How to Form an LLC in Texas

Select a registered agent. Before you can file to form your LLC, you will need to name a registered agent for your company. The primary role of the registered agent is to accept any and all legal documents served to the company. The registered agent must be either an individual resident of the State of Texas (who maintains a physical residence in the state), or an entity (domestic or foreign) that is registered to conduct business in the State of Texas.^[10]

• The LLC may not be its own registered agent within the State of Texas.^[11]
• The registered agent must give written or electronic consent to the LLC's members. The written consent does not need to be submitted with the certificate of formation, but it is required for the company's records. Failure to secure a written or electronic consent of the registered agent will subject the LLC's members to the liabilities and penalties associated with filing a false statement, as the company is deemed to have named that agent without the individual's consent.^[12]

Designate a registered office. In addition to naming a registered agent for the company, you must also designate a registered company office. The office must have a valid, listed address where service of process may be delivered to the LLC's registered agent during the course of normal business hours. It must be a physical office location, meaning a mailbox service or telephone answering service may not be designated as the registered office.^[13]

• The registered office does not have to be the registered agent's primary place of business, but it must meet the requirements of being a physical office in which the agent conducts relevant work.^[14]
• If your LLC is registered in another state and you wish to do business in Texas, you must complete Form L0011, the Application for Registration of Firm Office. This form must be completed and submitted for the LLC's main office in Texas before the company can be registered and licensed. You can find Form L0011 online at http://www.tsbpa.state.tx.us/pdffiles/l0011.pdf.^[15]

File a Certificate of Formation. The State of Texas requires you to complete and file Form 205, the Certificate of Formation Limited Liability Company. You can find that form on the Secretary of State website at http://www.sos.state.tx.us/corp/forms/205_boc.pdf. The form will require you to provide the name of your LLC, the registered agent and office, and the name and address of any designated managers of the LLC (if your LLC will have managers).^[16] You may also have to file Form L0014: Peer Review Reporting, which can be found online at http://www.tsbpa.state.tx.us/pdffiles/l0014.pdf.^[17]

• There is a $300 filing fee that must be paid to the Texas Secretary of State when you file your LLC's Certificate of Formation. Checks or money orders must be made payable to the Texas Secretary of State. If you are paying with a credit card, your payment will be subject to a convenience fee of 2.7 percent of the total fee - approximately $8.10, unless there are any additional fees required.^[18]
• You can submit a duplicate copy of the form and the filing fee to the state, either by fax, through the mail, or in person.^[19]
• The form can be faxed to (512) 463-5709, and must include valid credit card information with the fax transmission.^[20]
• The form can be mailed to P.O. Box 13697 - Austin, Texas 78711-3697.^[21]
• If you live in or near Austin, you can deliver the form in person to the James Earl Rudder Office Building at 1019 Brazos Street, Austin, Texas 78701.^[22]

Consider drafting an operating agreement. Though you are not required to write or file an operating agreement to form an LLC in Texas, some legal experts recommend drafting an operating agreement anyway to simplify the company's operations.^[23] There is no absolute rule for what an operating agreement should include, but it typically lists how the company is/will be managed, how meetings are conducted, how much capital each member is required to contribute, and how the LLC will manage its profits and losses.^[24]

Obtain a local license. In addition to filing to form an LLC, you may need to obtain a basic business license, LLC license, and/or a tax registration certificate. The necessary license(s) will be obtained from the city or county in which your company is registered. Not every local government requires an LLC to obtain a local business license, but many do. Contact your county or city clerk's office to determine whether you will need a local business license, and to inquire about any related fees.^[25]

• The local license(s) must be renewed on an annual basis.^[26]

Request an IRS Employer Identification Number (EIN). You must request an EIN if there are more than one members in the LLC (even if you do not have any employees hired at the LLC), or if a single-member LLC has any employees hired by the company.^[27] You can do this online through the IRS website at https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online.^[28]

Determine your tax obligations. Any business with one or more employees in the State of Texas is subject to state employment taxes. You will need to inform both the State of Texas and the Internal Revenue Service (IRS) of any hirings you make. Your company will also be subject to the state's franchise tax.^[29]

• Register your business with the Texas Employer Portal at https://portal.cs.oag.state.tx.us/wps/portal/AccountRequest. This is where you will also report any employee hirings or terminations.^[30]
• The Texas franchise tax requires all LLCs in the state to pay either 0.25 percent of the company's annual capital or 4.5 percent of the company's earned surplus, whichever is greater.^[31]
• LLCs are exempt from the state franchise tax if the LLC owes less than $100 in taxes, or if the gross receipts from the company's taxable capital and taxable earned surplus are each under $150,000 in a given tax period.^[32]