To form an LLC in Texas, you file a Certificate of Formation (Form 205) with the Texas Secretary of State, pay the $300 filing fee, and designate a registered agent with a Texas street address. After the state accepts the filing, you apply for an EIN with the IRS, adopt a company agreement among your members, and calendar the annual franchise tax report due every May 15. Everything else is detail on those steps.
Pick a Name That Clears the Secretary of State
Your LLC’s name has to be distinguishable from every other entity already on file with the Secretary of State, including active Texas entities, registered foreign entities, and pending name reservations.1Office of the Texas Secretary of State. Name Filings FAQs “Distinguishable” sits somewhere above “add one word” and below “completely different.” Texas Administrative Code Chapter 79, Subchapter C sets out when two names count as the same, when they’re distinguishable, and when the state will accept your filing only with notarized consent from the existing holder.2Office of the Texas Secretary of State. Instructions for Consent to Use of Similar Name
The name also has to end with an organizational designator: “Limited Liability Company,” “LLC,” or “L.L.C.,” under BOC Section 5.056.
Before you spend money on branding, get a preliminary availability check by calling the Secretary of State’s Corporations Section at (512) 463-5555 or emailing them. The final decision doesn’t happen until the certificate is processed, so treat this as a courtesy screen rather than an approval. If you want to hold a name while you prepare paperwork, file a name reservation through SOSDirect. Reservations can be renewed during the 30-day window before they expire.1Office of the Texas Secretary of State. Name Filings FAQs
Line Up a Registered Agent
Every Texas LLC has to maintain a registered agent and a registered office at a physical Texas street address.3Office of the Texas Secretary of State. Registered Agents The agent is who receives lawsuits and official state correspondence, and they need to be available at that address during normal business hours.
A P.O. Box alone won’t satisfy the requirement. The narrow exception is a commercial mail service that is itself acting as the registered agent, in which case its address may qualify. An out-of-state address is rejected outright.3Office of the Texas Secretary of State. Registered Agents You can serve as your own agent if you have a qualifying Texas address. Many owners hire a professional service instead — usually around $100 to $200 a year — to keep their home address off the public record.
File the Certificate of Formation (Form 205)
Form 205 is the document that actually creates your LLC. You can download it from the Secretary of State’s website or file it electronically through SOSDirect.4Office of the Texas Secretary of State. Form 205 – Instructions for Certificate of Formation – Limited Liability Company It asks for your LLC name, registered agent information, governance structure, and organizer details.
Member-Managed or Manager-Managed
Form 205 makes you pick one. In a member-managed LLC, every owner participates in running the business. In a manager-managed LLC, authority sits with one or more designated managers, who may or may not be owners. Pick manager-managed and you list the name and address of each initial manager; pick member-managed and you list each initial member. At least one governing person is required.5Texas Secretary of State. Form 205 – Certificate of Formation Limited Liability Company
Organizer and Effective Date
The organizer is whoever signs and files the certificate. Organizers don’t have to be members or managers; anyone can serve.6State of Texas. Texas Business Organizations Code 3.004 – Organizer You can also choose an effective date. Most filers use the filing date, but you can pick a future date up to 90 days out if you want the formation to line up with a specific calendar date.
How to File and What It Costs
Electronic filing through SOSDirect or SOSUpload is the fastest route.7Office of the Texas Secretary of State. Filing Options Paper filings go in duplicate to the Secretary of State at P.O. Box 13697, Austin, TX 78711-3697, with a courier address at 1019 Brazos, Austin, TX 78701.8Office of the Texas Secretary of State. Filing and Other General FAQs The filing fee is $300. Expedited processing on mailed or hand-delivered filings costs an extra $50 per document and typically produces a two-to-three business day turnaround.9Office of the Texas Secretary of State. Texas Express Expedited Business Filings
Get an EIN From the IRS
Once the Secretary of State accepts your Certificate of Formation, apply for an Employer Identification Number. The EIN is your LLC’s federal tax ID and is required before you can open a business bank account, hire employees, or file most tax returns.10Internal Revenue Service. Single Member Limited Liability Companies The IRS specifically tells you to form the entity with the state first; applying too early can slow things down.11Internal Revenue Service. Get an Employer Identification Number
The online application is free and issues the number immediately. A few quirks to know: you have to finish it in one session, it times out after 15 minutes of inactivity, you’re limited to one application per responsible party per day, and the tool is offline Saturday evenings and most of Sunday.11Internal Revenue Service. Get an Employer Identification Number
Put a Company Agreement in Place
Texas calls the internal governing document a “company agreement” rather than an operating agreement. Under BOC Section 101.052, it governs relations among members and the LLC’s internal affairs, and it is not filed with the state.12State of Texas. Texas Business Organizations Code – Supplemental Provisions for Limited Liability Companies Texas law allows the agreement to be oral or implied, but relying on that with multiple members is asking for a dispute you can’t resolve on paper.
A written company agreement should at minimum cover:
- Ownership percentages: each member’s share and how it was calculated (cash, property, services)
- Profit and loss allocation: whether distributions follow ownership percentages or use a different split
- Management authority: who can sign contracts, hire employees, and make financial decisions
- Capital calls: whether the LLC can require additional contributions, how much notice is required, and what happens if a member refuses
- Transfer restrictions: when a member can sell or assign their interest
- Dissolution terms: what triggers a wind-down and how assets get divided
Single-member LLCs benefit from the document too. It reinforces the separation between owner and business if anyone later challenges your liability protection.
Plan for the Texas Franchise Tax
This is the step new owners most often miss. Texas imposes a franchise tax on every LLC formed or doing business in the state, and the annual franchise tax report is due every May 15.13Texas Comptroller of Public Accounts. Franchise Tax Even if you owe nothing, you still have to file.
If your LLC’s total annualized revenue is at or below $2,650,000, you fall under the no-tax-due threshold and owe zero franchise tax.13Texas Comptroller of Public Accounts. Franchise Tax Most new LLCs qualify. You still have to submit the report and a Public Information Report (PIR) listing the LLC’s officers, directors, managers, or members and their addresses.14Texas Comptroller of Public Accounts. Texas Franchise Tax Public Information Report and Ownership Information Report Filing Requirements
Miss the deadline and you’re looking at a $50 penalty per late report, plus a 5 percent penalty on any tax owed if paid within 30 days (10 percent after that), with interest kicking in after 61 days.13Texas Comptroller of Public Accounts. Franchise Tax Keep ignoring the reports and the Comptroller will forfeit your right to do business in Texas, which can lead to involuntary dissolution by the Secretary of State. Reinstatement is possible but requires filing every missing report, paying everything owed with penalties and interest, obtaining a tax clearance letter, and filing reinstatement paperwork with the Secretary of State along with additional fees.15Texas Comptroller of Public Accounts. Reinstating or Terminating a Business Filing on time is much cheaper.
Other Filings You May Need
Sales Tax Permit
If your LLC sells, leases, or rents taxable goods or provides taxable services in Texas, you need a sales tax permit from the Texas Comptroller before you collect any sales tax. The same applies if you buy taxable goods from out-of-state suppliers that don’t hold a Texas sales and use tax permit.16Texas Comptroller of Public Accounts. Sales Tax Permit Requirements The permit itself is free.
Assumed Name Certificate
If your LLC operates under any name other than the exact legal name on its Certificate of Formation, file an assumed name certificate (often called a DBA) with the Secretary of State. The fee is $25 per name, each assumed name needs its own certificate, and the filing lasts up to 10 years with renewal available in the six months before expiration. Material changes to the information require a new certificate within 60 days.17Office of the Texas Secretary of State. Form 503 – Assumed Name Certificate Instructions Skipping this carries civil and criminal penalties under Texas Business and Commerce Code Sections 71.201 through 71.203.
Keep the Liability Shield Intact
The reason to form an LLC is to keep personal assets separate from business debts. That protection isn’t automatic. Texas courts can pierce the veil and hold members personally liable if they find the LLC was used to perpetrate actual fraud for the member’s direct personal benefit — the statutory standard under BOC Section 101.002.18Baylor Law. Veil Piercing and Other Bases of Personal Liability of Owners It’s a high bar, but commingling personal and business funds is the fastest way to hand a plaintiff the evidence they need.
Courts have treated blending personal and business bank accounts, taking loans and distributions to cover personal expenses in place of a regular salary, and using the LLC for personal purposes without documentation as evidence supporting an alter-ego finding.18Baylor Law. Veil Piercing and Other Bases of Personal Liability of Owners Owning all the membership interests or serving as the sole manager, by itself, is not enough to pierce the veil. Failure to follow LLC formalities required by the BOC or your company agreement is also explicitly excluded as a basis for personal liability.
Practically: open a dedicated business bank account right after you get your EIN, keep personal spending out of it, and document member contributions and distributions in writing.
What You Don’t Have to File: BOI Reports
Older formation guides mention a Beneficial Ownership Information (BOI) report that new LLCs had to file with the Financial Crimes Enforcement Network. As of March 2025, that requirement no longer applies to entities formed in the United States. FinCEN issued an interim final rule removing domestic companies and their beneficial owners from BOI reporting entirely.19FinCEN. FinCEN Removes Beneficial Ownership Reporting Requirements for U.S. Companies and U.S. Persons, Sets New Deadlines for Foreign Companies Only entities formed under the law of a foreign country and registered to do business in a U.S. state remain subject to BOI reporting.20Financial Crimes Enforcement Network. Beneficial Ownership Information Reporting A Texas LLC formed domestically can skip this step.