Do you want to set up a limited liability company in Texas? What requirements do you need to meet? Can you start a Texas LLC for free, and how long will it take you to set up the business?
All these are important questions that you need to get answers to before establishing a Texas LLC. But there is no shortage of guides online that cl
aim to offer the best advice on how to start an LLC in Texas. With so many options, which one do you trust?
Don't fret as we are here for you. Why should you trust us? We are all about business. Unlike other guides, we have conducted in-depth research across all states, and we understand their requirements and step by step process. So, you can compare it, for example, with NJ LLC formation, the way to form your LLC in the state of Wisconsin, or form your LLC in the state of Maryland, which is quite easy, similar to forming an LLC in Illinois. Also, some states can require special requirements, which are not necessarily complicated, as explained in our Florida LLC formation process.
It would also help if you get the services of a trusted LLC formation service.
So, what do you require to form a Texas LLC, and what steps do you follow to begin operations?
Registering your LLC
If you are still wondering how to set up an LLC in Texas, worry no more. If you want some help in setting up, check out our IncFile review.
Forming an LLC in the state of Texas is an affordable and seamless process. You only need to meet all the naming and all the requirements to form an LLC. Additionally, you should meet all the required fees and fill all the forms before registering with the Texas secretary of state. Also, for those who want to set up their business elsewhere, look into the PA LLC formation process, or how to form your LLC in the state of NC and LLC in Colorado. Moreover, if you form your LLC in the state of Ohio, your private assets will be protected if your business is sued.
Before you can form your Texas LLC, you must file for a Certification of Formation, also known as form 205, with the Texas secretary of state. You can do the registration for the Texas LLC online or by mail or fax.
When you get your LLC certificate of formation, it will come with various details, including:
Name and business address of the Texas LLC
Name and address of the Texas state LLC s registered agent
A statement outlining the type of management for your Texas LLC and by whom, i.e., is it manager-managed or member-managed?
The purpose for which the limited liability company LLC was formed and its date of dissolution
Name and address of the organizers of the business
We also reviewed Rocket Lawyer for all the legal guidance you need in the setup process.
How much does it cost to set up an LLC in Texas?
To set up your Texas LLC and start operations, you need to file the Certificate of formation with the secretary of state. The business filing fee should accompany the form.
The primary cost of setting up a Texas LLC is $300, which is the nonrefundable fee of filing for the certificate of formation. If you want an expedited process, then you can add a fee of $25.
If you wish to file for the Acceptance of Appointment or Consent form, also known as form 401-A, it will cost you $15 for a for-profit Texas business LLC. If it's a non-profit LLC in Texas, you'll pay a $5 fee.
If you want to file for a name reservation, it will cost you $40.
You can make the payment for the Texas LLCs using a money order, personal check, LeagalEase debit card, or a credit card. You are subject to a 2.7% convenience fee of the total charges for the credit card payment option. In addition, for those who want to set up their business in California, check out how much a CA LLC formation process cost, or why NY LLC formation process can seem complicated.
How long does it take to set up an LLC Texas business?
Are you worried that it might take too long to set up your business entity?
Well, forming LLCs in Texas is a seamless process that you will be done with without even noticing.
After submitting the Texas certificate of formation and other documents plus all the fees, the process is through in about five business days.
If you want an expedited service of process, you can submit a request at an additional fee per document or form. You need a written request for the expedited LLC filing.
Now that we know what you require to set up an LLC business in Texas, how do you go about it?
Here is a step to step guide on how to set up the business.
Select a business name for your Texas LC
Choosing a name for your LLC business is the first and crucial step towards its operation. Your preferred name should meet the naming requirements of the state, and it should also be easy to search by potential clients.
If you wish to reserve a name for your business, you can do so by filing form 501. The name reservation is done online or by mail, and you need to pay a nonrefundable filing fee.
The form must include the assumed name you want to reserve, the business type, and the name and addresses for whom the reservation is made. The reservation form must also be assigned by the applicant's lawyer or a Texas-registered agent.
Are there any guidelines you need to follow as you select a name for your LLC business?
Yes, there are.
Your business name should include the phrase "Limited Liability Company." You can also use the appreciation LLC or L.L.C.
If you are to use a restricted name for your business, such as a bank or university, you will require more paperwork. You will also require a licensed individual such as a lawyer to be part of the LLC business
Your choice of name should not confuse your business with a government agency such as the FBI or state department
Plus, you need to make sure that your choice of name is not already taken. You can do so by conducting a name search on the Texas Comptroller of Public Accounts website.
You should also search online to find out if the choice is available as a domain name. It would be best if you buy the URL to stop other people from using it, even though you are not ready to start a business website at the moment.
Select a registered agent in Texas
Choosing a registered agent is a vital step in your LLC formation.
Why is it that essential?
Texas registered agent acts as a link between your business and the government and ensures you conform to the state law.
What is a registered agent?
A registered agent can be an individual or entity that acts on behalf of your business. It receives all the legal documents, tax forms, and notices of lawsuits on behalf of your LLC.
A registered agent should be a resident of Texas state. It can also be a corporation, e.g., a registered agent service with authority to operate in the state. The registered agent ensures you comply with all tax requirements, including income tax, Texas franchise tax, etc.
The agent must consent to the appointment in writing or electronically. The consent statement should include the LLC identity, an express statement that the person consents to be a registered agent. The registered agent must sign the consent statement.
Note, it is not mandatory to file the consent with the secretary of state.
File for the certificate of formation
In the next step in your LLC registration, you must file a certificate of formation with the secretary of state. You can apply to file the certificate online, in person, or by mail.
The certificate of formation is a legal document that allows you to form your business. It includes the purpose of the business, the date of the filing's effectiveness, and the names of the LLC, registered agent, and business owners. It should also include the state filing fee.
Note, apart from the certificate, your LLC may require other business licenses. The business license your LLC requires will depend on the nature and purpose of its operation.
Create an LLC operating agreement
Do you need an operating agreement for your LLC?
Although it's not mandatory to create an operating agreement, we recommend that you come up with one. An operating agreement outlines the LLC business structure and its procedures of operation. It is essential for companies that don't operate as single-member LLCs.
The LLC operating agreement is vital in ensuring the business's managers and the organizers work in harmony. Therefore, it prevents conflicts in the future. It is also a requirement when you are filing for your Texas tax license.
Apply for an EIN for your LLC
The next step in your LLC formation includes getting an employer identification number.
The employer identification number EIN, also known as Federal Tax Identification Number (FTIN), is issued by the Internal Revenue System (IRS). The number is vital in identifying your business and tracking its tax reporting. It is the social security number for the LLC.
Why do you need to get an EIN?
It is essential when you want to open a bank account for the LLC
If it is not a single-member LLC, you need an EIN for tax purposes to ensure it is not taxed as a sole proprietorship
It is also vital if you'll be hiring employees for the company
File an annual report
As an LLC, your business is subject to the Texas franchise tax. As such, the Texas comptroller will require you to submit a franchise report together with the public information report after the first year of operation. After that, you will need to file an annual franchise tax and public information report every year.
Apart from franchise tax, your business is also subject to other taxes such as sales tax and federal income tax.
If you want to set up a limited liability company in Texas, nothing should stop you from going ahead. Setting up the business will take you a few days, and it is also affordable. You can follow our detailed steps above and enjoy a seamless setup process.