Tips to Start an LLC in Texas

An LLC is a popular business structure that provides liability protections for owners and flexibility in tax and management policies. Getting your company off the ground requires filing a few important documents with the state.

You must also make arrangements for a registered agent, who must have a Texas address and be available during business hours to receive service of process. Other requirements include preparing an operating agreement and registering for a Texas EIN (Employer Identification Number).

Choosing a Business Name

Choosing a business name is one of the most important steps when starting an LLC in Texas. You should spend plenty of time thinking of a good name that meets Texas naming guidelines and is not already used by another business entity.

Also, think forward when picking a business name and make sure it doesn’t pigeonhole you in the event you expand your offerings. You should also choose a business name that can be easily registered as a domain with a domain registrar.

If you are worried about trademark infringement, you should consider getting a trademark search done before filing your articles of organization with the Secretary of State. This will help you avoid the cost and hassle of having to change your business name after you have already filed your articles.

Choosing a Registered Agent

A Texas registered agent is a person or business that receives service of process (lawsuit papers) and official mail on behalf of an LLC or other business entity. Texas law requires all businesses to have a Texas resident registered agent and maintain an address in the state.

An individual or business may serve as an LLC's registered agent, but they must be available during normal business hours and must not mind their home address being listed on public record. If you or your friends and family do not want to serve as your registered agents, consider hiring a professional registered agent service.

A premium registered agent service like LegalZoom charges a one-time fee of $375 and renews annually at $49. They provide a street address in the state of Texas, help with your Certificate of Formation, mail forwarding, scanned documents with online access, and compliance form filing alerts to keep you in good standing with the state of Texas.

Creating an Operating Agreement

An LLC operating agreement is a crucial internal document. It should contain details on how the business will be managed, including voting procedures and allocation of profits and losses. It should also include buyout provisions in the event that a member leaves or dies. It should also lay out how the business will be taxed. Most LLCs choose to be taxed as pass-through structures.

While the operating agreement doesn’t have to be filed with the state, it will make your LLC more credible to outsiders and potential investors. Whereas Northwest Registered Agent charges $39 + state fees for LLC formation and free registered agent service for one year ($125 per year then after) as well as free address privacy. It will demonstrate that your company follows a set of standard guidelines, and it can help preserve your limited liability status.

Filing for Certificate of Formation

One of the first steps in getting an LLC off the ground is filing a Certificate of Formation. This tells the state government that you’re ready to start an LLC and gives you an official business registration number.

You’ll also need to provide information about your LLC, such as whether it will be manager-managed or member-managed. You can also choose whether your LLC will last in perpetuity or end on a specific date.

Next, you’ll need to enter your LLC’s Registered Agent—a person or company that will receive important notices (like service of process and tax forms) for the LLC. This can be a person who lives in Texas or a commercial Registered Agent service. You can also opt to include supplemental provisions in this section, but most filers leave it blank.

Filing for an EIN

Once your LLC is approved by the state of Texas (it takes 10 to 12 business days if you file online) you’ll receive a certificate of formation. Keep it safe, as the state will use it to verify information on important paperwork like tax forms and lawsuits.

Lastly, you need to obtain an Employer Identification Number from the IRS for your LLC. The nine-digit EIN will be used to distinguish your company for tax purposes. You’ll also want to open a business bank account and keep your personal and business funds separate to avoid commingling assets.

Matt Horwitz is the founder of LLC University and has been helping entrepreneurs start their businesses since 2010. His research and analysis translates complex state laws into simple instructions anyone can follow.