How to Start an LLC in Texas

Forming a Texas LLC comes down to one core filing with the Secretary of State, plus a handful of follow-up steps that keep the entity in good standing. This guide walks through exactly what to prepare, what it costs, and what to do after your Certificate of Formation is approved. Texas LLC formation is more straightforward than in many states: there's no state corporate income tax and no personal income tax, though a franchise tax report still applies to every LLC, including those that owe nothing.

What You'll Need Before You Start

Gather these before you open a filing session, whether you file online through SOSDirect or by mail:

• A distinguishable LLC name that includes an organizational designation such as "Limited Liability Company," "Limited Company," "LLC," "L.L.C.," "LC," or "L.C."
• A Texas registered agent with a physical street address in the state (no P.O. boxes)
• $300 for the Certificate of Formation filing fee
• The names and addresses of organizers, managers, or members, depending on how the LLC will be managed
• An SOSDirect account (or a completed paper Form 205) for filing
• An EIN application ready to submit to the IRS once the LLC is approved
• An operating agreement template or draft, even though Texas doesn't require one to be filed

Step-by-Step: How to Form an LLC in Texas

1. Choose and verify your LLC name

Your name must be distinguishable in the records of the Texas Secretary of State from any existing domestic or registered foreign filing entity, name reservation, or name registration. It can't imply a purpose the LLC isn't authorized to pursue, and it can't falsely suggest a government affiliation. Before you fall in love with a name, run a preliminary search through the SOS business name search, or call the Secretary of State's name availability line at (512) 463-5555 to confirm. A search showing no exact match doesn't guarantee approval; the examiner makes the final distinguishability call when your Certificate of Formation is reviewed.

2. Reserve your name, if you need time (optional)

If you're not ready to file the Certificate of Formation immediately but want to lock in a name, you can file an application to reserve an entity name for $40. The reservation holds the name for 120 days. The form is available directly from the Secretary of State at sos.texas.gov/corp/forms/806_boc.pdf. This step is optional; most filers who are ready to move skip it and go straight to formation.

3. Appoint a Texas registered agent

Every domestic LLC must continuously maintain a registered agent and a registered office in Texas. The agent must be either a Texas resident individual, a domestic entity, or a foreign entity registered to transact business in Texas, and must have given written or electronic consent to serve. The registered office needs to be a physical street address where the agent can be personally served during normal business hours; a mail forwarding service or answering service alone won't satisfy this requirement. Your LLC cannot act as its own registered agent. You can serve as your own agent personally (if you're a Texas resident with a physical address to list publicly), appoint a trusted associate, or hire a commercial registered agent service, which typically runs $100 to $300 per year. If you ever need to change your agent, that filing costs $15; resigning as an agent is free to file.

4. File the Certificate of Formation (Form 205)

This is the actual formation document that creates your LLC. File it with the Texas Secretary of State for a $300 fee. You have two filing paths:

• Online through SOSDirect (direct.sos.state.tx.us), which the Secretary of State's office identifies as the fastest processing route
• By mail or in person, which generally takes at least one business day just to be logged into the system as "Received" before review even starts

The Secretary of State does not publish a guaranteed standard turnaround time for regular filings. If you need certainty on timing, Texas offers paid expedite tiers: Standard Expedite ($50 per document, typically two to three business days), Next Day Expedite ($500 per document, processed by close of business the next business day for filings received by noon), and Same Day Expedite ($750 per document, processed the same day for filings received by noon). Expedite fees are added on top of the $300 filing fee, not a substitute for it.

5. Get an EIN from the IRS

Once your Certificate of Formation is approved, apply for an Employer Identification Number from the IRS. This is free directly through the IRS and is required to open a business bank account, hire employees, and file federal taxes. Apply only after your LLC is officially formed; using a name that hasn't been approved yet can create mismatches down the line.

6. Draft an operating agreement

Texas doesn't require you to file an operating agreement with the state, but skipping one entirely is a common mistake. This internal document spells out ownership percentages, management structure, voting rights, and what happens if a member leaves or the LLC dissolves. Banks frequently ask for it when opening a business account, and it's the document that reinforces your liability shield if the LLC's separateness from its owners is ever challenged.

7. Register for the taxes that apply to your business

Texas has no corporate income tax and no personal income tax, but most LLCs still have two tax obligations to sort out:

• Sales and use tax permit: If you sell taxable goods or services, you need a permit from the Texas Comptroller. It's issued at no charge and typically takes two to three weeks to process. Apply at comptroller.texas.gov/taxes/permit. The state sales tax rate is 6.25%, and local jurisdictions can add more on top.
• Franchise tax: This is Texas's privilege tax for doing business in the state, administered by the Comptroller (comptroller.texas.gov/taxes). For the 2026 and 2027 report years, LLCs with total revenue at or below $2,650,000 owe no franchise tax, but the LLC still has to file, typically a No Tax Due Report along with a Public Information Report or Ownership Information Report. Above that threshold, rates are 0.375% for retail and wholesale businesses, 0.75% for most other entities, and a 0.331% EZ Computation rate is available for entities under $20 million in total revenue.

Texas does not issue a general state business license. What you actually need depends on your industry, city, and county; the state's Texas Business Licenses and Permits Guide, published by the Business Permit Office, is the reference point for figuring out which specific licenses or permits apply to your activity.

8. File your annual franchise tax and Public Information Report

There's no separate annual report fee owed to the Secretary of State. Instead, every LLC files a Public Information Report each year with the Texas Comptroller, due May 15, alongside the franchise tax report. Mark this date; missing it can lead to forfeiture of your LLC's right to transact business in Texas, even if you owed zero tax.

Common Mistakes to Avoid

• Assuming a clear name search guarantees approval. The Secretary of State makes the final distinguishability call at the time of filing, not you.
• Listing a P.O. box as the registered office. Texas requires a physical street address where the agent can be served in person.
• Skipping the operating agreement because it isn't legally required. Banks and courts both tend to expect one.
• Forgetting the May 15 franchise tax filing because "no tax due" sounds like "nothing to file." The report is still mandatory even at $0 owed.
• Filing by mail and expecting fast turnaround. If timing matters, file through SOSDirect or pay for an expedite tier; the standard mail queue has no guaranteed processing window.
• Confusing a DBA with an LLC filing. An Assumed Name Certificate (Form 503, $25 with the Secretary of State) only registers a trade name; it doesn't create a separate legal entity or provide liability protection.

What to Expect After Filing

Once the Secretary of State approves your Certificate of Formation, your LLC generally becomes a legally recognized entity as of the effective date on the filing. Many filers report that online submissions through SOSDirect tend to move faster than mailed paperwork, though the office does not commit to a specific number of business days for standard processing, so build in some buffer if you're working against a deadline like a lease signing or a contract start date. After formation, opening a business bank account, applying for any needed local permits, and getting your sales tax permit (if applicable) are usually the next practical steps toward actually operating.

Texas LLC Formation Costs at a Glance

Item	Cost
Certificate of Formation (Form 205)	$300
Name reservation (optional)	$40 for 120 days
Standard Expedite (optional)	$50 per document
Next Day Expedite (optional)	$500 per document
Same Day Expedite (optional)	$750 per document
Registered agent change	$15
Assumed Name Certificate / DBA (SOS)	$25 (county clerk fees vary if applicable)
Sales tax permit	No charge
Public Information Report (annual, with Comptroller)	No separate fee; franchise tax may apply above the revenue threshold

If a fee you need isn't listed here or seems to have changed, confirm current amounts directly on the Texas Secretary of State site before filing.

Where to Get Help

For free, hands-on guidance beyond what a filing checklist can cover, the Texas Small Business Development Center Network offers no-cost consulting across the state, and the SBA's Dallas-Fort Worth district office is a starting point for federal small business resources.

This article is informational content only and does not constitute legal or tax advice. Texas LLC formation involves decisions, entity structure, tax elections, licensing, that can carry real financial and legal consequences depending on your specific business. Consult a licensed Texas attorney and a CPA before filing, especially if your situation involves multiple owners, outside investors, specialized licensing, or revenue near the franchise tax threshold.