Form an LLC in Texas
A Texas limited liability company gives a business a separate legal structure, flexible management, and a cleaner line between the owner's personal assets and the company's obligations. It is often a practical fit for a startup, online retailer, professional service, or local business that wants a formal entity without the governance load of a corporation.
Forming one is a filing process, but the filing is only one part of the work. You need an available name, a Texas registered agent, an internal operating agreement, a Certificate of Formation, and a plan for taxes, reports, permits, and banking after approval.
Why Form a Texas LLC
An LLC can help limit owner liability for business debts and claims. The company owns its business property, signs its own contracts, and carries its own obligations. That separation is the reason many owners choose an LLC over operating as a sole proprietorship or general partnership.
The structure is also more flexible than a corporation. A Texas LLC can be managed by its members or by managers, and the operating agreement can define voting rights, ownership percentages, profit distributions, transfer rules, and what happens if a member leaves the company.
For many small businesses, the professional signal matters too. Vendors, clients, landlords, and banks often expect a formal entity before they treat the business as more than a personal side project.
Choose a Texas LLC Name
Start with the company name. The name should be distinguishable from existing business names on file and should include an LLC designator such as "Limited Liability Company," "Limited Company," "LLC," or "L.L.C."
If you are not ready to form immediately, Texas allows name reservation through Form 501. The reservation fee is $40 and the reservation period is 120 days.
If the LLC will operate under a name other than its legal name, it can file an assumed name certificate. Texas Form 503 is the assumed name certificate filed with the Secretary of State for corporations and LLCs, and the filing fee is $25.
Appoint a Texas Registered Agent
Every Texas LLC must maintain a registered agent and a registered office in Texas. The registered office must be a physical Texas address where service of process and official notices can be received during business hours.
The registered office cannot be only a P.O. box unless the commercial mail or message service is itself serving as the registered agent. Many owners appoint a third-party registered agent so official notices do not go to a home address or storefront.
Prepare an Operating Agreement
Texas does not require the operating agreement to be filed with the state, but the document is still important. It is the internal contract for how the LLC will run.
A useful operating agreement typically covers member ownership, manager or member authority, voting rules, profit and loss allocations, meeting rules, transfer restrictions, buyout terms, amendment procedures, and dissolution procedures.
Without an operating agreement, the company leans more heavily on default state rules and informal understandings. That is a weak place to be when members disagree or when a bank, investor, or buyer asks how the company is governed.
File the Certificate of Formation
To create the LLC, file Form 205, the Certificate of Formation for a Limited Liability Company, with the Texas Secretary of State. Texas accepts the filing online through SOSDirect or by mail.
The Certificate of Formation generally identifies the LLC name, registered agent, registered office, management structure, organizer, and effective date. If the LLC is member-managed, the filing identifies initial members. If it is manager-managed, it identifies initial managers.
The Texas filing fee for Form 205 is $300. After the filing is accepted, the company exists as a Texas LLC.
Handle EIN, Banking, and Records
After formation, many LLCs need an Employer Identification Number for tax filings, banking, payroll, or vendor paperwork. The EIN step is separate from the Texas Certificate of Formation.
The company should also keep formation records, the signed operating agreement, member approvals, tax records, bank records, and any licenses or permits in a consistent company file. The point is simple: treat the LLC as a company, not as an extension of the owner's personal accounts.
Franchise Tax and Public Information Report
Texas LLCs do not file a separate annual report with the Secretary of State. The recurring state compliance obligation is the franchise tax filing and Public Information Report with the Texas Comptroller.
The annual franchise tax report is due May 15 each year. The Public Information Report is due on the same date and must be filed even if the LLC's revenue is at or below the no-tax-due threshold.
For 2026 and 2027, the no-tax-due threshold is $2,650,000 in annualized total revenue. Businesses above the applicable threshold should review the Comptroller rules for the franchise tax rate and calculation method.
Business Licenses and Sales Tax
Texas does not use one universal state business license for every LLC. Licensing depends on the company's city, county, profession, and activity.
If the LLC sells or leases tangible personal property or sells taxable services in Texas, it may need a Texas sales tax permit. The permit application is handled online through the Texas Comptroller's eSystems, and the state sales and use tax rate is 6.25%. Local jurisdictions can add up to 2%, making the maximum combined rate 8.25%.
Professional or regulated businesses may need additional licenses before they can operate. Check those requirements before signing contracts, opening to customers, or collecting sales tax.
Who Should Form an LLC
An LLC is usually worth considering when the owner wants a formal business entity, a separate company bank account, flexible management, and a liability boundary between business obligations and personal assets.
It is not always the right structure for every company. A business seeking venture capital or a more traditional corporate stock structure may need to compare an LLC against a corporation before filing.