Revenue Service) who will be looking for your EIN, operating agreement and whether this is an individual or business entity. The operating agreements are important so you understand how to pay taxes and are also paying out sales tax since Texas is a state that collects that.
How much does it cost to maintain an LLC in Texas?
Texas LLP Certificate – Formation ($300) The fee to file electronically in person is $800, while the fee to file online is $80. These fees are only for filings. Please check your Texas LLC Name and the cost of what the secretary of state office says it is in that year. This can change and you need to really understand the cost associated to this on a annual basis.
How do I dissolve an LLC in Texas?
Do you really want to dissolve your LLC that you put so much time and energy into? This article of how to start an llc in Texas is all about starting one – don’t dissolve what you’ve built! If you really do need some help with this, you can go through and make sure your operating agreement and everything associated to the business (including registered agent) is updated.
In order to dissolve your LLC, you must first notify the Secretary of State’s office by filing a Certificate of Cancellation (Form 502). Once the form is filed, your LLC will be officially dissolved and removed from the state’s records.
What are the penalties for not filing taxes in Texas?
The late penalty for not filing your Texas state tax return is 5% of the tax due for each month or part of a month that the return is late, up to a maximum of 25%. The minimum penalty is $5.
If you don’t pay your taxes by the due date, you will also be charged interest on the unpaid amount. The interest rate is 4% per year.
What is the statute of limitations on LLCs in Texas?
The statute of limitations for an LLC in Texas is four years from the date the tax was originally due. This means that if you do not file your tax return or pay your taxes within four years of the due date, you may no longer be held liable for those taxes.
Do I need a Texas business license?
No, you do not need a business license to operate an LLC in Texas. However, you may need to obtain other licenses and permits depending on the nature of your business.
Do I need insurance for my LLC in Texas?
No, there is no state law mandating that LLCs in Texas carry insurance. However, we recommend that all businesses carry some form of liability insurance to protect themselves from potential lawsuits.
Can foreign LLCs do business in Texas?
Yes, foreign LLCs are allowed to do business in Texas. To register, you will need to file a Certificate of Authority with the Secretary of State’s office.
Do I need a bank account for my LLC in Texas?
No, you are not required to have a bank account for your LLC in Texas. However, we recommend that you open one in order to keep your personal and business finances separate. This will also make it easier to manage your
Can I form a single-member LLC in Texas?
Yes, you can form a single-member LLC in Texas. To do so, you will need to file a Certificate of Formation with the Secretary of State’s office.
Can I form a professional LLC in Texas?
Yes, you can form a professional LLC in Texas. To do so, you will need to file a Certificate of Formation with the Secretary of State’s office. You will also need to obtain a license from the appropriate professional licensing board.