How to Start an LLC in Texas in 2026

Steps to Start an LLC in Texas

Forming an LLC in Texas means filing with the Texas Secretary of State and handling a few requirements before and after that filing. These are the six steps to start a Texas LLC:

1. Choose a unique name for your LLC in Texas
2. Appoint a registered agent to receive important notices for your business
3. File Form 205, the Certificate of Formation, with the Texas Secretary of State
4. Create an operating agreement to establish the rules for your LLC
5. Register your business with the IRS and review your tax requirements
6. Get the licenses and permits your business needs

✓ Step 1: Name your Texas LLC

Your LLC’s name must be distinguishable from every other business name on file with the Texas Secretary of State, and it must follow the state’s naming rules for limited liability companies.

How to Choose a Name

Use this checklist when choosing a name for your Texas LLC:

• Unique name: Make sure no other Texas business already uses the name you want.
• Compliance with naming rules: Follow Texas naming rules, which prohibit certain government-related words and require authorization for restricted words.
• Name availability: Use the Texas business entity search to check whether your name is available. For a more precise check, contact the Texas Secretary of State at 512-463-5555 or corpinfo@sos.texas.gov.
• Designator: Texas law requires your name to include “limited liability company,” “limited company” or an abbreviation such as “LLC” or “L.L.C.”
• Trademark check: Search state and federal trademark records to make sure your name doesn’t infringe on an existing trademark. Texas trademarks are listed on the Texas Secretary of State website, and federal trademarks are searchable through the U.S. Patent and Trademark Office.
• Domain name availability: Check whether a matching web domain is available so customers can find you online.
• Assumed name (DBA): If you plan to operate under a name other than your official LLC name, register an assumed name with the Texas Secretary of State.
• Name reservation: To hold a name before you form your LLC, file a name reservation application with the Texas Secretary of State. A reservation lasts 120 days.

The Texas Secretary of State website has the state’s full naming guidelines.

Can you change the name of a Texas LLC?

Yes. You can change your LLC’s legal name at any time, as long as another business isn’t already using the new name. File a Certificate of Amendment with the Secretary of State through SOSDirect or by mail. The Certificate of Amendment has a filing fee.

If you only want to operate under a new name and don’t need to change the legal name, an Assumed Name Certificate is usually the cheaper option. It has a smaller filing fee and lets your company do business publicly under a name other than its official one.

✓ Step 2: Appoint a registered agent in Texas

Every Texas LLC must have a registered agent. This is a person or business entity with a physical Texas street address that receives official government correspondence, tax forms and legal documents for your LLC, such as a summons if the business is sued.

The registered agent’s address is called the “registered office.” It doesn’t have to be where your business operates, but it must be a physical street address in Texas. A P.O. box won’t work because documents like subpoenas must be delivered in person.

How to Choose a Registered Agent

You have three options: serve as your own registered agent, appoint another person or hire a registered agent service. A few states allow an LLC to act as its own registered agent, but Texas doesn’t.

✓ Step 3: File Texas Certificate of Formation Form 205

Filing a Certificate of Formation (Form 205) with the Texas Secretary of State is what legally creates your LLC. Many other states call this document the Articles of Organization.

How to File Form 205

To file online, create an SOSDirect account on the Texas Secretary of State website. The filing fee is a one-time payment of $307, plus a 2.7% convenience fee for credit card payments. Processing times change often, so check the Secretary of State’s current processing times page before you plan around a filing date.

If you file by mail, the fee is the same $307. Mail the completed Certificate of Formation and your payment to:

Secretary of State
P.O. Box 13697
Austin, TX 78711-3697

Mail filings take longer than online filings. Check the same processing times page for the current mail turnaround.

How much does it cost to start an LLC in Texas?

The main cost to start an LLC in Texas is the $307 filing fee for the Certificate of Formation. Other costs depend on your choices, such as hiring a registered agent service, reserving a name or registering an assumed name. See the full breakdown of Texas LLC costs for every fee.

What Information to Provide About Your LLC

• Entity name and type: Your company name, followed by “limited liability company,” “limited company” or an abbreviation like “LLC” or “LC.”
• Registered agent and office: The name of your registered agent and their physical Texas address.
• Governing authority: Whether your LLC will be member-managed or manager-managed.
• Purpose: A general statement like “any and all lawful purposes” is enough.
• Initial mailing address: An address where the Texas Comptroller can send tax information and correspondence.
• Supplemental provisions: An optional section for any additional provisions.
• Duration: Whether your LLC has a termination date or exists indefinitely.
• Organizer: The person completing and filing the form for the LLC.
• Effectiveness of filing: When your LLC will take effect.
• Execution: The date and signature.

Once the state approves your filing, you’ll receive a stamped Certificate of Formation that officially recognizes your LLC. If any of that information changes later, you’ll need to update it with the state.

If you’re forming a PLLC in Texas, you’ll use a slightly different form: Form 206, the Certificate of Formation for a Professional Limited Liability Company.

✓ Step 4: Create an operating agreement

Texas law doesn’t require an operating agreement, but it’s worth having one, especially if your LLC has more than one owner. The agreement sets out how the LLC is run, who owns what and how money is divided, which helps prevent disputes later.

What to Include in Your Operating Agreement

A Texas LLC operating agreement typically covers:

• Ownership: Each member’s ownership percentage, if ownership isn’t divided equally.
• Management: Whether the LLC is member-managed or manager-managed, and how decisions get made.
• Initial contributions: The capital each member contributes when the LLC is formed.
• Profit distribution: How profits and losses are split among members.
• Taxes: The LLC’s tax classification: sole proprietorship, partnership, C corporation or S corporation.
• Ownership changes: What happens when a member leaves, sells their share, dies or becomes incapacitated.
• Dissolving the business: The process for dissolving the LLC if needed.

Templates and attorneys can both help you draft an operating agreement. Members can amend it later as the business changes.

Why it matters: Texas banks and other lenders may require an operating agreement, along with your EIN letter and Certificate of Formation, when you open a business checking account or apply for financing. Having a signed copy ready can prevent delays.

✓ Step 5: Apply for an EIN

An employer identification number (EIN) is a free federal tax ID from the IRS. Most Texas LLCs need one to open a bank account, hire employees or file taxes.

How to Apply for an EIN

The fastest way to get an EIN is to apply online on the IRS website. To apply by mail, send Form SS-4 to Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999. Mail applications take about four weeks.

An LLC generally needs an EIN if it:

• Has more than one member
• Hires employees
• Opens a bank account or applies for loans or credit lines
• Elects to be taxed as a corporation

Even single-member LLCs without employees may need an EIN for certain business licenses and permits.

Despite its name, an EIN isn’t only for employers. Don’t confuse it with the 11-digit Texas taxpayer number from the Texas Comptroller, covered below.

What is a Texas Taxpayer Number?

After your LLC is formed, the Texas Comptroller of Public Accounts mails a Franchise Tax Responsibility Letter (Form 05-280), usually within two to three weeks. The letter assigns your LLC an 11-digit Texas taxpayer number for state taxes and explains your franchise tax obligations.

What is the annual franchise tax report in Texas?

Every Texas LLC files an annual franchise tax report with the Texas Comptroller by May 15. Texas doesn’t require a separate annual report with the Secretary of State, so the franchise tax filing is the yearly requirement that keeps your LLC in good standing.

Most small LLCs owe no franchise tax. For the 2026 report year, an LLC with annualized total revenue at or below $2.65 million owes nothing. Since 2024, these LLCs no longer file a No Tax Due Report, but they must still file a Public Information Report (PIR) by May 15.

LLCs above the threshold pay tax on their taxable margin. The standard rate is 0.75%, and retailers and wholesalers pay 0.375%. Filing late triggers a $50 penalty, and continued failure to file can cost your LLC its right to do business in Texas.

The Comptroller adjusts the threshold periodically, so confirm the current figure on the Texas Comptroller’s franchise tax page before you file.

✓ Step 6: Get the licenses and permits your business needs

Most Texas LLCs need at least one license or permit. Which ones depend on your industry and location, and they can come from federal, state and local agencies.

Federal licenses apply to heavily regulated activities. Businesses that make alcoholic beverages need a permit from the Alcohol and Tobacco Tax and Trade Bureau, for example, and aviation businesses need approval from the Federal Aviation Administration.

At the state level, Texas doesn’t have a general business license that applies to every business. If you sell goods or services subject to state sales tax, though, you’ll need a sales tax permit from the Texas Comptroller.

Your city or county may require its own license even though the state doesn’t. El Paso requires a general business license at the city level, for example, while Houston doesn’t. Check with your city government, and expect to need zoning permits as well.

Many professions also need a state license. The Texas Department of Licensing and Regulation licenses massage therapists, barbers and driver’s education instructors, among others. Lawyers are licensed through the State Bar of Texas, and medical professionals through the Texas Medical Board.

Research these requirements before you open, since the right mix depends on your industry, services and location.

Licenses and Permits for PLLCs

Licensing matters even more for a PLLC, since the business is built around a professional license. Check the Texas Business Permit Office’s website for your profession’s requirements, along with any local permits or occupational licenses in the city or county where you operate. A business license report service can also help identify what you need.

Next Steps After Forming a Limited Liability Company

After your LLC is formed, a few more steps help protect it and keep it in good standing with the state.

Open a business bank account

Once you have your LLC and an EIN, you can open a business checking account. Keeping business and personal money separate makes tax time easier and helps you avoid commingling funds.

Commingling funds doesn’t just complicate your taxes. It can also be used against you in court if someone challenges whether you and your LLC are truly separate.

File the annual franchise tax report

Texas LLCs don’t file a traditional annual report with the Secretary of State. Instead, they file an annual franchise tax report and a Public Information Report with the Texas Comptroller by May 15, even when no tax is due. Step 5 covers the details.

These filings keep the state’s records about your business current and keep your LLC in good standing. Missed deadlines can lead to penalties and, eventually, the loss of your LLC’s right to do business in Texas.

Invest in business insurance

Business insurance covers risks that an LLC’s liability protection doesn’t. Common types include:

• General liability insurance: Covers accidents or damage that happen on business premises.
• Professional liability insurance: Covers service businesses against claims of errors or negligence.
• Commercial property insurance: Protects your physical location from damage caused by events like fires, storms or theft.

The right mix depends on the kind of business you run. For more detail, talk with an insurance advisor or visit the Texas Department of Insurance website.

Consider filing S corp status

S corp tax status can lower your self-employment taxes by splitting your income into a salary and a share of company profits. The IRS closely reviews S corps, though, and they must meet specific eligibility rules. Talk with a tax professional before electing S corp status for your Texas LLC.

Stay up to date

Texas regulations and filing requirements change over time. Local business groups, chambers of commerce and industry associations are good ways to keep up with those changes and meet other business owners.

Business licensing requirements are the most complex area for Texas entrepreneurs, with nearly 3 in 10 owners seeking more guidance after their first consultation.

Business licensing complexity varies widely by industry

Texas LLC owners often underestimate industry-specific licensing requirements. Professional services, construction and retail businesses frequently need multiple permits at the state, county and city levels. Research licensing early in the planning process, not after formation, to avoid delays.

Amendment processes are straightforward but time-sensitive

Changing an LLC’s name, address or management structure requires filing an amendment with the Texas Secretary of State. Most Texas owners find the process well documented and manageable. File amendments promptly when changes happen to stay compliant and avoid confusion with banks or vendors.

The annual filing requirement catches some owners off guard

Texas LLCs don’t file a traditional annual report with the Secretary of State, which leads some owners to assume they have no yearly filing. They do: an annual franchise tax report and Public Information Report are due to the Texas Comptroller by May 15, even when no tax is owed.

DBA filings happen at the state level, not the county level

Since Sept. 1, 2019, an LLC (domestic or foreign) files its assumed name certificate only with the Texas Secretary of State. County clerks no longer record assumed names for LLCs and other filing entities, so a county filing won’t register your LLC’s assumed name.

Foreign qualification timing matters for out-of-state LLCs

LLCs formed in other states must register as foreign entities before doing business in Texas. Texas requires foreign qualification before operations begin, not after. File the application before establishing a physical presence or generating revenue in Texas.

Tax structure decisions affect ongoing obligations

Texas LLC owners can choose different federal tax treatments, from sole proprietorship to S corp status. Each choice comes with different quarterly payment requirements and filing deadlines. Talk with a tax professional before making an election to understand the long-term effects.

Source: ZenBusiness first-party data, aggregated from LLC owner interactions across all 50 states and Washington, D.C.

Benefits of a Texas LLC

A Texas LLC gives business owners liability protection, tax flexibility and less paperwork than a corporation. Here’s what forming one offers:

1. Limited Liability Protection

An LLC generally keeps your personal assets, such as your home, car and personal bank accounts, separate from business debts and lawsuits. If your Texas LLC runs into financial trouble or a legal dispute, your personal property is usually protected.

2. Flexible Tax Options

An LLC can be taxed as a sole proprietorship, a partnership or a Texas corporation. Texas also has no state income tax, although LLCs are subject to the state franchise tax covered in Step 5.

3. Simplified Administration

LLCs have fewer formal requirements than corporations, such as shareholder meetings and board records, so there’s less paperwork to keep up with as you get your business started.

4. Credibility

Adding “LLC” to your business name, as in “John’s Barbecue, LLC,” shows customers, suppliers and partners that your business is formally registered.

5. Management Flexibility

Texas lets you choose how your LLC is managed. It can be member-managed, where the owners run the business, or manager-managed, where designated managers handle daily operations.

6. Asset Protection Strategies

Texas law offers strong personal asset protections. The state’s homestead exemption, for example, typically protects your primary residence from most creditors.

7. Growth Opportunities

Texas has a large, diverse economy and major business centers like Austin, Dallas and Houston, giving new LLCs a wide range of markets to grow into.

Different LLC Types in Texas

Texas allows four main types of LLCs, and the right one depends on how many owners you have and what kind of work your business does.

Single-Member LLC

A single-member LLC in Texas has one owner. It gives a solo business owner the liability protection of an LLC without sharing ownership or control.

Multi-Member LLC

A multi-member LLC has two or more owners. Members pool their resources and share profits, losses and decision-making according to the operating agreement.

Series LLC

A Texas series LLC lets you run several separate series under one master LLC. Each series can have its own assets, members and operations, and each is generally protected from the liabilities of the others. The structure suits owners with multiple ventures under one umbrella.

Professional LLC

A professional limited liability company (PLLC) is designed for licensed professionals, such as doctors and lawyers. It provides liability protection similar to a regular LLC while meeting professional licensing requirements. A PLLC doesn’t shield members from their own malpractice claims, but it can protect them from malpractice claims against other members.

Alternative Business Structures in Texas

An LLC isn’t the only business structure available in Texas. Here are the other common options:

Sole proprietorship: This is the simplest business structure. It has one owner and requires no state registration unless you want a DBA, which you’ll need to operate under any name other than your own surname. The downside is that a sole proprietorship offers no liability protection. If someone sues the business, they can go after your personal savings, home and car.

General partnership: A general partnership works like a sole proprietorship with multiple owners. Like a sole proprietorship, it offers no personal liability protection.

Corporation: Like an LLC, a corporation exists separately from its owners and offers strong liability protection. However, corporations face “double taxation”: Profits are taxed once at the corporate level and again when they’re distributed to shareholders as dividends. Corporations also have more formal requirements, such as keeping corporate records and holding shareholder meetings.

Limited partnership (LP): An LP has at least one general partner who runs the business and has unlimited liability for its debts. Limited partners are liable only up to the amount they’ve invested.

Limited liability partnership (LLP): An LLP is similar to an LP, except all partners have limited liability, and partners are also protected from the errors of other partners. LLPs are often used by professionals like lawyers and doctors.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. For specific questions about any of these topics, seek the counsel of a licensed professional.