How to Start an LLC in Texas

Texas is one of the most popular states for LLC formation, and for good reason. With no state income tax, a business-friendly regulatory environment, and a $300 filing fee, forming a Texas LLC is a straightforward process that most people can complete in under an hour online. The state processes filings in 10-12 business days, though expedited options are available for those who need their LLC formed sooner.

Follow these steps to start your Texas LLC in 2026.

How to Start an LLC in Texas (6 Steps)

Step 1: Name Your Texas LLC

Choosing a name is the first step in forming your Texas LLC. Your LLC name must be distinguishable from any existing business entity on file with the Texas Secretary of State. The name must include a designator such as “Limited Liability Company,” “LLC,” or “L.L.C.” to clearly identify the business as a limited liability company. You can search for available names using the Texas Comptroller’s entity search or the SOSDirect database.

If you find an available name and aren’t ready to file immediately, you can reserve it for 120 days by filing a Name Reservation with the Secretary of State for $40. This prevents anyone else from registering the same name while you prepare your formation documents. Keep in mind that a name reservation does not guarantee approval of your Certificate of Formation — the Secretary of State will still review the name during the filing process.

Before finalizing your name, it’s also a good idea to check whether the matching domain name is available for your website and whether the name is available on social media platforms. You should also search the USPTO trademark database to make sure your desired name doesn’t infringe on an existing trademark.

Texas naming rules:

• Must include “Limited Liability Company,” “LLC,” or “L.L.C.”
• Must be distinguishable from other business names on file with the Texas Secretary of State
• Cannot include words that imply the LLC is a bank, insurance company, or government agency without proper licensing
• Cannot contain language that is obscene or indicates a purpose the LLC is not authorized to pursue

Step 2: Choose a Registered Agent

Texas requires every LLC to have a registered agent with a physical street address in Texas. The registered agent receives legal documents — including lawsuits, subpoenas, and official state correspondence — on behalf of your LLC. This is a legal requirement, and your LLC cannot be formed without designating a registered agent.

You can serve as your own registered agent (if you have a Texas address), appoint a trusted friend or family member, or hire a professional registered agent service. While acting as your own registered agent saves money, it means your personal address becomes public record and you must be available at that address during all normal business hours to accept documents.

Our top recommendation is Northwest Registered Agent ($39/year), which also handles LLC formation for $39 + the $300 state fee. Using a professional service provides privacy, ensures you never miss an important document, and frees you from having to be physically present at a fixed address during business hours.

Step 3: File Your Certificate of Formation

To officially create your Texas LLC, you need to file a Certificate of Formation (Form 205) with the Texas Secretary of State. This is the legal document that brings your LLC into existence. The fastest way to file is online through SOSDirect, the state’s online filing portal. You can also file by mail by sending the completed form and filing fee to the Secretary of State’s office in Austin, but online filing is recommended for faster processing.

When completing Form 205, you’ll need to choose between a member-managed and manager-managed structure. In a member-managed LLC, all owners participate in running the business. In a manager-managed LLC, one or more designated managers handle day-to-day operations while other members are passive investors. Most small LLCs choose member-managed.

Filing details:

• Filing fee: $300
• Online filing: SOSDirect (recommended — faster processing)
• Processing time: 10-12 business days (standard), 1-2 business days (expedited for additional fee)
• Mail filing address: Secretary of State, P.O. Box 13697, Austin, TX 78711

Information required:

• LLC name
• Registered agent name and address
• Purpose of the LLC (can be general, such as “any lawful purpose”)
• Management structure (member-managed or manager-managed)
• Names and addresses of governing persons (managers or members)
• Organizer name and address
• Duration of the LLC (typically perpetual)

Step 4: Create an Operating Agreement

Texas does not legally require an operating agreement, but having one is strongly recommended for every LLC, whether single-member or multi-member. An operating agreement is an internal document that establishes the rules for how your LLC is run, including ownership percentages, profit and loss distribution, voting rights, and what happens if a member wants to leave or if the LLC is dissolved.

Without an operating agreement, your LLC will be governed by the default rules in the Texas Business Organizations Code, which may not align with your intentions. For example, the default rules assume profits are split equally among members regardless of their capital contributions. An operating agreement lets you customize these terms. Most banks and financial institutions also require a copy of your operating agreement before they will open a business bank account.

Step 5: Get an EIN

Apply for an Employer Identification Number (EIN) through the IRS website. It’s free and takes about 15 minutes online. An EIN is a nine-digit number assigned by the IRS that acts as your LLC’s tax identification number — think of it as a Social Security Number for your business. You need an EIN to open a business bank account, hire employees, file federal taxes, and apply for business permits. Even single-member LLCs with no employees should get an EIN, as it helps keep your personal Social Security Number off business documents.

Step 6: File Your Texas Franchise Tax Report

All Texas LLCs must file an annual Franchise Tax Report with the Texas Comptroller of Public Accounts, even if no tax is owed. The report is due on May 15 each year. The good news is that Texas LLCs earning less than $2.47 million in total revenue owe $0 in franchise tax — they simply file a “No Tax Due” report. LLCs that exceed this threshold pay a tax rate of 0.375% (retail/wholesale) or 0.75% (other industries) on their taxable margin.

Your first franchise tax report is not due until May 15 of the year after your LLC is formed. For example, if you form your LLC in July 2026, your first report is due May 15, 2027. File your report through the Texas Comptroller’s website. Failure to file can result in penalties, interest charges, and eventually forfeiture of your LLC’s right to transact business in Texas.

Texas LLC Costs

Total first-year cost: $300-$640. This range covers the required state filing fee ($300) plus an optional registered agent service. If you serve as your own registered agent, your only mandatory cost is the $300 filing fee. See our complete guide to LLC costs by state.

Texas LLC Taxes

One of the biggest advantages of forming an LLC in Texas is that the state has no personal income tax. This means that LLC profits passed through to members are not subject to state income tax — a significant savings compared to states like California (up to 13.3%) or New York (up to 10.9%). This applies whether your LLC is a single-member LLC or a multi-member LLC taxed as a partnership.

Texas does impose a franchise tax (also called a “margin tax”) on businesses, but most small LLCs are exempt. If your LLC’s total revenue is below $2.47 million, you owe $0 in franchise tax. You still need to file the annual No Tax Due Report, but there’s no payment required. For LLCs above the threshold, the tax rate is either 0.375% (for retail and wholesale businesses) or 0.75% (for all other businesses), calculated on the LLC’s taxable margin. The taxable margin is the lesser of 70% of total revenue, total revenue minus cost of goods sold, total revenue minus total compensation, or $1 million.

Texas has a state sales tax rate of 6.25%, with local jurisdictions adding up to 2%, for a combined maximum rate of 8.25%. If your LLC sells taxable goods or services, you’ll need to collect and remit sales tax. You can register for a sales tax permit through the Texas Comptroller’s office. There’s no fee to obtain a sales tax permit in Texas.

Remember that all LLC members still owe federal income tax and self-employment tax (15.3%) on their share of LLC profits, regardless of the state’s favorable tax treatment.

Texas LLC Annual Requirements

Every Texas LLC must file a Franchise Tax Report by May 15 each year with the Texas Comptroller. Even if your LLC owes no franchise tax (which is the case for most small businesses), you must still file a No Tax Due Report. Failure to file can result in penalties and eventually forfeiture of your LLC’s right to do business in Texas. If your LLC is forfeited, you can reinstate it by filing the overdue reports and paying any penalties, but it’s best to avoid this situation.

Texas does not require a separate annual report like many other states. The franchise tax report serves as the state’s primary ongoing compliance requirement. In addition to filing the franchise tax report, you should keep your registered agent information current with the Secretary of State, and file an amendment if your LLC’s name, registered agent, or management structure changes. You should also maintain accurate internal records, including your operating agreement, meeting minutes, and financial statements.

If you want to confirm that your LLC is in good standing, you can request a Certificate of Status from the Texas Secretary of State for $15. This document is sometimes needed when applying for business loans, opening bank accounts in other states, or registering your LLC as a foreign entity in another state.

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Frequently Asked Questions

How much does it cost to start an LLC in Texas?

The state filing fee for a Texas LLC is $300, which is the cost to file your Certificate of Formation (Form 205) with the Secretary of State. Additional costs may include a registered agent service ($39-$299/year) and a name reservation ($40, optional). Most people spend between $300 and $640 in their first year. If you file without a registered agent service, your only required cost is the $300 filing fee.

How long does it take to form an LLC in Texas?

Standard processing through SOSDirect takes 10-12 business days. If you need your LLC formed faster, you can pay for expedited processing, which typically takes 1-2 business days for an additional fee. Filing by mail takes significantly longer — often 3-4 weeks or more. Online filing through SOSDirect is the fastest and most reliable option.

Do I need a registered agent in Texas?

Yes, every Texas LLC is required by law to have a registered agent with a physical street address in Texas. The registered agent accepts legal documents, including lawsuits and official state mail, on behalf of your LLC during normal business hours. A P.O. box cannot be used as a registered agent address.

Does Texas require an operating agreement?

No, Texas does not legally require an operating agreement. However, creating one is strongly recommended because it defines member roles, profit sharing, voting procedures, and decision-making processes. Without one, your LLC is governed by the default rules in the Texas Business Organizations Code, which may not reflect your actual business arrangement. Most banks also require an operating agreement to open a business bank account.

How are LLCs taxed in Texas?

Texas has no state personal income tax, so LLC profits passed through to members are not taxed at the state level. Texas does have a franchise (margin) tax, but LLCs with total revenue under $2.47 million owe $0. All LLCs must still file an annual franchise tax report by May 15. Members still owe federal income tax and self-employment tax on their share of profits.

Can I be my own registered agent in Texas?

Yes, you can serve as your own registered agent in Texas as long as you have a physical street address in the state (not a P.O. box) and are available at that address during normal business hours to accept legal documents. Keep in mind that your address will become part of the public record and you cannot take vacations or step away during business hours without risking missed service. Many LLC owners prefer using a professional registered agent service for privacy and convenience.

Does my Texas LLC need a business license?

Texas does not have a general state business license. However, depending on your industry and location, you may need specific permits or licenses at the state, county, or city level. For example, food service businesses need health permits, contractors may need licensing, and businesses in certain cities need municipal permits. Check with your local government and the Texas Department of Licensing and Regulation to determine what applies to your business.

What is the Texas franchise tax?

The Texas franchise tax (also called the margin tax) is a tax on businesses operating in the state. For LLCs with total revenue under $2.47 million, no tax is owed — you just file a No Tax Due Report. For LLCs above that threshold, the tax rate is 0.375% for retail and wholesale businesses or 0.75% for all other businesses, calculated on the LLC’s taxable margin. The taxable margin is calculated using the lesser of several methods, including 70% of total revenue or total revenue minus cost of goods sold.

Do I need to file an annual report for my Texas LLC?

Texas does not have a separate annual report requirement like most other states. Instead, you must file an annual Franchise Tax Report with the Texas Comptroller by May 15 each year. Even if no tax is owed, the report must be filed to keep your LLC in good standing. If you fail to file, your LLC may be forfeited by the state.

Can a non-resident form an LLC in Texas?

Yes, you do not need to be a Texas resident or a U.S. citizen to form an LLC in Texas. However, you will need a registered agent with a physical address in Texas. Many non-residents use a professional registered agent service for this purpose. If you conduct business in another state where you live, you may also need to register your Texas LLC as a foreign LLC in that state.