How to Create a LLC in Texas: 13 Steps

1. Choose a Name for Your LLC: Select a unique and representative name for your Texas LLC that follows the naming guidelines from the Texas Secretary of State. Make sure to include ‘Limited Liability Company’, ‘LLC’, or ‘L.L.C.’ at the end of your chosen name.
2. Check Name Availability: Visit the Secretary of State website and use their search tool to ensure your chosen name is not already taken by an existing business in Texas.
3. Reserve Your LLC Name (Optional): You may reserve your desired LLC name for 120 days by filing a name reservation application with the Texas Secretary of State, which can be done online or by mail, accompanied by a fee.
4. Appoint a Registered Agent: Choose a registered agent to act as your company’s official point of contact with the Texas Secretary of State. This agent must have an address in Texas and be available during business hours.
5. Prepare Your Certificate of Formation: Complete the Certificate of Formation (Form 205) provided by the Texas Secretary of State, including details such as your company’s name, registered agent, purpose, contact information, and more.
6. File Your Certificate of Formation: Submit your completed Certificate of Formation along with the required filing fee to the Texas Secretary of State, either by mail or through their online portal.
7. Obtain an EIN from the IRS: Request an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) either online or by mail using Form SS-4; this number is necessary for tax purposes.
8. Create an Operating Agreement (Optional): Draft an operating agreement outlining the management structure, responsibilities, and financial contributions of your LLC’s members. Although this step is optional in Texas, it’s strongly recommended to avoid potential disputes among members later on.
9. Register for State Taxes: If necessary, register with the Texas Comptroller of Public Accounts to obtain your state tax identification number and any required business permits or licenses.
10. Open a Business Bank Account: Establish a separate bank account for your LLC to maintain clear financial records and ensure the personal assets of members are protected from liability.
11. Obtain Necessary Business Permits or Licenses: Depending on the nature of your LLC, you may need additional permits or licenses from local, state, or federal agencies to comply with regulations and operate legally.
12. Maintain Compliance with Texas LLC Requirements: Meet annual reporting requirements by submitting a Public Information Report (PIR) along with your Texas Franchise Tax return and keep current with any changes to laws or regulations affecting your LLC.
13. Secure Appropriate Insurance: Protect your LLC by purchasing appropriate insurance coverage for potential risks such as general liability insurance, workers’ compensation insurance, and professional liability insurance, if applicable.
By following these 13 steps, you’ll be well on your way to successfully creating and managing a Limited Liability Company in the state of Texas. Keep in mind that professional guidance from an attorney or accountant is always recommended when forming a new business entity.