If you are looking to set up LLC in texas, then this guide will help you to understand how you can form LLC in texas. We cover everything that required to register an LLC.
LLC or Limited Liability Company is a business structure in which the liability of members, as well as owners, are limited to the amount of sum they invested. Every state has a slightly different process of starting an LLC, and in this comprehensive guide, I will share the information to start a creating an limited liability company in Texas.
According to the law, the limited liability company offers personal protection of liability to everyone in the company. There are some companies that charge $100 to $200 and do the filing work on behalf of you, but I suggest following the instructions by yourself and save this big amount. Let us not waste any more of our precious time and move further to the main subject.
How To Form an LLC in Texas
Getting started with LLC anywhere in the US involves some crucial filing process. I have listed all my knowledge in steps to make it super easy for you to start an LLC in Texas.
Choose a Name for Your LLC
You cannot just think and choose any name for your new limited liability company. There are certain rules to comply with while choosing a name for your company. I have mentioned everything to check before choosing a name.
- The name of your Texas LLC should be unique and check if the name is available for use in the state. (You cannot use any name which is already taken by any existing company)
- You must include a limited liability company or L.L.C in the end of your new LLC.
You can check the availability of the chosen name online from [HERE] OR call at the State Business Information at 512-463-5555.
Note: I recommend checking the name by calling the SBI (State Business Information) even if the name is available on the site as it is not updated frequently.
Finding LLC Registered Agent
As in the other states, Texas Secretary of State requires you to have a registered agent to become the legal face of the business. A registered agent can be an individual or corporation who is a resident of Texas or a person who has the authority to do business in Texas and has a physical street address in Texas. The registered agent will receive all the legal mails & notice on behalf of the limited liability company.
You can also hire a registered agent company that will charge some extra amount, but you will be free from all the legal filing of documents. According to the lawsuit, you can also be a registered agent of your LLC.
Texas LLC Certificate of Formation
Filing documents and getting the certificate of formation is one of the most important steps of the whole process. Texas LLC filing fee is $300, and if you approach any third-party agent, then this will increase by $100 to $200. You can file the documents online or by mail, but I recommend filling it online as it will save you from the physical hassle. To file the document online, you can visit the official SOSDirect website – [HERE]
To apply by mail, you are required to fill-up the form accurately and mail it to the Texas Department of State. Do not forget to stick a cheque or money order of $300 along with the form.
Secretary of State
PO Box 13697
Austin, TX 78711
Note: The approval might take two to three days if done online and about a week if done offline by mail. You will get a Certificate of Formation with an approval sign stamped on it.
Getting Texas LLC Operating Agreement
An operating document is a written private document that depicts the company’s private information. Just like any other US State, Texas does not require an operating agreement to start a limited liability company, but getting one will certainly be helpful for you in the future. Operating Agreement contains information like LLC’s name, owner’s details, investments, debts, and other crucial information. It helps to create a separate legal entity than its owners/members. If you are starting an LLC in Texas, then I personally recommend choosing to have an Operating Agreement as it has many excellent advantages.
EIN OR Tax ID Number
The next step is to have an EIN (Employee Identification Number), which is mandatory to set up a bank account in the company’s name and has other important uses. You can apply for an EIN or Federal TAX ID number in Texas online BUT only if you have SSI or ITIN. Without an EIN, you cannot hire employees for your limited liability company, and all the banks will certainly ask you for an EIN to open an account in the name of the company. Also, do not apply for EIN until your LLC is approved by the Texas Department of State. Applying for Federal TAX ID Number in Texas will not cost you anything as it is totally free of cost.
Texas LLC TAX & Regulatory Reports
No matter what your company revenue or return is, it is mandatory to file the LLC’s annual taxation report with the Texas Comptroller’s Office. Apart from the taxation report, in Texas the limited liability company is also required to file a Public Information Report (PIR) with the Texas Comptroller’s Office. The filing of these reports is important because it maintains the protection of the limited liability privilege of a company. If you are starting an LLC in TX, then you should worry about filing the tax or public reports in the start, but all these reports will be held due in the next year. After your LLC approval, you will receive a welcome letter that will have the 11-digit tax ID number.
Note: Most of the LLC companies in Texas are not liable to pay tax because they fall into the no due tax threshold of $1,130,000. You can file this report online through WebFile.
This is just a brief overview as the Texas Tax rules & points are quite complex and lengthy.
In most of the cities in Texas, there is no specific business license or permit to sign for in order to do business through LLC. But you are required to register for sale tax if your business includes any taxable service like selling of product/service. Getting a sales tax permit is free of charge, and you can apply for it from [HERE]; this will also help you in filing tax to the federal department of the state.
Apart from that, you might require to file up additional taxes according to the location(city) in which you are and what type of industry your company works in. The best thing you can do is to call the local municipality of your city or area.
Note: You can also check about permits/license online at https://texas.gov/
LLC’s Bank Account
After you get the approval of your, you will need a bank account to separate your transactions with the limited liability company’s transactions. But before that, make sure you have Employee Identification Number (EIN) or Federal TAX ID Number as no bank will let you open an account without EIN number. Opening a separate company’s bank account is crucially important as it will maintain your limited liability protection. There are certain private rules of every bank, and your LLC must comply with them all to open an account. You must contact the bank in order to know the in-depth information about opening a bank account in the company’s name.
Things mandatory to have to open an LLC’s Bank Account:
- EIN / Federal Tax ID Number
- Stamped as “Approved” Certificate of Formation
- Identity Document (License/Passport)
A wise recommendation from us would be to use different phone numbers for the documents of limited liability company as it will save your from getting a whole lot of chaos on your phone.
State Agencies of Texas
512-463-5555 (8:00am – 5:00pm, M-F)
(LLC taxation, franchise tax, sales tax, etc.)
800-252-1381 (8:00am – 5:00pm, M-F)
(if you’ll hire employees)
512-463-2222 (8:00am – 5:00pm, M-F)
Starting a limited liability company in Texas is not rocket science but not simple either. Many third-party agencies bluff people and charge hundreds of dollars just to do some straightforward steps (mentioned above). These agencies can be helpful as if you forget to file any document on time, and then the limited liability company might suffer from fine or even sudden dissolution. The company might lose limited liability protection, too, if you fail to file the mandatory documents every year. In this article, I shared almost everything that you need to know and enough to satisfy the question “How to start an LLC in Texas.” I believe that this comprehensive article helped you and satisfied all your queries regarding the subject. But if you have any issue or problem, then please feel free to make a comment below, and I or someone from our team will certainly respond to you with a positive & helpful answer in no big time. Also, do not forget to share this piece of information with your friends or people who might find this helpful.
Which type of limited liability company are you starting in Texas?