How to Set Up an LLC in Texas

By Christine Funk, J.D.

How to Set Up an LLC in Texas

By Christine Funk, J.D.

Setting up a limited liability company, or LLC, in Texas allows the company to have liability protection and tax benefits. The Lone Star State does have certain requirements that must be met and forms that need to be filed before you can launch your new venture.

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Setting Up an LLC in Texas

In Texas, if a business owner wishes to create an LLC they must begin by filling out a Certificate of Formation for a Limited Liability Company (Form 205). The form guides you through the process of preparing your documents.

1. Select a company name and type.

A company's business name is an important part of its brand. As such, one should carefully consider potential company names. Texas law prohibits companies from using the same name as another company. It also prohibits using a name deceptively similar to the name of any other entity, whether domestic or foreign. It cannot be the same as any name reservation or any business name registered with the Secretary of State. As a service to filers, the state of Texas provides preliminary determinations of name availability by phone. While using the preliminary determination of name availability is a good idea, the Secretary of State does not make a final determination until the office receives and processes the application.

In addition to selecting a name, the new LLC must provide an organizational designation in its name. It can use any of the following designations:

  • Limited liability company
  • Limited company
  • An abbreviation of one of these terms

2. Identify a registered agent and registered office.

In Texas, as in other states, companies must have a registered agent and a registered office. A registered agent receives important legal documents at the registered office address. An LLC may not act as their own registered agent. In Texas, a registered agent must be either a domestic or foreign entity registered to do business in Texas or an individual resident of the state.

It is illegal to list a person as a registered agent without their written or electronic consent. While state law does not require an LLC to submit a copy of the person's consent, filing a false statement violates Section 5.207 of the Texas Business Organizations Code.

The registered office may not be a post office box. Rather, it must be a street address that can receive mail during normal business hours.

3. Identify organizational facets of the LLC.

Before you can begin the process of filing, you have to address several organizational facets of your new company, including its governing authority and its intended purpose.

Under Texas law, you must identify who will have governing authority over the company. If it's just you, then you'll be the sole governing authority. If you plan on including other members, you may only include individual people, partnerships, corporations, or other legal entities. The LLC must list all of these people or organizations along with their mailing addresses.

You must also identify one person as the company's organizer. The organizer can be anyone authorized to contract for themselves or another, but they must be 18 years of age or older. Alternatively, an organizer can be a corporation or other legal entity.

The state of Texas allows for the formation of an LLC for any lawful purpose. Form 205, mentioned above, is a general purpose form, but it includes a space to declare the specific purpose of the company in a Supplemental Provisions section for compliance with the Internal Revenue Code. If the LLC plans to operate only for a limited time, for example, this information should appear in the Supplemental Provisions section. If this information is not specified, the company is presumed to last indefinitely.

4. Sign and submit.

When the paperwork is ready to be submitted to the Texas Secretary of State, the company organizer is the one who must sign the Certificate of Formation, which legally launches the new LLC when the Texas Secretary of State approves the application and files it. If the applicant desires, the Secretary of State can delay the formation of an LLC date for up to 90 days from the date it is signed. It can also be delayed until the occurrence of a future fact or future event.

 

As of July 2018, the filing fee for a Certificate of Formation is $300. This fee must be submitted along with the completed form and a copy. Forms can be mailed, faxed, or delivered to the James Earl Rudder Office Building in Austin, Texas.

Setting up an LLC in Texas is a straightforward process that can be relatively easy if you follow all of the required steps. Done right, you'll have your new company in the Lone Star State up and running in no time.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.