How to Form an LLC in Texas: A Step-by-Step Guide

## Introduction to Forming an LLC in Texas Forming a Limited Liability Company (LLC) in Texas is a popular choice for entrepreneurs due to its flexibility and the protection it offers to personal assets. This guide will walk you through the process step-by-step, ensuring you understand each stage of forming your LLC in the Lone Star State. ## Step 1: Choose Your LLC Name Before proceeding with formation, you'll need to select a unique business name that complies with Texas naming requirements: - Must contain "Limited Liability Company," "LLC," or "L.L.C." - Cannot be misleadingly similar to existing business names - Must not include restricted words without proper approval - Be distinguishable from existing businesses You can check name availability using the [Texas Secretary of State's SOSDirect website](https://direct.sos.state.tx.us/). ## Step 2: Designate a Registered Agent Every LLC in Texas must have a registered agent who will: 1. Receive legal documents on behalf of your LLC 2. Be available during regular business hours 3. Have a physical address in Texas (P.O. boxes are not acceptable) You can serve as your own registered agent, appoint another individual, or hire a professional registered agent service. ## Step 3: File the Certificate of Formation ### Required Information The Certificate of Formation (Form 205) must include: * LLC name * Registered agent information * Management structure (member-managed or manager-managed) * Organizer information * Principal office address ### Filing Methods You can file your Certificate of Formation: - **Online**: Through [SOSDirect](https://direct.sos.state.tx.us/) - **Mail**: Send to Secretary of State, P.O. Box 13697, Austin, TX 78711-3697 - **In-person**: Deliver to the James Earl Rudder Office Building, 1019 Brazos St., Austin, TX 78701 The filing fee is $300. ## Step 4: Create an Operating Agreement While not required by Texas law, it's highly recommended to create an operating agreement that outlines: * Ownership structure and percentages * Member rights and responsibilities * Management procedures * Voting rights and procedures * Profit and loss distribution * Dissolution process ## Step 5: Obtain an EIN Apply for an Employer Identification Number (EIN) through the [IRS website](https://www.irs.gov/businesses/small-businesses-self-employed/get-an-employer-identification-number). This number is necessary for: * Opening business bank accounts * Filing taxes * Hiring employees * Certain licensing requirements ## Step 6: Comply with Texas Tax and Regulatory Requirements ### State Tax Obligations Register with the [Texas Comptroller of Public Accounts](https://comptroller.texas.gov/taxes/) for: * Sales tax permit (if selling taxable goods or services) * Franchise tax account * Other applicable state taxes ### Business Licenses and Permits Research and obtain necessary: * Professional licenses through the [Texas Department of Licensing and Regulation](https://www.tdlr.texas.gov/) * Local permits * Industry-specific certifications * Zoning permits ## Step 7: Maintain Your LLC ### Annual Requirements * File annual franchise tax reports (due May 15th each year) * Maintain registered agent and office * Update business records as needed * Keep financial records separate from personal accounts ### Best Practices To ensure your LLC's success: * Open a separate business bank account * Maintain detailed financial records * Keep meeting minutes * Update your operating agreement as needed * Maintain proper insurance coverage --- Remember that while forming an LLC in Texas is relatively straightforward, consulting with legal and tax professionals can help ensure you're making the best decisions for your business structure and compliance requirements.

How to Form an LLC in Texas: A Step-by-Step Guide

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