To start an LLC in Texas, you pick a name, appoint a registered agent and file a Certificate of Formation (Form 205) with the Secretary of State. The filing fee is $300, and online filings through SOSDirect are usually approved in 2-3 business days. After that you’ll want an operating agreement, an EIN and a business bank account, and you’ll owe a franchise tax filing every May 15.
That’s the whole process. Below is how to start an LLC in Texas without the mistakes that get filings rejected or LLCs forfeited later.
Why form an LLC in Texas?
The main reason is liability protection. If the business is sued or can’t pay its debts, your house, personal savings and car generally stay out of it. You also keep pass-through taxation, so profits go on your personal return instead of being taxed twice.
Texas adds no personal income tax, and most small LLCs owe nothing under the franchise tax. An LLC also takes less paperwork than a corporation, can be member-managed or manager-managed, and looks more established than a sole proprietorship. You don’t need partners, either. Single-member LLCs are fully recognized in Texas.
How to start an LLC in Texas, step by step
Step 1: Choose and check your LLC name
Your name has to be distinguishable from every other entity registered with the Texas Secretary of State, and it must include “Limited Liability Company,” “LLC” or “L.L.C.” Avoid words that suggest a government connection (FBI, Treasury, State Department) and words like Bank, Insurance or University that need extra licensing or approval.
Search the name in SOSDirect before you file. Look for close variations too, not just exact matches. If “Lone Star Consulting LLC” already exists, “Lonestar Consulting LLC” may be rejected as too similar.
If you aren’t ready to file yet, you can reserve a name for 120 days by filing Form 501 with a $40 fee. The reservation is renewable once. We’d only bother if something is genuinely holding you up, like waiting on a partner or funding. Otherwise just file the LLC.
Step 2: Appoint a Texas registered agent
Every Texas LLC needs a registered agent: a person or company that accepts lawsuits and official state mail for the business. The agent needs a physical street address in Texas (no P.O. boxes) and has to be available there during normal business hours.
You have three options. You can be your own agent, which is free but puts your address on the public record and means you need to be there when papers arrive. Miss a delivery and you might miss a lawsuit deadline. You can ask a friend or family member, which is also free but shifts the risk and the public address onto them. Or you can hire a professional registered agent service, which typically costs $50-$300 per year and keeps your personal address private. IncCraft includes registered agent service with its formation packages.
If you work from home, we’d use a service. Having your home address tied to a lawsuit delivery isn’t worth the savings.
Step 3: File your Certificate of Formation
Form 205 is the document that actually creates your LLC. It asks for:
- LLC name, with the “LLC” designation
- Registered agent name and Texas street address
- Governing authority, meaning whether the LLC is member-managed or manager-managed
- Organizer name and address (the organizer doesn’t have to be a member)
- Duration, usually perpetual, or a specific end date
- Purpose, where a general purpose is fine
| Method | Processing time | Cost |
|---|---|---|
| Online (SOSDirect) | 2-3 business days | $300 |
| 5-7 business days | $300 | |
| Expedited | 24 hours | $300 + $25 |
To file online, create a SOSDirect account at sos.state.tx.us, choose “Formations” and then “Limited Liability Company,” complete Form 205 and pay the $300 by credit card. Once it’s approved, download your filed Certificate of Formation. Hang on to your confirmation number, because you’ll need it to check status and pull documents.
File online. Mail costs the same and takes longer.
Step 4: Write an operating agreement
Texas doesn’t require one, but you should have it. The operating agreement sets out ownership percentages, how profits and losses are split, voting rights, who manages the business, what happens if a member leaves or dies, and how the LLC winds down.
Without one, Texas default LLC rules govern your business, and they may not match what you and your partners intended. Some banks won’t open an account without it, member disputes have no agreed process, and your liability protection is easier to challenge in court.
Single-member LLCs need one too. It shows you’re keeping the business separate from yourself, gives you documentation if your LLC status is ever challenged, and makes it easier to add a partner later.
Step 5: Get an EIN
An EIN is your LLC’s federal tax ID. You need one if the LLC has employees, has more than one member or files certain federal returns, and most banks require one to open an account.
The IRS issues EINs free at IRS.gov/EIN. The online application takes about 10 minutes and you get the number immediately. To apply online, the responsible party needs a valid Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).
Step 6: Open a business bank account
Keeping business and personal money separate protects your liability shield, makes bookkeeping and taxes simpler, and helps you build business credit. Most banks will ask for your filed Certificate of Formation, your EIN confirmation letter, your operating agreement, a government-issued ID and an initial deposit, which varies by bank.
Regional banks like Frost Bank, Texas Capital Bank and Comerica and national ones like Chase, Bank of America and Wells Fargo all open LLC accounts. Ask what they need before you go.
Step 7: Understand the Texas franchise tax
Texas has no state income tax, but most businesses fall under the franchise tax. Every Texas LLC files a franchise tax report, though most small ones owe nothing. LLCs with annualized total revenue under $2.47 million (2024) owe no franchise tax.
| Revenue | Form required | Due date |
|---|---|---|
| Under $2.47M | No Tax Due Report (Form 05-163) | May 15 |
| $2.47M – $20M | EZ Computation Report (Form 05-169) | May 15 |
| Over $20M | Long Form (Form 05-158) | May 15 |
Owing no tax doesn’t mean skipping the filing. If you don’t file, you face penalties and your LLC can eventually be forfeited. Along with the franchise tax report, you also file a Public Information Report (PIR) that updates your principal office address, registered agent and officer, director or manager information.
Step 8: Get business licenses and permits
Texas has no general state business license, but your industry or city may require one. Contractors, real estate agents, healthcare providers, food service businesses and alcohol sellers all need state licenses, from agencies such as the Texas Department of Licensing and Regulation, the Texas Real Estate Commission, the Texas Medical Board and Board of Nursing, the Texas Department of State Health Services and the Texas Alcoholic Beverage Commission. Cities and counties may also want business permits, zoning approval, health permits, fire inspections or sign permits, so call your city clerk’s office and county clerk before you open.
How much does it cost, and how long does it take?
| Item | Cost | Frequency |
|---|---|---|
| Certificate of Formation | $300 | One-time |
| Registered agent service | $0-$300 | Annual |
| EIN | Free | One-time |
| Name reservation (optional) | $40 | One-time |
| Operating agreement | $0-$500 | One-time |
| Franchise tax report | $0 under $2.47M revenue | Annual |
| Minimum total | $300 | – |
On timing, choosing a name and preparing the form takes about a day each, state processing takes 2-3 business days standard or 24 hours expedited, the EIN comes the same day, and a bank account takes 1-3 days. That works out to about 5-7 business days in total with standard filing, or 2-3 business days if you expedite.
Mistakes that cost Texas LLC owners later
Most of the problems we’d warn you about are covered above: a name too close to an existing business, a P.O. box for the registered agent, no operating agreement, no EIN, forgotten city and county permits. Two deserve repeating. Mixing personal and business money weakens your liability protection, so run everything through the business account. And missing the franchise tax filing because no tax was due is the mistake that leads to forfeiture.
Should you form in Delaware or Wyoming instead?
| Factor | Texas | Delaware | Wyoming |
|---|---|---|---|
| Filing fee | $300 | $90 | $100 |
| Annual fee | $0 under $2.47M revenue | $300 | $60 |
| State income tax | None | None on out-of-state income | None |
| Privacy | Moderate | High | High |
| Best for | Operating in TX | Venture-backed | Privacy-focused |
If you’re doing business in Texas, form in Texas. An out-of-state LLC still has to register in Texas as a foreign LLC, so you’d pay fees in both states and keep two sets of filings current.
What you’ll keep up with each year
Every year, file the franchise tax report by May 15 (even when no tax is due) along with your Public Information Report, keep a registered agent in place and keep your operating agreement current. As things change, update your registered agent if you switch services, amend your Certificate of Formation if your name, address or structure changes, and file any annual reports your professional licensing boards require.
Put May 15 on your calendar the day your LLC is approved. It’s an easy deadline to miss.
Start your Texas LLC with IncCraft
IncCraft files your Certificate of Formation, gets your EIN and provides registered agent service, so the setup is done right the first time.
Ready to form your Texas LLC? Get started with IncCraft today.