How to Form an LLC in Texas

by Michele Vrouvas
The LLC business structure offers tax and legal incentives to Texas businesses.

The LLC business structure offers tax and legal incentives to Texas businesses.

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The LLC business structure in Texas offers its members several distinct legal and financial incentives. For one thing, members cannot be held responsible for personal debts incurred by other members, such as another member’s default on a home equity loan. Second, one or more members cannot be singled out to assume liability for the debts and obligations attributed to the LLC as a whole. Also high on the list of LLC advantages are more flexibility for running the business than corporations enjoy, as well as the attractive tax benefits of a partnership.

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Step 1

Find a registered agent with offices in Texas who can receive legal papers served on the LLC. This can be your attorney or accountant, or an officer, owner or employee of the LLC. You can also find a service company in Texas that will serve as a registered agent for a fee.

Step 2

Access the Texas Business Organizations Code (BOC) online and review the rules for naming business entities. For example, LLCs must choose a name that is not similar to any corporation, partnership or LLC currently operating in the state. The name cannot contain words that suggest the LLC is a government agency, such as “The Texas State Chiropractors Association.” The name must include the words “Limited Liability Company” or “Limited Company.” Texas accepts the abbreviations “L.L.C.,” “LLC,” “LC” or “L.C.” You can also use the abbreviations “LTD” or “Ltd.” for the word “Limited” and “Co.” for “Company.”

Step 3

Call or send an email to the Texas secretary of state’s public information office and request a free database search of current business names to confirm the name you’ve chosen is not in use. You can also request the service by fax or regular mail for a fee. Online access to the database is also available at SOSDirect for a fee. This search will result in a preliminary determination that the suggested name is available for use. You will receive final clearance if the secretary of state approves your formation documents.

Step 4

Designate one individual to serve as the organizer who will sign formation documents. The individual must be at least 18 years old. You can also choose a corporation or business entity. The organizer does not have to satisfy state residency requirements.

Step 5

Go to the secretary of state’s website. Download and print the Certificate of Formation Limited Liability Company form. This one form registers a domestic LLC in Texas. State the company’s intended name, and provide the name and address of the registered agent.

Step 6

Explain whether the LLC’s governing authority is vested in managers or in members on the form. If managers will govern, provide the name and address of each. If the LLC will be run by one or more member(s), give the name and address of each initial member.

Step 7

Describe the LLC’s purpose for transacting business in Texas on the form. State law permits LLCs to operate for any lawful purpose as long as that purpose has not been expressly prohibited by the BOC. For example, an LLC cannot operate as a bank or insurance company, a trust or savings institution. If the general purpose language provided on the Certificate of Formation form does not sufficiently describe your company’s reasons for conducting business, explain further in the “Supplemental Provisions/Information” section.

Step 8

Enter the name and address of the organizer chosen on the form. State whether you want the Certificate of Formation to take effect immediately after approval by the secretary of state. You can delay the effectiveness of approval by specifying a date up to 90 days after executing the form, or delay effectiveness of filing up to 90 days after the occurrence of a future event. If you choose the latter, explain how the future event will trigger effectiveness of filing.

Step 9

Have the organizer sign the Certificate of Formation. Send the completed form by regular mail to the secretary of state’s office along with the required filing fee. You can also hand-deliver or fax the form and fee.