How to Form an LLC in Texas

Texas is a good state for an LLC when the business really works there. It has no personal income tax, but it does charge a franchise tax on many LLCs, and every LLC files a yearly report. This guide explains how Texas LLC formation works, what the state requires, and the yearly duties that surprise new owners. To have it filed for you, see our LLC formation service.

Is Texas a good state for your LLC?

Texas suits a business with customers, staff or an office in the state. Because many businesses must register in Texas anyway if they operate there, forming in Texas avoids paying a second state to register a company formed elsewhere. If the business is online and run from abroad, compare it with other states in our LLC filing fees by state table.

What Texas requires

• A name that is available. It must differ from the names on file and include "Limited Liability Company", "L.L.C." or "LLC".
• A registered agent with a Texas street address. It receives legal papers and official mail. A PO box is not accepted.
• A Certificate of Formation. This is the formation document in Texas (Form 205), filed with the Texas Secretary of State, whose guidance is at sos.state.tx.us. It lists the managers, or the members if there are no managers, and these names are public.
• The state's filing fee. Check the Secretary of State's site or our fee table for the current figure.

Texas does not require a US citizen, a Texas resident or a Social Security Number. A non-resident can form a Texas LLC; see LLC formation for non-residents.

Steps to form a Texas LLC

1. Choose the name and check it is available.
2. Appoint a registered agent in Texas.
3. File the Certificate of Formation with the Secretary of State.
4. Write an operating agreement, which is not filed with the state.
5. Apply for an EIN through the IRS (see its Employer ID Numbers page), or through our EIN service.
6. Open a business bank account. See US business bank account.

The yearly duties in Texas

Texas does not charge a personal income tax, but most LLCs are subject to the state's franchise tax, which the Comptroller collects. A company below the state's revenue threshold owes no tax, but it must still file. The report is due on May 15 each year, and includes a Public Information Report with the names of the company's officers or managers. Missing it can lead to penalties and the loss of the company's right to do business in the state. The Comptroller explains the current thresholds and forms on its franchise tax page.

Other points to plan for

• Sales tax. A business that sells taxable goods or services in Texas registers with the Comptroller and collects it.
• Registered agent renewal each year.
• Local licences for some trades and places.
• Federal tax filings. A foreign-owned single-member LLC files an information return with the IRS every year, even with no tax due. See US LLC tax filing.

Frequently asked questions

Does a Texas LLC pay income tax?

There is no personal income tax. The company may owe the franchise tax, depending on its revenue, and the owners report profit on their own returns as the LLC is normally a pass-through.

Can I form a Texas LLC from outside the US?

Yes. You need a Texas registered agent, an EIN and to plan for the yearly state and IRS filings.

Are the owners' names public?

The Certificate of Formation lists the managers, or the members if there are none, and the state's yearly report lists the company's officers or managers. Read what you will have to disclose before you file.

This is general information, not legal, tax or financial advice. Fees, thresholds and deadlines change, so check the Texas Secretary of State's and Comptroller's own websites before you file.