Texas is one of the easiest states to form an LLC in. The filing is online, the fee is reasonable, and there's no state income tax. Here's exactly what to do, in order, without paying a 'formation service' $300 for filings you can do yourself.
Step 1 — Pick a name and check availability
Your LLC name must include 'LLC' or 'Limited Liability Company' and must be distinguishable from other entities registered in Texas. Search the Texas Secretary of State's SOSDirect database (or use the free Taxable Entity Search) before you fall in love with a name.
Step 2 — Designate a registered agent
Every Texas LLC needs a registered agent with a physical street address in Texas (no PO boxes). You can be your own agent if you have a Texas address and don't mind your address being public.
Step 3 — File the Certificate of Formation
File Form 205 (Certificate of Formation — Limited Liability Company) with the Texas Secretary of State. The filing fee is $300 and you can file online through SOSDirect or SOSUpload. Processing time is usually 3–5 business days online.
Step 4 — Get your EIN from the IRS
Once Texas has approved your LLC, apply for an Employer Identification Number directly at IRS.gov. It's free, it's instant if you apply during business hours, and you do not need to pay anyone to do it for you.
Step 5 — Write an operating agreement
Texas does not require an operating agreement, but you should write one anyway. It defines ownership, management, profit distribution, and what happens if a member leaves. Banks and lenders sometimes ask for it.
Step 6 — Open a business bank account
Use your filed Certificate of Formation, EIN letter, and operating agreement to open a dedicated business bank account. Mixing personal and business funds is the fastest way to lose the legal protection your LLC was supposed to give you.
Step 7 — Know your Texas Franchise Tax obligation
Most Texas LLCs owe no franchise tax until annualized revenue exceeds the 'no tax due' threshold (currently $2.47 million for the 2024 report year). But you still have to file an annual Franchise Tax Report and a Public Information Report — even if you owe $0. Miss them and your LLC can be forfeited.
What most guides skip
- Getting business insurance — general liability is cheap and shields you in ways your LLC can't.
- Registering for sales tax with the Texas Comptroller if you sell taxable goods or services.
- Filing a DBA (Assumed Name Certificate) if you'll operate under a name different from your LLC's legal name.
- Setting up basic accounting from day one — even a free tool like Wave beats a shoebox of receipts.
Frequently asked questions
How much does it cost to start an LLC in Texas?+
$300 state filing fee. Optional: registered agent service (~$100–200/year), business insurance, accountant.
How long does it take?+
Online filings are usually approved in 3–5 business days. Expedited processing is available for an extra fee.
Do I need a lawyer to form a Texas LLC?+
No. The filing is straightforward. A lawyer is helpful if you have complex ownership, multiple investors, or unusual industry rules.
Do Texas LLCs pay state income tax?+
No personal state income tax. The LLC may owe franchise tax once revenue exceeds the no-tax-due threshold.