Starting a business in Texas? Forming a Limited Liability Company (LLC) provides business owners with flexibility, from personal liability protection to tax benefits and more, and has been a very popular choice for entrepreneurs. Texas, in particular, stands out for many business-friendly policies, like minimal state income tax and straightforward LLC registration and formation processes.
However, there are still specific requirements and costs to be aware of when setting up an LLC in Texas. This guide will walk you through the steps to create an LLC in Texas, from choosing a name to getting the correct permits and important things to know before and after you do.
How to start an LLC in Texas in 5 steps
Though there are several steps when it comes to opening an LLC in Texas, there are 5 important major steps you need to start an LLC:
- Choosing a name
- Appointing an agent
- Filing for the LLC
- Creating an operating agreement
- Getting an EIN
The process can typically take 3-10 business days (depending on how you filed) with costs starting at $300 (the state filing fee).
Before you start an LLC, make sure you read our guide on how to start a business for tips on essentials to make your business a real success.
1. Choose a name for your LLC
The first step in forming an LLC in Texas (or anywhere) is to choose a name that resonates with your business and complies with state regulations. You’ll want to make sure the name is unique and not in use by another business.
It should also include the words “Limited Liability Company” or an approved abbreviation such as LLC or L.L.C. You can check for name availability through the Texas Secretary of State’s Business Services page.
Not sure how to choose a name for your LLC? Check out our guide for more information.
Get your business domain name
Once you choose a name, it’s a good idea to secure your online presence by purchasing a domain name that matches your LLC. GoDaddy can help you find and buy a domain name and even has tools to leverage AI to generate a unique domain name for your business.
Get a DBA
A “Doing Business As” (DBA) lets you operate under a different name than the name you registered. Also known as an “Assumed Name Certificate”, this can be useful for branding if you plan to conduct business under a different name and gives you the flexibility to offer different product lines or operate in different locations under various names.
Related: What is a DBA?
2. Appoint a registered agent
Every LLC in Texas must designate a registered agent who will receive legal documents on behalf of the company. Texas requires the following of a registered agent:
- The registered agent must have a physical address in Texas (it cannot be a P.O. box or virtual address),
- They must be available on-site during business hours to receive and accept documents.
You can serve as your own registered agent or hire a professional service for added convenience and privacy.
3. File a Certificate of Formation
To legally establish and register your LLC, you must file a Certificate of Formation (Form 205) with the Texas Secretary of State. This document can be submitted online via SOSDirect, by mail, or also in person. It may sound complicated, but the form is relatively straightforward and requires the following information:
- Your LLC’s name
- The name and address of your registered agent
- The purpose of the LLC (a short, general statement is okay)
- The LLC’s duration (if it has a time duration after which you want it to be dissolved)
- The business structure for management of the LLC
- The name and address of members or managers and the LLC’s organizer
- The effective date of the certificate
- The signature of the person starting the LLC
The filing fee is $300, and processing times vary, usually ranging from 3-10 business days, usually shorter for online applications than mailed applications.
4. Create an operating agreement
Although Texas does not require an operating agreement, it is highly recommended to create one, especially if there are multiple members in the LLC. An operating agreement helps define the operational and financial practices of your LLC, the liability agreement between the LLC and its members and outlines procedures to address disagreements between members and adding new members.
An operating agreement often includes information regarding:
- The name and address of the LLC
- Purpose of the LLC
- List of members and their contributions
- How profits and losses will be divided
- Management of the LLC and responsibilities of the managers and members
- Meetings frequencies and structure
- How to add new members and how members can leave
- How the LLC can be shut down
Think of an operating agreement as the business’ constitution and make sure you review it regularly to ensure it is relevant or if it requires changes and amendments.
5. Get an EIN
Once your LLC has been formed, you must obtain your Employer Identification Number (EIN) from the Internal Revenue Service (IRS). As soon as your LLC has been formed, you can apply for it and get it for free on the IRS’ website on the same day. The EIN also functions as your business’s federal tax identification number.
If you are a single-member LLC with no employees, you may not be required to have an EIN, but it is prudent to get one to use on your business documents from the start.
How long does it take to get an EIN?
You can get an EIN immediately from the IRS’ website after your LLC has been approved.
How much does an EIN cost?
There is no cost to obtain an EIN when applying directly through the IRS.
How much does it cost to start and run an LLC in Texas?
The costs associated with forming and operating an LLC in Texas include the following:
- Certificate of Formation fee: $300 ($750 if you are not based in Texas)
- Registered Agent (if hiring a service): $50 - $300 / year
- EIN: $0
- Domain Name: $10 – 50 / year
- DBA / Assumed Name Certificate: $25 (can vary by county)
- Business licenses and permits: $50 - $500 (costs vary by industry)
- Texas Franchise Tax: 0.3475% - 0.75% of revenue (if revenue exceeds $2.47 million) (as of 2025)
Unlike some states, Texas does not require LLCs to file annual reports, which helps in reducing administrative costs and work.
What happens after your LLC is up and running?
Once you’ve successfully formed your LLC, you need to keep your business compliant and operational. This includes setting up bank accounts and keeping on top of tax obligations to ensure your business runs smoothly.
Open a business bank account
Opening a business bank account helps keep personal finances separate from business finances and protects your LLC’s liability status. Requirements vary by bank, but you often need the following to open a business bank account:
- EIN
- Certificate of Formation
- Operating Agreement
File for permits and required business licenses
Depending on the type of business, you might require specific permits and licenses to operate in certain industries or locations. The Texas Comptroller’s office and local government agencies can provide guidance on necessary requirements and when and where you would need licenses and permits.
File annual reports
Texas does not require LLCs to file annual reports. However, Texas LLCs must file an Annual Franchise Tax Report with the Texas Comptroller by May 15 every year. This report has no fee but determines the amount of tax owed if revenue exceeds certain thresholds.
Things to know about Texas LLCs
Before you operate an LLC in Texas, it is important to be aware of all tax obligations, insurance requirements, and other state-specific regulations. These can affect your business’s financial and legal standings and will help you make informed and compliant decisions.
File taxes for a Texas LLC
As of 2025, Texas does not impose a state income tax on LLC members. However, a franchise tax may apply if an LLC generates more than a certain threshold, which is $2.47 million as of 2025.
In addition, if your business sells taxable goods and services, you must collect the Texas state sales tax and other county/city taxes. You must file these taxes quarterly or monthly, determined by the amount of your revenue.
It is important to work with your business accountant to keep accurate records and file and pay taxes as required.
Texas LLC insurance
While business insurance is not a legal requirement to start an LLC, having coverage is important and can help protect your company. General liability insurance is recommended for all businesses to protect them from claims resulting from normal business operations. It often covers bodily injury, property damage, and personal and advertising injury.
Additionally, if you have employees, it is important to get workers' compensation insurance for medical care, income replacement, and more.
Texas LLC franchise tax
The Texas franchise tax applies to LLCs that, as of 2025, earn more than $2.47 in annual revenue. The tax rate varies depending on whether the business is a retail or wholesale business or not. All businesses are required to file the Annual Franchise Tax Report by May 15th every year with the Texas Comptroller to determine the tax owed. Failing to file a franchise report can result in penalties and loss of good standing with the state.
FAQ
What do I need to open an LLC in Texas?
To open an LLC in Texas, you need the following:
- A unique business name
- A registered agent
- A Certificate of Formation filed with the Texas Secretary of State
- Additionally, EIN is required for tax purposes
- (Recommended) An operating agreement for your LLC
- (Recommended) A business bank account for financial management
How long does it take to start an LLC?
The processing time to start an LLC in Texas depends on the method of filing. Online applications can typically take 5-7 business days, while mailed applications may take 7-10 business days.
How much does an LLC cost in Texas?
The total cost to form an LLC in Texas is $300 to file for the Certificate of Formation. In addition to that, if you hire a registered agent, expect to pay between $50-300 per year. You might have additional costs if your business requires specific licenses or permits or any DBAs.
Texas is an excellent place to launch and grow your LLC, with minimal state taxes and a supportive business environment. Starting an LLC in Texas in 2025 is a relatively straightforward process and offers entrepreneurs liability protection and tax benefits, and more. By taking the time to properly set up your LLC, securing the necessary licenses, and staying compliant with Texas regulations, you position yourself and your business for long-term success!
Disclaimer: This content should not be construed as legal or financial advice. Always consult an attorney or financial advisor regarding your specific legal or financial situation.
