How to start an LLC in Texas: Your 2025 step-by-step guide

Launching a business in Texas offers a wealth of opportunities, whether you're in the bustling tech hubs of Austin, the energy-driven economy of Houston, or the diverse markets of Dallas. As a small business owner, you’ll have to make many decisions every day, but one of the first critical decisions is choosing the right legal structure for your business.

A business legal structure defines how a company is legally organized and taxed, impacting liability, management, and regulatory requirements. You can register as a sole proprietorship, partnership, corporation, or limited liability company (LLC). Each option comes with its own operational implications, so it's important to choose the structure that best fits your goals.

LLCs are among the state’s most commonly registered business structures and offer significant advantages. 

Jump to:

• Why choose an LLC in Texas?
• New business data in Texas in 2025
• 5 steps for creating an LLC in Texas
• Step 1: Choose a name for your Texas LLC
• Step 2: Choose a registered agent in Texas
• Step 3: Complete the certificate of formation form and file your Texas LLC
• Step 4: Get an Employer Identification Number (EIN)
• Step 5: Ongoing compliance and required filings
• Types of LLCs to consider in Texas
• Costs of setting up an LLC in Texas
• LLC taxes in Texas
• Frequently asked questions

Why choose an LLC in Texas?

An LLC offers limited liability protection, meaning owners are not personally responsible for business debts. They also provide flexible management and pass-through taxation. Pass-through taxation means business profits and losses pass directly to the owners' personal tax returns, avoiding corporate income tax. Instead of the business paying taxes, owners report income on their individual returns and pay taxes at their personal rates. 

Another reason LLCs are so popular for small businesses is because they generally involve less formalities and paperwork than corporations. 

This guide will explain how to start an LLC in Texas, as well as the costs and paperwork involved, tax considerations, how accounting software could help, and other important information to set yourself up for success. 

New business data in Texas in 2025

Texas continues to be a beacon for entrepreneurs, thanks to its pro-business environment, competitive costs, skilled talent pool, and streamlined regulations. In 2024, the state celebrated record-breaking employment, with the largest labor force in its history at 15,536,100 individuals, and 14,884,600 Texans working, including the self-employed. Over the same period, Texas added 274,300 nonfarm jobs, outpacing all other states and growing at a faster annual rate than the national average. The state looks to maintain this growth through 2025 and beyond. 

Key industries fueling this expansion include oil and gas, financial activities, and manufacturing, each experiencing significant growth. The Texas Enterprise Fund (TEF) continues to play a pivotal role in attracting businesses, offering performance-based financial incentives for projects that promise substantial job creation and capital investment.

Looking ahead, Texas is set to launch the Texas Stock Exchange (TXSE) in late 2025, with its first listings anticipated in early 2026. Headquartered in Dallas, TXSE aims to provide a new platform for companies seeking to go public, further solidifying Texas's position as a national economic leader.

These developments underscore Texas's unwavering commitment to fostering economic growth and innovation, reinforcing its reputation as a top destination for business formation and expansion.

5 steps for creating an LLC in Texas

Starting an LLC in Texas is an exciting step toward building your business. You’ll need to choose a unique business name, file the necessary paperwork, and secure an EIN. The sections ahead walk you through each step so you can establish your LLC smoothly and efficiently. 

Step 1: Choose a name for your Texas LLC

The first step is to select a name for your business venture. This will be the legal name of your business, and you should aim to select a name that will be memorable to your customers and prospects. 

Choose a name that is easy to remember and lets prospective customers know what products or services your company will provide. Your LLC's name must also comply with the state’s business naming rules. 

Texas LLC naming rules

When choosing a name for your LLC in Texas, there are specific guidelines you must follow:

Uniqueness requirement

• Your LLC's name must be distinguishable from existing entities registered in Texas. To ensure your desired name is unique, consult the Texas Secretary of State's records.

LLC designation 

• The name must include one of the following designations:
• Limited Liability Company
• L.L.C.
• LLC 
• L.C. 
• LC
• Ltd. Co.

Accurate representation

• The name should accurately reflect the nature of your business and not mislead the public about its purpose. 
• Avoid names that imply a false governmental affiliation or suggest unauthorized activities.

Restricted words

Certain words require authorization before they can be used in an LLC name:

• “Bank”
• “Trust”
• “Insurance Company”
• Other regulated terms that imply a specific type of business entity

In addition, entity names that are deemed grossly offensive will not be accepted for registration.

Permitted characters

• Your LLC name can include letters from the Roman alphabet, Arabic numerals (0-9), and certain symbols.

Formatting

• The Texas Secretary of State does not recognize differences in font or typeface. Superscript and subscript characters will not appear differently when recorded.

Before finalizing your LLC name, ensure it meets these requirements to avoid delays or rejection in the registration process.

Check for name availability

Once you have chosen a name for your new business, you must ensure that no other company is already using it. To check name availability, use the SOSDirect online search tool provided by the Texas Secretary of State. This service allows you to search existing business names and determine if your desired name is available. Note that there is a $1.00 fee per search. You should also do a county business entity search where you’ll be operating from.

In Texas, subtle variations in business names may not be sufficient to make them legally distinct. The state applies strict criteria when determining name uniqueness. For example, the following minor differences do not make a name unique:

• Suffixes (e.g., Inc., LLC, Co.)
• Articles (e.g., the, a, an)
• Conjunctions (e.g., and, &)
• Singular, plural, or possessive forms of a word
• Spacing, punctuation, or capitalization

When searching for name availability, focus on your preferred core name without these variations.

Reserving your LLC name

While not a requirement, you may opt to reserve your preferred LLC name once you’ve determined it’s available. This can be done easily through SOSDirect. If you prefer to mail in your reservation, you’ll need to submit Form 501 and mail it with the filing fee, which is $40, to Secretary of State P.O. Box 13697 Austin, TX 78711-3697.

Keep in mind that submitting the name reservation does not legally establish your business; it only reserves your name for 120 days. This will give you time to prepare and file the other paperwork needed to formally register your business. 

Step 2: Choose a registered agent in Texas

When forming an LLC in Texas, you must designate a registered agent. A registered agent is a designated person or business responsible for receiving legal documents and official correspondence on behalf of a company. Appointing a registered agent is mandated by the Texas Secretary of State. 

Who needs a registered agent?

• All Texas LLCs, both domestic and foreign, are required to appoint a registered agent.

Who can serve as a registered agent?

• Individual: A Texas resident with a physical street address (P.O. boxes are not acceptable) who is available during standard business hours to receive legal documents.
• Business entity: A Texas-based or authorized foreign entity, such as a corporation or LLC, that provides registered agent services.

Note: Your LLC cannot act as its own registered agent.

Consent requirement

Any individual or entity appointed as a registered agent must consent to the appointment in written or electronic form. The consent doesn’t have to be filed with the state, but you must keep it in your records.

You can choose to file it with the Secretary of State and it will be recorded in your business’s filing history. The filing fee is $15.

Check the Texas Secretary of State website for additional registered agent information. 

Choosing a resident agent service

If you want to hire a professional resident agent service, here are some tips for finding the right one.

Research and compare

Be sure to research different providers and compare factors such as:

• Cost: Fees typically start around $50 per year.
• Reputation: Choose a reputable company with a proven track record.
• Customer support: Ensure they provide excellent customer service and support.
• Knowledge: Select a provider with a strong understanding of Texas-specific compliance requirements to ensure your business stays in good standing.
• Coverage: For businesses operating in multiple states, choose a provider that offers services across all the states where you plan to operate.

Consider bundled services

If you're using a company formation service or an attorney to set up your LLC, they may offer resident agent services as part of a package.

Step 3: Complete the certificate of formation form and file your Texas LLC

Once you’ve decided on your name and registered agent, the next step is to fill out the certificate of formation form. 

What is the certificate of formation?

A certificate of formation is a legal document filed with the Secretary of State to officially create a business entity, such as an LLC. This document outlines essential details about your entity, including your business name, purpose, registered agent, management structure, and other pertinent information. Filing the certificate of formation is a mandatory step to legally establish the entity and grant it recognition under Texas law.

The fee to file a new Texas certificate of formation for an LLC is $300. Optional certified copies cost an additional $15 plus $1 per page.

You have two options for obtaining and submitting the form:

Option 1: Online

Most filings can be submitted through the Texas Secretary of State's online portal, SOSDirect. 

Option 2: Mail-in filing

You can also file your LLC by mailing paper forms, but the Secretary of State strongly recommends online registration. Filing by mail can take several weeks. For mail-in filing, print and complete Form 205 (Certificate of Formation – Limited Liability Company) and mail it to the designated address on the form with the required payment.

How long does it take for an LLC to get approved in Texas?

The approval processing time depends on the method of submission. Online filings are typically processed more quickly, often around 10-12 business days. Mail-in filings may take several weeks to process. 

If you are not a Texas resident

To conduct business in Texas as a non-resident and establish a foreign (out-of-state) limited liability company, follow these steps:

1. Designate a registered agent: Appoint a registered agent with a physical street address in Texas to receive legal documents on behalf of your LLC. The registered agent can be an individual Texas resident or a business entity authorized to do business in Texas.
2. Ensure compliance with naming rules: Your LLC's name must be distinguishable from existing entities registered in Texas. If a conflict exists, you may need to register under an assumed name. 
3. Obtain a Certificate of Existence: Provide a Certificate of Existence (also known as a Certificate of Good Standing) from your LLC's home state, issued within the last 90 days. This document must accompany your Texas LLC registration.
4. Complete the Application for Registration: Fill out Form 304, the "Application for Registration of a Foreign Limited Liability Company," available through the Texas Secretary of State's website.
5. File the application with the applicable filing fee: Submit your completed application, the Certificate of Existence, and a $750 filing fee to the Texas Secretary of State. While online filing via SOSDirect is recommended for efficiency, you can also file by mail.

What to include in your LLC’s certificate of formation

Completing the certificate of formation form is a straightforward process since only basic information is required. You will be asked to provide:

• The name of your LLC
• The purpose of your LLC, which can be a general business statement
• The registered office address of the LLC in Texas (must be a street address, not a P.O. box)
• The name and address of your registered agent
• Management structure (member-managed or manager-managed)
• The name and address of the LLC’s organizer
• Your signature

Find full instructions for completing the certificate of formation form online.

Step 4: Get an Employer Identification Number (EIN)

You’ll likely need an Employer Identification Number (EIN) from the Internal Revenue Service to form an LLC in Texas. An EIN is a nine-digit number that identifies a business for tax purposes, similar to a Social Security Number for your company.

According to the IRS, you need an EIN if any of the following apply:

1. You have employees.
2. Your business operates as a corporation or partnership.
3. You file employment, excise, or alcohol, tobacco, and firearms tax returns.
4. You withhold taxes on income, other than wages, paid to a non-resident alien.
5. You have a Keogh plan (a tax-deferred pension plan).
6. You are involved with certain types of organizations, including trusts, estates, real estate mortgage investment conduits, non-profit organizations, farmers' cooperatives, or plan administrators.

Single-member LLC considerations

If you are a single-member LLC, you may not be required to obtain an EIN. However, getting one is still a smart idea, as your business needs might change over time, and obtaining an EIN is free.

An EIN becomes mandatory if your LLC elects to be taxed as a corporation, hires employees, or files excise or employment tax returns.

Having an EIN also simplifies opening a business bank account and protects your personal Social Security Number, reducing the risk of identity theft.

Requesting an EIN

You can request an EIN by mail or phone, but the fastest method is completing the process online on the IRS website. After obtaining an EIN, use accounting software to track business expenses and ensure your company’s finances remain separate from your personal finances. 

Step 5: Ongoing compliance and required filings

Obtaining your LLC's certificate of formation is the initial step in establishing your business in Texas. To maintain compliance and good standing, adhere to the following state and federal requirements:

• Annual Franchise Tax and Public Information Report (PIR)
• Filing requirement: All Texas LLCs, both domestic and foreign, must file an Annual Franchise Tax Report and a Public Information Report with the Texas Comptroller of Public Accounts.
• Due date: May 15 each year.
• Purpose: To report revenue and update ownership or management information.
• Filing method: File online via the Texas Comptroller's Webfile system.
• Fees: The franchise tax due varies based on your LLC's revenue. Late filings may incur penalties and interest.
• Note: Veteran-owned businesses formed in Texas between January 1, 2022, and January 1, 2026, and fully owned by honorably discharged veterans are exempt from certain filing fees and franchise taxes for up to five years.
• Beneficial Ownership Information Report
• Filing requirement: Submit a Beneficial Ownership Information Report to the U.S. Department of the Treasury within 30 days of forming your LLC.
• Purpose: This report helps prevent money laundering and other financial crimes by identifying the true owners of the LLC.
• Who needs to file: All LLCs formed in 2024 or later are required to file.
• How to file: File the report online through the U.S. Treasury Financial Crimes Enforcement Network website.
• Fees: There is no filing fee.
• Business licenses and permits
• Requirement: Depending on your industry and location, specific licenses or permits may be necessary. For example:
• Property tax professionals
• Electricians
• Dietitians
• Verification: Consult the Texas Department of Licensing and Regulation and your local county or city authorities to determine specific requirements for your business. You can also check the Texas Business Licenses & Permits Guide.
• State tax registration
• Requirement: If your LLC will collect state taxes, such as sales tax, you must register with the Texas Comptroller's Office.
• Tax determination: Use the Texas Comptroller's resources to identify applicable taxes.
• Registration methods: Register online through the Texas Comptroller's Webfile system.
• Purchase Insurance
• Requirement: Depending on your business type, specific insurance coverage may be necessary. For example,
• Workers’ compensation insurance
• Commercial auto insurance
• Liability insurance
• Information: Consult an insurance professional or an attorney to determine what business insurance you may need to carry.
• Certificate of Status (Optional)
• Requirement: While not always legally required, a Certificate of Status can be beneficial.
• Purpose: It verifies that your LLC is in good standing with the state of Texas.
• Why you may need it: To open a business bank account, obtain certain licenses, or apply for credit card processing.
• How to obtain it: Order online through SOSDirect.
• Fee: $15.

Types of LLCs to consider in Texas

When establishing an LLC in Texas, it's important to understand the different types available to determine which best suits your business needs.

Single-member LLC

A single-member LLC is owned by one individual or entity, providing liability protection while allowing for simplified management and taxation. For federal income tax purposes, a single-member LLC is typically treated as a disregarded entity, meaning the business activities are reported on the owner's personal tax return.

Multi-member LLC

A multi-member LLC consists of two or more members who share ownership. This structure offers flexibility in management and profit distribution among members. Multi-member LLCs are generally treated as partnerships for tax purposes unless they elect to be taxed as a corporation.

Professional limited liability company (PLLC)

Designed for certain licensed professionals, a PLLC allows individuals to offer professional services under an LLC structure. See this chart to determine which professions are eligible to form a PLLC.

Manager-managed LLC

In a manager-managed LLC, members appoint one or more managers to handle daily operations, allowing non-managing members to act as passive investors. This management structure must be specified in the company's certificate of formation.

Member-managed LLC

A member-managed LLC involves all members actively participating in the management and decision-making processes of the company. This is the default management structure for LLCs in Texas unless otherwise specified in the certificate of formation.

Costs of setting up an LLC in Texas

Setting up a limited liability company in Texas involves several fees: 

• A $300 one-time fee to file your certificate of formation
• Registered agent service fees, if applicable, which typically start at $50 a year
• Texas LLCs are required to file an Annual Franchise Tax Report and a Public Information Report. The franchise tax due varies based on your LLC's revenue.

Other costs you may have to cover include late fees if you file any required paperwork after its due date and license or permit fees if your business operates in a regulated industry.

Open a Texas LLC business bank account

A key advantage of forming an LLC is protecting your personal assets if your business faces a lawsuit. However, this protection can be compromised if you mix personal and business finances.

To preserve liability protection, open a dedicated business bank account and keep financial records separate. This also simplifies bookkeeping and strengthens your LLC’s credibility.

What you'll need 

When opening a business bank account, you’ll typically need:

• Your EIN 
• Copy of your certificate of formation 
• (Possibly) an operating agreement and Certificate of Status
• Personal identification

Out-of-state residents should consider choosing a bank with a presence in the state.

After opening your bank account, use QuickBooks accounting software to track and manage your finances.

LLC taxes in Texas 

Texas LLCs can be classified differently for federal tax purposes. They may be treated as a sole proprietorship (for single-member LLCs), partnership, C corporation, or S corporation. This classification affects how the LLC is taxed at both the federal and state levels.

Federal tax classification

Similar to federal guidelines, Texas LLCs can choose their tax classification:

• Single-member LLCs: Automatically treated as disregarded entities, with income and expenses reported on the owner's personal tax return.
• Multi-member LLCs: Default to partnership taxation, requiring the filing of Form 1065 with the IRS.
• Election as a corporation: LLCs can opt to be taxed as a C corporation or S corporation by filing the appropriate forms with the IRS.

State taxes

Texas imposes several state taxes that may affect LLCs:

Franchise tax

• This is a privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas. 
• The tax is based on the entity's margin. 
• It is due annually on May 15. 
• Businesses with annual revenue at or below the $2.47 million no tax due threshold are exempt from filing a No Tax Due Report.

Learn more about Texas franchise taxes.

Sales and use taxes

As of 2025, Texas applies a 6.25% state sales and use tax on most retail sales, leases, rentals, and taxable services. Local jurisdictions may add up to 2%, bringing the total possible tax rate to 8.25%.

Employment taxes

LLCs with employees must pay state unemployment insurance (UI) taxes. Rates range from 0.25% to 6.25% on the first $9,000 of wages. Employers must also comply with federal tax withholding rules.

Texas-related resources

• Texas Secretary of State – Business Services: This state office provides resources for registering your business entity, including filing for corporations, limited liability companies (LLCs), and assumed business names (DBAs). Through the SOSDirect online portal, you can submit necessary documents and access information on business structures and name availability.
• Texas Comptroller: The Texas Comptroller's office is responsible for state tax collection and offers guidance on tax obligations for businesses. You can register for a sales tax permit, understand franchise tax requirements, and access various tax forms and resources through their website.
• Texas Small Business Development Centers (SBDCs): In partnership with the U.S. Small Business Administration, Texas SBDCs offer free, confidential business advising and training to small business owners and aspiring entrepreneurs. Services include assistance with business planning, financial projections, marketing strategies, and access to capital. 
• Texas Department of Licensing and Regulation (TDLR): The TDLR is the state agency responsible for overseeing various occupational and business licenses, ensuring public safety and consumer protection. TDLR regulates over 40 industries, including electricians, barbers and cosmetologists, towing companies, and HVAC contractors.

Federal-related resources 

• Small Business Administration (SBA): The SBA supports small businesses through various loan programs, provides resources for government contracting, and offers counseling and training programs to help entrepreneurs start and grow their businesses.
• Internal Revenue Service (IRS): The IRS provides essential information for LLCs, including tax classifications, employer identification numbers (EINs), and filing requirements. Its Small Business and Self-Employed Tax Center offers guidance on tax obligations specific to LLCs.
• U.S. Patent and Trademark Office (USPTO): For businesses looking to protect their intellectual property, the USPTO provides resources on how to apply for patents and register trademarks, which can be essential for safeguarding your unique products or services.
• U.S. Department of Labor (DOL): The DOL's website offers information on federal labor laws, workplace safety regulations, and employee benefits that LLC owners need to consider when hiring staff.

Disclaimer: 

This content is for information purposes only and information provided should not be considered legal, accounting or tax advice or a substitute for obtaining such advice specific to your business. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. Intuit Inc. does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. Intuit Inc. cannot warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers should verify statements before relying on them.