Interested in starting up an LLC in the Lone Star State? Follow these five easy steps to get your company up and running quickly.
Steps to forming an LLC in Texas
This is a ‘how to’ guide to the legal formation process of an LLC. The simple steps you need to follow are:
- Create a name for your LLC
- Pick a registered agent
- File the Texas Certificate of Formation
- Set out a Texas LLC operating agreement
- Get an EIN (Employer Identification Number)
Step 1: Create a name for your LLC
This is a vital step to forming your LLC. The name of your LLC must comply with the regulations and requirements for naming an LLC in Texas. These naming guidelines are:
- The name must refer to the fact that the business is an official LLC. You must include, at the very least, the letters “L-L-C” if not the entire “Limited Liability Company.” Alternatively, you can include “Ltd./Company/Co.”
- Do not include words that can be confused with government agencies (e.g. FBI/ Treasury).
- Certain words are limited for use (like bank, university), but they can still be included in your name. However, you will need to put in additional effort as the correct paperwork and a licenced professional (e.g. a lawyer) may be required to be part of your LLC.
- Tip: Make sure your name’s domain is available before applying for your LLC. This will prove valuable even if you are not interested at the moment in creating a website.
Step 2: Pick a registered agent
To register an LLC in Texas, you are required to appoint a registered agent. This person will be the connection of contact between your LLC and the state. Their duties include matters such as receiving vital tax and legal documents, notice of lawsuits and government correspondence. The registered agent must be a resident of Texas or a corporation (such as a registered agent service). You may opt to elect your registered agent from within your LLC.
To comply with the legal requirements, your registered agent must agree to be appointed the position either by written letter or electronic form. Their statement of consent must include:
- The name of your LLC
- State clearly that they agree to be your LLC’s registered agent
- Their legal name
- Their signature
- The starting date of their position
- Note: The registered agent’s consent letter does not have to be filed with the Secretary of State.
Step 3: File the Texas Certificate of Formation
The third step requires you to file a legal document (the Texas Certificate of Formation) to register officially. This is required to be filed with the Secretary of State. This can be fulfilled either online, by snail mail, or in person. What must be included when filing this document is the name of your LLC, the name and address of the LLC’s registered agent, the purpose of the company, the date of the effectiveness of filing, the name of the LLC’s Organizer, and the state filing fee.
- Congratulations! Your LLC is now legally formed. However, we recommend completing the last two steps to ensure a profitable LLC.
Step 4: Set out a Texas LLC operating agreement
This is not required to form an LLC in Texas, but it is advisable. This operating agreement will set out the ownership and operation of the LLC. The purpose of this agreement is to reduce the risk of conflict later on within the LLC.
Step 5: Get an EIN (Employer Identification Number)
This number will be used to identify your business as a legal entity. It is necessary to have one in order to record the business’s tax reporting. Additionally, having an EIN for your business is required for Federal and state tax duties. However, it also will allow you to open a business bank account and hire employees.