How to Get an LLC in Texas for Free: Veteran Waiver and Form 205

The only way to form an LLC in Texas for free is through the state’s veteran fee waiver. Senate Bill 938 added Section 12.005 to the Texas Business Organizations Code, directing the Secretary of State to waive the standard $300 filing fee for a Certificate of Formation when the entity qualifies as a “new veteran-owned business.”¹ The same law exempts the business from Texas franchise tax for its first five years. If you don’t qualify as a veteran under the statute, there is no free path — Texas charges $300 by mail or $308 online to everyone else.²

Who Qualifies

Two conditions must both be true:

Every member of the LLC is an individual who served in and was honorably discharged from a branch of the United States Armed Forces. One non-veteran member disqualifies the entire entity.
The LLC is chartered or organized in Texas and first begins doing business in the state on or after January 1, 2022.³

The statute says “honorable discharge.” The Texas Veterans Commission uses slightly broader language on its site, referencing “honorable or general under honorable discharge.”⁴ If your DD-214 shows “general under honorable conditions,” contact the TVC before you start filing anything.

Confirm the Waiver Is Still Active

SB 938 originally included a sunset provision repealing both the fee waiver and the franchise tax exemption on January 1, 2026.¹ During the 89th Legislative Session, lawmakers introduced Senate Bill 524 to strike that expiration date and make both benefits permanent, with a proposed effective date of September 1, 2025.⁵ Check the current status with the Texas Secretary of State’s veterans business page or the TVC before you file. If the waiver has lapsed, none of the steps below will get you a free formation.

Step 1: Get Your Veteran Verification Letter

You cannot file for the waiver without this letter. It is the document that tells the Secretary of State’s office to skip the payment requirement.

Start by connecting with a business consultant through the Texas Veterans Commission’s Veteran Entrepreneur Program. You’ll submit documentation of your military service and discharge. The TVC reviews the documents for verification only and does not keep copies after the review.⁴ Any file you upload must be 4 MB or smaller.

Once eligibility is confirmed, the TVC issues the Veteran Verification Letter along with instructions for submitting your formation paperwork.⁶ Keep the letter. You’ll attach it to your filing.

Step 2: Gather What Goes on the Form

Missing any of these will stall your filing.

Entity name. Must be distinguishable from every other active business on file with the Secretary of State and must include a designator such as “Limited Liability Company,” “LLC,” or “L.L.C.” Check availability through SOSDirect before committing.
Registered agent. Every Texas LLC must designate one. The agent has to be a Texas resident or an organization authorized to do business in Texas, with a physical street address in the state — no P.O. boxes. An officer, owner, or employee of the LLC can serve, but the LLC cannot be its own agent. Serving as your own agent keeps costs at zero; commercial services generally run $100 to $300 a year.⁷
Management structure. Member-managed (owners run it) or manager-managed (designated managers do). This decides who can sign contracts for the company.
Governing persons. Names and addresses of the initial members or managers.
Purpose statement. A short description. Most filers write “any lawful purpose.”

Step 3: File Form 205 with No Fee

The formation document is Form 205, Certificate of Formation — Limited Liability Company, from the Secretary of State’s website.⁸ Complete it with the details from Step 2.

Online

Upload the completed Form 205 and your Veteran Verification Letter through SOSUpload. Submitted together with the veteran documentation, the system bypasses the payment screens. Electronic filings are typically processed in five to seven business days, though peak periods run longer.⁸

By Mail

Send Form 205 and the Veteran Verification Letter to: Secretary of State, P.O. Box 13697, Austin, Texas 78711-3697. Do not enclose a check. Mail processing takes longer than online and varies with the office’s workload.

When the Secretary of State approves the filing, you’ll receive a Certificate of Filing. Your LLC legally exists at that point.

What “Free” Actually Covers

The waiver eliminates the $300 formation fee. It also removes franchise tax and the related reporting obligations for the first five years. During that period you don’t need to file a franchise tax report, a Public Information Report, or an Ownership Information Report with the Comptroller.⁹

The waiver runs until the earlier of five years from formation or the date the business stops qualifying as veteran-owned.¹ Add a non-veteran member or sell a stake to a non-veteran, and the benefits end going forward. You must notify the Comptroller if that happens, and the franchise tax exemption ends immediately.⁹

Free Federal Steps After Formation

Your LLC exists once the state approves it, but a few federal items come next. Both are free.

Get an EIN

An Employer Identification Number acts as the business’s tax ID. Banks require one to open a business account. Apply online through the IRS at no cost; the application takes about 15 minutes and the number is issued immediately.¹⁰ You’ll need the Social Security number of the responsible party, and the IRS limits one EIN per responsible party per day. Form the LLC with the state first — applying before the entity is on file can cause delays.

Federal Tax Classification

By default, the IRS treats a single-member LLC as a disregarded entity and a multi-member LLC as a partnership. You can elect corporate taxation with Form 8832 if that fits your situation better.¹¹

Beneficial Ownership Reporting

As of March 2025, FinCEN published a rule exempting all U.S.-formed entities from beneficial ownership information reporting under the Corporate Transparency Act. A Texas-formed LLC currently has no BOI filing obligation.¹²

Draft an Operating Agreement

Texas doesn’t require one, but skipping it undermines the liability protection you formed the LLC to get. Without a written agreement, an LLC looks a lot like an informal sole proprietorship or partnership to a court, which makes it easier for a creditor to pierce the veil and reach personal assets.¹³ Even a single-member LLC should have one. You can write it yourself at no cost. Cover ownership percentages, how profits and losses are split, voting rights, management authority, and what happens if a member leaves or dies. For a multi-member veteran-owned LLC, documenting each member’s stake also gives you clean proof of 100% veteran ownership if the state ever asks.

Keeping the LLC in Good Standing

Once the five-year exemption ends, normal franchise tax rules apply. If annualized total revenue stays under the no-tax-due threshold ($2,650,000 for 2026), you won’t owe franchise tax, but you’ll still need to file the Public Information Report (Form 05-102) each year.¹⁴

Keep your registered agent designation current. If the agent’s address changes or you switch agents, file the update with the Secretary of State. Letting this lapse can mean missing lawsuits and eventually losing the LLC to administrative forfeiture.

1
Texas Legislature Online. 87(R) SB 938 – Senate Committee Report Version – Bill Text
2
Office of the Texas Secretary of State. Business Filings and Trademarks Fee Schedule
3
Texas Legislature Online. 87(R) SB 938 – Committee Report (Unamended) Version – Bill Analysis
4
Texas Veterans Commission. Entrepreneurs
5
Senate Research Center. 89(R) SB 524 – Bill Analysis
6
Texas Veterans Commission. Veteran Verification Letter
7
Texas Secretary of State. Registered Agents FAQs
8
Office of the Texas Secretary of State. Form 205 – Instructions for Certificate of Formation – Limited Liability Company
9
Texas Comptroller of Public Accounts. New Veteran-Owned Businesses and Texas Franchise Tax
10
Internal Revenue Service. Get an Employer Identification Number
11
Internal Revenue Service. LLC Filing as a Corporation or Partnership
12
FinCEN.gov. Beneficial Ownership Information Reporting
13
U.S. Small Business Administration. Basic Information About Operating Agreements
14
Texas Comptroller of Public Accounts. Requirements for Reporting and Paying Franchise Tax