To create a holding company in Texas, you file a Certificate of Formation with the Texas Secretary of State, pay a $300 filing fee, and then complete the setup work that turns a filed entity into a functioning holding company: getting a federal tax ID, adopting governing documents, opening a dedicated bank account, and formally transferring your assets in. The filing itself is straightforward. The decisions around it — entity type, how you move assets in, and how you keep the structure separate from yourself — are where the work sits.
Choose an LLC or a Corporation
The two common structures are the Limited Liability Company and the corporation. Both protect your personal assets from the company’s debts. They differ in how much formality they demand and how they’re taxed.
An LLC lets you decide whether members run the company directly or appoint managers, and it gives you room to customize profit allocations. A corporation requires a board of directors and officers, with more formal governance baked in. For a company whose job is to hold real estate, stock, or interests in subsidiaries rather than run daily operations, many owners prefer the LLC’s lighter administrative load.
When a Series LLC Makes Sense
Texas also allows a Series LLC, which lets you create individual series inside a single master LLC, each holding its own assets and keeping its own records. If a lawsuit hits one series, the assets in the others are protected, as long as you maintain proper separation. To use this structure you have to include Series LLC language in the Certificate of Formation and keep separate accounting for each series. Skip the formalities and a court can collapse the whole structure.
Name the Company and Appoint a Registered Agent
Your name has to be distinguishable from every other business name on file with the Secretary of State, and it must include a designator that reflects the entity type.1Texas Secretary of State. Name Filings FAQs For an LLC that means “Limited Liability Company,” “LLC,” or “L.L.C.” Corporations use “Corporation,” “Incorporated,” “Company,” or an abbreviation like “Corp.” or “Inc.”
You can get a preliminary availability check at no cost by calling the Secretary of State at (512) 463-5555 or emailing the Corporations Section.1Texas Secretary of State. Name Filings FAQs A preliminary check isn’t a guarantee; the final call happens when your formation document is processed.
Every Texas entity needs a registered agent to accept legal notices. The agent can be a Texas resident or a business entity authorized to operate in the state.2Office of the Texas Secretary of State. Registered Agents FAQs The registered office has to be a physical Texas address where the agent is available during business hours. A P.O. box tied to a commercial mail service doesn’t qualify unless that commercial business is itself the registered agent.3Office of the Texas Secretary of State. Registered Agents You can serve as your own agent, or hire a professional service (typically $35 to $350 per year) to keep your personal address off the public record.
File the Certificate of Formation
The Certificate of Formation is what legally brings the company into existence. Use Form 205 for an LLC or Form 201 for a corporation.4Texas Secretary of State. Certificate of Formation Limited Liability Company Form 2055Texas Secretary of State. Form 201 – Certificate of Formation For-Profit Corporation Both collect the same core information: company name, registered agent details, and governing structure. For an LLC you’ll say whether members or appointed managers will run it.6Office of the Texas Secretary of State. Selecting a Business Structure
You can file online through SOSDirect (the fastest option), or by mail, fax, or in person at the Austin office.7Office of the Texas Secretary of State. Formation of Texas Entities FAQs The filing fee is $300 for either entity type.8Texas Secretary of State. Business Filings and Trademarks Fee Schedule Credit card payments online include a processing surcharge; mail filings can pay by check or money order. Once accepted, you’ll receive an acknowledgment of filing that serves as proof the company exists.
Set Up the Company After Filing
Get an EIN
Your holding company needs a Federal Employer Identification Number from the IRS. You’ll need it to open a bank account, file tax returns, and handle most financial transactions. Applying is free on the IRS website.9Internal Revenue Service. Get an Employer Identification Number The IRS advises forming the entity with the state first, since applying for the EIN before the Secretary of State finishes processing your filing can cause delays.10Internal Revenue Service. Employer Identification Number
If your holding company will own single-member LLC subsidiaries treated as disregarded entities, those subsidiaries don’t always need their own EIN. A disregarded entity without employees or excise tax obligations can use the parent’s EIN for federal tax reporting. If it has employees, owes excise taxes, or needs an EIN to open a bank account, it must get its own.11Internal Revenue Service. Single Member Limited Liability Companies
Adopt an Operating Agreement or Bylaws
An LLC’s internal governance document is the Operating Agreement; a corporation’s is the Bylaws. Texas doesn’t legally require an LLC to have an operating agreement, but skipping it is one of the most common mistakes holding company owners make. Without one, you’re stuck with default state law on profit distribution, what happens when a member leaves, and everything in between. A useful operating agreement covers management structure, each member’s responsibilities, how profits and losses are allocated, and what happens during a dispute or dissolution.
Bylaws do the same work for a corporation, covering board authority, officer appointments, voting procedures, and shareholder rights. These documents matter more for holding companies because the relationship between parent and subsidiaries needs clear documentation to preserve liability protection.
Open a Dedicated Bank Account
Open a bank account for the holding company as soon as the entity is formed. Commingling personal and business funds is one of the fastest ways to undermine your liability protection. Banks will typically ask for your filed Certificate of Formation, EIN confirmation letter, and Operating Agreement or Bylaws.
Transfer Assets Into the Company
A holding company isn’t doing anything until it holds something. How you transfer an asset depends on what it is.
- Real estate: Execute and record a new deed (usually a warranty deed or special warranty deed) transferring title to the holding company, and file it with the county clerk where the property sits. Check with your lender before transferring mortgaged property, because some loans contain due-on-sale clauses that a transfer can trigger. Update your property insurance to reflect the new owner.
- Ownership interests in subsidiaries: Use a formal assignment of membership interests or a stock transfer. Update the subsidiary’s records and governing documents to reflect the new owner.
- Intellectual property: Patents, trademarks, and copyrights require a written assignment agreement identifying the IP and including warranties that the person transferring it owns the rights. For federally registered trademarks and patents, record the assignment with the USPTO.
Each transfer can carry tax consequences. Moving appreciated real estate, for example, may trigger a reassessment or gain recognition depending on the circumstances. Talking to a tax advisor before you move valuable assets in usually costs far less than unwinding a poorly planned transfer later.
Franchise Tax and Federal Tax Classification
Every Texas LLC and corporation has to file an annual franchise tax report with the Texas Comptroller by May 15, whether or not it owes any tax.12Texas Comptroller of Public Accounts. Franchise Tax Rates, Thresholds and Deduction Limits The report covers the prior year.
For 2026, entities with total revenue at or below $2,650,000 owe no franchise tax but still have to file. Above that, the rate is 0.375% for retail and wholesale businesses and 0.75% for everyone else.12Texas Comptroller of Public Accounts. Franchise Tax Rates, Thresholds and Deduction Limits Most holding companies land in the 0.75% category because their income comes from investments, rent, or management fees rather than retail sales.
Missing the filing isn’t just a penalty issue. The Comptroller can forfeit your right to transact business in Texas, and the Secretary of State can administratively terminate the entity. If your holding company owns subsidiaries and loses its good standing, the problems cascade downward. Set a calendar reminder well before May 15.
At the federal level, the IRS treats a single-member LLC as a disregarded entity by default (income passes through to the owner’s personal return) and a multi-member LLC as a partnership. To have your LLC taxed as a corporation instead, file IRS Form 8832. All owners have to sign, and once made, the election is locked in for 60 months.
If your holding company is a corporation and owns at least 80% of the voting power and 80% of the total stock value of a corporate subsidiary, the two can file a consolidated federal income tax return. Consolidated filing lets you offset one subsidiary’s losses against another’s gains, which can reduce the overall tax bill. This 80% threshold is stricter than the 50% ownership rule that triggers consolidation for financial reporting purposes.
Keep the Liability Shield Intact
The legal shield holds only if you treat the company as genuinely separate from you and from its subsidiaries. Courts can pierce the veil and hold you personally liable if the holding company looks like a sham. What keeps the structure sound:
- Separate finances: Never mix the holding company’s money with your personal accounts or with subsidiary accounts. Every entity gets its own bank account and its own bookkeeping.
- Arm’s-length transactions: If the holding company charges a subsidiary for management services, rent, or licensing fees, the price should reflect what an unrelated party would pay. Put these arrangements in written intercompany agreements that state what’s provided, how costs are calculated, and what each party owes.
- Corporate formalities: Hold meetings or document written consents, keep minutes, and record major decisions. An LLC has more flexibility than a corporation, but flexibility isn’t the same as no documentation.
- Adequate capitalization: A holding company funded with almost no money, existing purely to shield assets from creditors, is exactly what courts look through. The entity needs enough capital to meet its reasonably anticipated obligations.
Beneficial Ownership Reporting
The federal Corporate Transparency Act originally required most newly formed entities to file a beneficial ownership information (BOI) report with FinCEN. As of an interim final rule published on March 26, 2025, all entities created in the United States are exempt from the BOI reporting requirement. Only entities formed under foreign law and registered to do business in a U.S. state are now classified as reporting companies.13Financial Crimes Enforcement Network (FinCEN). Beneficial Ownership Information Reporting FinCEN has indicated it will issue a revised rule, so check FinCEN’s website before assuming the exemption still stands when you form your entity.