How to Form an LLC in Texas: Formation, EIN, and Franchise Tax

To form an LLC in Texas, file a Certificate of Formation (Form 205) with the Texas Secretary of State and pay a $300 filing fee.¹ The filing itself can be done online in one session through SOSDirect, but a working LLC also needs a registered agent, a federal tax ID, a tax classification decision, and registration for the Texas franchise tax before it is fully operational.

Pick a Name and Check That It Is Available

Your LLC’s name has to be distinguishable from every other active entity on file with the Secretary of State.¹ Search the state entity database through the SOSDirect portal, or call the Secretary of State at (512) 463-5555 for a quick preliminary answer.

Found a name but not ready to file? You can reserve it through SOSDirect. Reservations are generic and can be used later for any entity type. A reservation only holds the name for state filing; it gives you no trademark rights.²

If you plan to operate under a name different from your official LLC name, file an assumed name certificate (a DBA) using Form 503. The certificate lasts up to ten years from the filing date.²

Appoint a Registered Agent

Every Texas LLC must maintain a registered agent to receive legal documents, including lawsuits, on the company’s behalf. The agent’s office must be a physical Texas address staffed during normal business hours. A P.O. box alone will not work, though a commercial mail service can serve as the registered office if that commercial enterprise itself is the registered agent.³

You can serve as your own agent, name another member, or hire a commercial service. Professional services typically charge between $49 and $300 per year. Whoever you pick, the agent’s name and physical Texas address become public record. If either changes, file an update with the Secretary of State. Failing to maintain a current registered agent can lead to administrative termination of your LLC.¹

Complete the Certificate of Formation (Form 205)

The Certificate of Formation is the legal document that creates your LLC. Download Form 205 from the Secretary of State’s website or fill it out online through SOSDirect.⁴ A few sections deserve attention.

Management Structure

Indicate whether the LLC will be member-managed or manager-managed. In a member-managed LLC, all owners share responsibility for running the business. In a manager-managed LLC, one or more designated managers, who may or may not be members, handle day-to-day operations. A member-managed LLC lists the names and addresses of all initial members; a manager-managed LLC lists only the initial managers.

Purpose Clause

Form 205 includes a purpose clause describing what the LLC is authorized to do. The default language authorizes any lawful business activity under the Texas Business Organizations Code, and most filers use the standard wording without modification.⁵

Organizer

The organizer signs and submits the Certificate of Formation. They must be at least 18 years old, but they do not have to be a Texas resident or a member of the LLC.⁶ Once the filing is complete, the organizer has no ongoing authority over the company unless separately appointed as a member or manager.

File the Certificate and Pay the Fee

Two ways to submit:

Online through SOSDirect, which is faster. Credit card payments carry a 2.7 percent convenience fee on top of the filing fee.⁷
By mail to the Secretary of State’s office in Austin. Payment can be a check, money order, or pre-funded SOSDirect deposit account. Processing takes several business days longer than online filings.

The filing fee is $300 regardless of method and is non-refundable.¹ For faster turnaround, the Secretary of State offers three tiers of expedited processing on top of the base fee:⁸

Standard expedited: $50 per document
Next-day: $500 per document
Same-day: $750 per document

Once approved, the Secretary of State returns a file-stamped copy of the Certificate of Formation showing your LLC’s filing date and a unique state file number. That copy is your legal proof the entity exists. Keep it accessible; banks, lenders, and landlords ask for it often.

Get an Employer Identification Number

After formation, apply for an Employer Identification Number (EIN) from the IRS. The nine-digit number is free, functions as your LLC’s tax ID, and is used to file federal tax returns, hire employees, and open a business bank account.⁹ Apply online at irs.gov during business hours for an immediate number, or submit Form SS-4 by mail or fax.

Most banks require both the EIN and your file-stamped Certificate of Formation to open a business account. Under federal anti-money-laundering rules, the bank will also verify the personal identity of anyone owning 25 percent or more of the LLC, so bring a driver’s license and Social Security number for each such owner.

Write an Operating Agreement

Texas does not require you to file an operating agreement with the state, but having one is strongly recommended, especially for multi-member LLCs. The document spells out how profits and losses are divided, how major decisions get made, what happens when a member leaves, and how disputes are resolved.

Without a written agreement, your LLC defaults to the rules in the Texas Business Organizations Code, which may not match what the owners actually intended. The default rules can, for example, divide profits equally among members regardless of how much capital each person contributed. Putting the arrangement in writing avoids those surprises.

Choose Your Federal Tax Classification

The IRS does not treat an LLC as its own tax category. It assigns a default based on the number of members:¹⁰

A single-member LLC is treated as a disregarded entity, so all income and expenses flow through to the owner’s personal return.
A multi-member LLC is treated as a partnership, filing Form 1065 and issuing a Schedule K-1 to each member.

You are not locked into the default. To be taxed as a C-corporation, file IRS Form 8832. The election can take effect no more than 75 days before the filing date and no later than 12 months after it.¹¹ After changing classification, you generally cannot change it again for 60 months.

To elect S-corporation treatment, file Form 2553. An LLC that timely files Form 2553 and meets S-corporation requirements is automatically treated as a corporation for tax purposes without a separate Form 8832.¹¹ The deadline for an existing business is March 15 of the tax year; a new business has 75 days from its start date.

Register for the Texas Franchise Tax

Texas has no personal income tax, but most LLCs participate in the state franchise tax system. Register with the Texas Comptroller of Public Accounts, and expect to file an annual franchise tax report by May 15 each year.¹²

For the 2026 report year, the no-tax-due threshold is $2,650,000 in annualized total revenue. If your LLC’s revenue is at or below that amount, you owe no franchise tax and are not required to file a No Tax Due Report.¹³ LLCs over the threshold pay 0.375 percent (retail and wholesale) or 0.75 percent (all other businesses) on taxable margin.¹²

You may still need to file a Public Information Report to stay in good standing even when no tax is owed. Missing the May 15 deadline triggers a $50 penalty on each late report, plus 5 percent of any unpaid tax if paid within 30 days or 10 percent if paid later. Interest starts 61 days after the due date. Continued noncompliance can lead to forfeiture of your LLC’s right to do business in Texas.¹²

Handle Employer and Sales Tax Duties If They Apply

If your LLC hires employees, you take on federal payroll tax obligations. Withhold federal income tax, Social Security, and Medicare from wages and deposit them with the IRS on a monthly or semi-weekly schedule depending on liability size.¹⁴ Deposits are electronic. If accumulated liability reaches $100,000 on any day, the deposit is due the next business day.

When you pay an independent contractor $2,000 or more during the year (for payments made after December 31, 2025), report it on Form 1099-NEC. The form is due to the contractor by January 31 and to the IRS by February 28 on paper or March 31 electronically.¹⁵

If your LLC sells taxable goods or services in Texas, apply for a sales tax permit through the Texas Comptroller before collecting sales tax from customers.¹²

A Note on Beneficial Ownership Reporting

The Corporate Transparency Act originally required most new LLCs to file a Beneficial Ownership Information (BOI) report with the Financial Crimes Enforcement Network (FinCEN). As of March 26, 2025, FinCEN issued an interim final rule that exempts all entities created in the United States from that requirement. Domestic LLCs and their beneficial owners no longer need to file, update, or correct BOI reports.¹⁶ The requirement now applies only to entities formed under foreign law that have registered to do business in a U.S. state. This area has changed several times in a short period, so check FinCEN’s website before assuming no filing is needed.

1
Office of the Texas Secretary of State. Form 205 — Instructions for Certificate of Formation—Limited Liability Company
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Office of the Texas Secretary of State. Name Filings FAQs
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Texas Secretary of State. Registered Agents – Section: What Is a Registered Office?
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Office of the Texas Secretary of State. Selecting a Business Structure
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Texas Secretary of State. Form 205 – Certificate of Formation – Limited Liability Company
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Office of the Texas Secretary of State. Form 205 Limited Liability Company
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Office of the Texas Secretary of State. Form 503 — Instructions for Assumed Name Certificate
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Office of the Texas Secretary of State. Secretary of State Jane Nelson Announces Texas Express
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Internal Revenue Service. Get an Employer Identification Number
10
Internal Revenue Service. LLC Filing as a Corporation or Partnership
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Internal Revenue Service. Form 8832 Entity Classification Election Instructions
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Texas Comptroller. Franchise Tax
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Texas Comptroller. Form 05-915, 2026 Franchise Tax Instructions
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Internal Revenue Service. Employment Tax Due Dates
15
Internal Revenue Service. Form 1099 NEC and Independent Contractors
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Financial Crimes Enforcement Network. Beneficial Ownership Information Reporting