What Is an LLC in Texas?
A limited liability company organized in Texas is a distinct type of business entity, neither a corporation nor a partnership, governed by the Texas Business Organizations Code (Tex. Bus. Orgs. Code), Title 3, Chapter 101. Members of a Texas LLC are shielded from personal responsibility for the company’s debts and obligations; under Tex. Bus. Orgs. Code § 101.114, “a member or manager is not liable for a debt, obligation, or liability of a limited liability company, including a debt, obligation, or liability under a judgment, decree, or order of a court,” except to the extent the company agreement provides otherwise.
Texas LLCs may be structured with or without managers. An LLC that has managers operates under a manager-managed governance model; one that does not have managers is member-managed, with each member sharing management authority. For federal tax purposes, a single-member LLC defaults to disregarded-entity treatment and a multi-member LLC defaults to partnership treatment, though either may elect corporate classification by filing IRS Form 8832. Texas does not impose a personal income tax, but it does levy a franchise tax on every taxable entity formed or doing business in the state, a point that catches many new organizers by surprise.
Texas LLC Name Search
Every LLC name filed with the Texas Secretary of State must be distinguishable in the office’s records from the name of any existing domestic or foreign filing entity, any name reservation, and any name registration currently on file. Tex. Bus. Orgs. Code, Chapter 5 establishes these requirements and further prohibits names that falsely imply governmental affiliation or suggest a business activity the entity is not authorized to pursue.
The name must include one of the following designators: “Limited Liability Company,” “Limited Company,” “LLC,” “L.L.C.,” “LC,” or “L.C.” An organizer may check preliminary name availability by calling the Secretary of State’s office at (512) 463-5555 or by emailing a name inquiry to corpinfo@sos.texas.gov. The Secretary of State’s SOSDirect portal also permits entity name searches. A preliminary clearance, however, does not guarantee acceptance. The Form 205 instructions caution that “a final determination cannot be made until the document is received and processed by the Secretary of State.”
Name Reservation: An organizer may reserve an available name for 120 days by filing Form 501 – Application for Reservation of Entity Name with a $40 fee. A reservation may be renewed by filing a new application during the 30 days before the reservation expires.
Choosing an LLC Registered Agent in Texas
Tex. Bus. Orgs. Code § 5.201 requires every domestic and foreign filing entity to designate and continuously maintain a registered agent and registered office in Texas. The registered agent accepts service of process, notices, and demands on the LLC’s behalf.
Two categories of agents qualify under the statute. An individual agent must be a resident of Texas. An entity agent must be either a domestic filing entity or a foreign entity registered to transact business in the state. The LLC itself cannot serve as its own registered agent—the Form 205 instructions make this explicit: “do not enter the limited liability company name as the name of the registered agent.”
The registered office must be a physical address in Texas where service of process can be personally delivered during normal business hours. It may not consist solely of a mailbox service or telephone answering service. The registered agent must have consented, in writing or electronically, to serve in that capacity before the organizer names the agent in the certificate of formation. Form 401-A is the Secretary of State’s official consent form. Although this form does not need to be submitted with the certificate of formation, the consent must exist at the time of filing.
Note: Filing a certificate of formation that names a registered agent without that person’s consent is a false statement under Tex. Bus. Orgs. Code §§ 4.007 and 4.008. The offense is a Class A misdemeanor, elevated to a state jail felony if the intent is to harm or defraud.
LLC Filing Requirements in Texas
A Texas LLC comes into existence when the Secretary of State files its certificate of formation. Tex. Bus. Orgs. Code, Chapter 3, Subchapter A sets out the formation requirements, and the official form is Certificate of Formation – Limited Liability Company (Form 205). Detailed guidance appears in the Form 205 instructions.
The certificate of formation must include:
- The LLC’s name with an approved designator
- The name and address of the registered agent and the street address of the registered office
- Whether the LLC initially will or will not have managers, and the name and address of each initial manager (if manager-managed) or each initial member (if member-managed)
- The LLC’s purpose (a general purpose statement is permitted)
- The initial mailing address of the LLC (used by the Comptroller for tax correspondence)
- The name and address of each organizer
- The effective date, if the organizer elects a delayed effective date
Only one organizer is required. The organizer may be any person with the capacity to contract—an individual aged 18 or older, or a legal entity. There are no residency requirements for organizers.
The filing fee is $300. Fees may be paid by personal check, money order, LegalEase debit card, or American Express, Discover, MasterCard, or Visa credit card. Credit card payments carry a statutorily authorized convenience fee of 2.7% of the total.
- Online: File through the SOSDirect portal ($1.00 statutory access fee applies). Alternatively, submit a PDF of the signed form through the SOSUpload system for potentially faster processing.
- By Mail: Send the completed form in duplicate with the filing fee to P.O. Box 13697, Austin, TX 78711-3697.
- In Person: Deliver filings to 400 W. 15th St., Austin, TX 78701.
The LLC’s existence begins on the date the Secretary of State files the certificate, unless the organizer specifies a delayed effective date, which may be no more than 90 days after the date the document is signed. A file-stamped copy is returned to the submitter as proof of formation.
Texas LLCs exist perpetually by default under Tex. Bus. Orgs. Code § 3.003. If a limited duration is desired, it must be stated in the certificate of formation. Texas does not impose a publication requirement or an initial report at formation, but the LLC must file its first franchise tax report with the Comptroller of Public Accounts by the due date for the tax period in which the LLC was formed.
How Much Does it Cost to Create an LLC in Texas?
| Cost | Mandatory or Optional | Amount | When It Applies | Official Source |
| Certificate of Formation (Form 205) | Mandatory | $300 | At formation | Texas Secretary of State Fee Schedule (PDF) |
| Credit Card Convenience Fee | Mandatory if paying by credit card | 2.7% of total fees | At formation (if applicable) | Texas Secretary of State Filing Options |
| SOSDirect Access Fee | Mandatory if filing online | $1.00 | At formation (online filings only) | SOSDirect |
| Name Reservation (Form 501) | Optional | $40 | Before filing, hold a name for 120 days | Texas Secretary of State Fee Schedule (PDF) |
| Franchise Tax (Public Information Report) | Mandatory | No tax due if annualized total revenue ≤ $2,650,000; otherwise 0.375% or 0.75% of taxable margin | Annually, the first report is due in the tax year following formation | Texas Comptroller – Franchise Tax |
| Certified Copy | Optional | Varies | When a certified copy of the certificate of formation is needed | Texas Secretary of State – Copies and Certificates |
| Registered Agent Consent (Form 401-A) | Mandatory (no filing fee) | $0 | Before formation, retained by the LLC | Texas Secretary of State – Registered Agents |
| Commercial Registered Agent Service | Optional | Varies by provider | Ongoing, if the LLC uses a third-party agent | — |
LLC Operating Agreement in Texas
Texas law does not require an LLC to adopt a written company agreement—the statutory term for what most states call an operating agreement, but it recognizes and enforces one when it exists. Tex. Bus. Orgs. Code § 101.052 provides that the company agreement governs “the relations among members, managers, and officers of the company, assignees of membership interests in the company, and the company itself” and “other internal affairs of the company.” The agreement is enforceable by or against the LLC regardless of whether the company has signed or otherwise expressly adopted it, and it binds all members, managers, and assignees, whether or not they signed it.
The company agreement is never filed with the Secretary of State. Texas defines it broadly; it may be written, implied, or oral, though a written agreement is far more reliable for establishing the members’ expectations. Where the agreement is silent, the default provisions of Title 3 and Title 1 of the Business Organizations Code fill the gaps. Those defaults include equal management rights among all members in a member-managed LLC, a prohibition on member withdrawal or expulsion, and assignment of membership interests that does not automatically confer management rights on the assignee.
A well-drafted company agreement addresses the authority and duties of managers or managing members, allocation of profits and losses, distribution policies, transfer restrictions, admission of new members, dispute resolution, and dissolution triggers. Even a single-member LLC benefits from having one, because the agreement documents the separation between the member’s personal finances and the company’s assets—a distinction that courts examine closely when a creditor challenges the LLC’s liability shield.
How to Get an EIN for an LLC in Texas
A federal Employer Identification Number (EIN) is the nine-digit tax identifier the Internal Revenue Service assigns to business entities, and virtually every Texas LLC will need one. An EIN is legally required for any LLC that will have employees, file employment or excise tax returns, or withhold taxes on income paid to a nonresident alien. Even a single-member LLC with no employees typically needs an EIN to open a business bank account and to register for the Texas franchise tax.
The IRS does not charge a fee for an EIN. The IRS online EIN application issues the number immediately at the close of the session. The applicant must hold a valid Social Security Number or Individual Taxpayer Identification Number, and the LLC’s principal place of business must be in the United States. The online tool is available Monday through Friday, 7:00 a.m. to 10:00 p.m. Eastern Time.
Applicants who prefer paper can complete IRS Form SS-4 and submit it by fax (approximately four business days for processing) or by mail (approximately four to five weeks). The form requires the name and Taxpayer Identification Number of the LLC’s responsible party, the individual who controls, manages, or directs the entity, and the disposition of its funds and assets. In a single-member LLC, this is ordinarily the sole member.
Registering for State Taxes in Texas
Texas has no personal income tax, but it imposes a franchise tax on every taxable entity formed in or doing business in the state. This entity-level privilege tax applies to LLCs and is administered by the Texas Comptroller of Public Accounts. For the 2026 and 2027 report years, the tax rate is 0.75% of taxable margin for most entities, reduced to 0.375% for entities primarily engaged in retail or wholesale trade. Entities whose annualized total revenue falls at or below the $2,650,000 no-tax-due threshold owe no franchise tax but must still file a Public Information Report or Ownership Information Report.
Franchise tax registration occurs automatically when the LLC’s certificate of formation is filed with the Secretary of State. The Comptroller uses the initial mailing address provided in the certificate to establish the LLC’s tax account. The first franchise tax report is due by May 15 of the year following the calendar year in which the LLC was formed.
An LLC that sells taxable goods or services must obtain a sales tax permit from the Comptroller before beginning operations. The Texas Online Tax Registration Application is the electronic portal for this purpose, and there is no fee for the permit itself.
| Tax Type | Agency | Registration Method | Rate or Threshold |
| Franchise Tax | Texas Comptroller of Public Accounts | Automatic upon filing certificate of formation; reports filed via Comptroller WebFile | 0.75% (0.375% retail/wholesale); no tax due if revenue ≤ $2,650,000 |
| Sales and Use Tax | Texas Comptroller of Public Accounts | Texas Online Tax Registration Application | 6.25% state rate; local rates vary |
Note: The franchise tax no-tax-due threshold applies to annualized total revenue. Even LLCs below the threshold must file the required Public Information Report or Ownership Information Report annually to remain in good standing.
Registering as an Employer in Texas
An LLC that employs workers in Texas must register with the Texas Workforce Commission (TWC) for unemployment insurance within 10 days of becoming a liable employer. Liability generally arises when the LLC pays wages of $1,500 or more in any calendar quarter, or has at least one employee for any part of a day in 20 different calendar weeks during the current or preceding calendar year.
Texas stands apart from nearly every other state in that workers’ compensation insurance is not mandatory for most private employers. The Texas Department of Insurance gives private employers the choice of whether to carry coverage. Employers who opt out—known as non-subscribers must report their non-coverage status to the Division of Workers’ Compensation and lose the protection of the statutory liability limits that coverage provides. Private employers who contract with government entities, however, are typically required to carry workers’ compensation insurance.
Because Texas imposes no personal income tax, employers have no state income tax withholding obligation. Federal withholding for income tax, Social Security, and Medicare applies to every payroll.
All employers in Texas must report newly hired and rehired employees to the Texas Office of the Attorney General – New Hire Reporting within 20 calendar days of the employee’s start date.
| Obligation | Agency | Registration Method |
| Unemployment Insurance | Texas Workforce Commission | Online tax registration |
| Workers’ Compensation Insurance | Texas Department of Insurance (voluntary for most private employers) | Employer resources |
| New Hire Reporting | Texas Office of the Attorney General | New Hire Reporting |
The LLC must also satisfy federal employer obligations: filing IRS Form 941 (Employer’s Quarterly Federal Tax Return), remitting FUTA (Federal Unemployment Tax Act) taxes, and completing Form I-9 (Employment Eligibility Verification) for each new hire.