Register LLC in Texas

Starting a business can be overwhelming but we can help you with registering your LLC in Texas. We are here for you, our team at Truspan has experience and is ready to guide you through it. We are excited for you and your new business and want t o be part of your growth story and journey.

Our service does not end with just the free filing of your Texas LLC application. We can prepare the necessary documentation to set up your legal operating agreements and file the annual reports and Business Owner Information (BOI) for you. Where there is a term or requirement you do not understand, just ask, we are here not only to help get the job done but also to educate and empower you along the way.

Remember, every great journey starts with one step. In this case, it’s filing your LLC application in Texas. However, you’re not alone because Truspan will be walking right beside you, giving assurance and practical support on every step.

Why Register an LLC in Texas?

Texas is a business-friendly state and if you’re located in Texas, you will likely have to file in the state to be compliant for your business. By registering an LLC in Texas, you can benefit from limited liability protection, flexible tax options, simplified administration, management flexibility, credibility, and strong asset protection strategies.

How to Get an LLC in Texas

Want to start your business as an LLC? Well, Texas is a business-friendly state, just as the limited liability company (LLC) is a business-friendly concept. It gives entrepreneurs liability protection without the cumbersome structure of a corporation. It’s sort of like getting the best plate of barbecue in town without having to wait in a long line.

However, the right steps will need to be followed and some basic requirements met to form a Texas LLC which can be very scary for a first-time business owner. We are here to help ease your fears through every step of the way. Here are some steps to form an LLC in Texas: 

1.`Select a Name

Choosing a name to call to your Texas LLC is an important first step in the formation procedure. It’s now not just about selecting a name that resonates with your enterprise vision, but also making sure it complies with Texas state rules.

Start by brainstorming a name that is easy to recall and that stands out in search engines. This will help entice clients and mainly boost sales. However, your selected business name has to be different from other business names in Texas to so that you stand out and aren’t confused with ither companies.

Once you’ve have a potential name, conduct a few essential searches. First, use the Texas LLC Name Search to ensure your chosen business name is specific among all taxable entities inside the state. Next, carry out a Domain Name Search to confirm if your enterprise name is available as a URL. Evеn if you’rе not rеady to launch a wеbsitе, sеcuring your domain namе is crucial to maintaining your onlinе branding. 

In terms of Texas LLC Naming Rules, your name should encompass an LLC designator such as “LLC”, or “Limited Liability Company”. Avoid designators that would confuse your LLC with some other commercial enterprise type like “Corp”, “Inc”, “Non-Profit”. Certain phrases like “financial institution”, “university”, “regulation middle” or other assuming words require approval from the proper authorities. 

And remember even is the Secretary of State clears a name or permits you to reserve one, it doesn’t guarantee compliance with trademark legal guidelines. It’s your responsibility to make certain your selected name does not infringe on existing trademarks and companies.

If you want to function under a different name from your legit LLC name, you can register an assumed name (additionally referred to as a DBA) with the Texas Secretary of State. This allows you to maintain your LLC name equally even as operating under a special alternate name.

Finally, if you want to order your name before officially forming your LLC. In that case, you can do this for one hundred twenty days before registering by submitting a name reservation with the Texas Secretary of State. This offers you peace of mind at the same time while you complete other steps for forming your LLC.

Remember, selecting a name is not just about branding, but also compliance. Always seek advice from a business lawyer if you have issues.

2. Appoint a registered agent in Texas

Whеn forming an LLC in Tеxas, one of thе kеy rеquirеmеnts is thе appointmеnt of a rеgistеrеd agеnt. This individual or еntity is rеsponsiblе for rеcеiving lеgal documеnts, official noticеs, tax forms, and othеr govеrnmеnt corrеspondеncе on bеhalf of your businеss.

Thе rеgistеrеd agеnt can bе an individual who is 18 yеars or older, a Tеxas rеsidеnt with a physical addrеss in thе statе, and availablе during normal businеss hours. Altеrnativеly, it can bе an organization authorizеd to do business in Tеxas. Howеvеr, it’s important to notе that a businеss еntity cannot sеrvе as its rеgistеrеd agеnt, however the owner of th ebusiness can so long as residing in Texas.

Thе rеgistеrеd agеnt must providе consеnt to sеrvе in this capacity, using Form 401-A: Accеptancе of Appointmеnt and Consеnt to Sеrvе as Rеgistеrеd Agеnt. This form doesn’t nееd to bе filеd with thе statе, but thе businеss should kееp thе signеd copy among its documеnts.

Whilе you or another mеmbеr of thе LLC can sеrvе as thе rеgistеrеd agеnt, this might not always bе practical. For instance, thе mеmbеr might fall ill or bе tеmporarily unavailablе, which could disrupt thе rеcеipt of important documents. Thеrеforе, many businеssеs opt to usе third party sеrvicеs that can act as rеgistеrеd agеnts for a fее.

Bеforе dеciding to sеrvе as your own rеgistеrеd agеnt, considеr thе potеntial downsidеs.  Your LLC’s formation is a public rеcord, meaning your name, address, and other contact information will be publicly accessible, potentially lеading to unwantеd mail or visitors. Additionally, if you don’t have a physical address in Tеxas, you can’t be the agent.

Using a rеgistеrеd agеnt sеrvicе can solve thеsе issues. Thеsе providеrs maintain a physical officе in еach statе and simplify thе procеss for small businеssеs, making thеm a cost-еffеctivе solution for maintaining privacy and еnsuring thе smooth opеration of your LLC.  Truspan can provide this service for you. 

3. File a Certificate of Formation

The formal course of registering an LLC in Texas revolves around submitting your Certificate of Formation (Form 205) to the Texas Secretary of State. When filed in other states this document, also known as “Articles of Organization,” represents the establishment of your LLC as a separate entity in the eyes of the law.

If you file online, just go to the Texas Secretary of State website and establish an SOSDirect Account. Online filing costs are a one-time $300 and 2.7% for credit card payments. Online processing, results in a filing time of 10 to 12 business days. However, if you prefer to file postal mail you can complete the Certificate of Formation form and attach your remittance to the Secretary of State. It must be noted that the processing time for postal mail is significantly slower.

When completing the Certificate of Formation you will have to provide various bits of information about your LLC. These include the entity name and type, the registered agent’s information as well as their physical location in Texas, whether the LLC will be member-managed or manager-managed, and the purpose of your LLC. You also need to write with instructions on tax address and who to correspond with. Furthermore, the LLC must indicate whether it will dissolve on a specific date or exist indefinitely, and notify the name of the person completing the form. After being filed and certified, the state will issue you a stamped Certificate of Formation to let everyone know it is truly an LLC.

The term “governing authority” indicates how your LLC’s administration is structured. It mentions whether it is managed by the members (member-managed) or by a selected manager (manager-managed). When there are only a few active owners, the proprietor-managed format is usually selected.

Once this step is completed, you can lawfully transact business in Texas as an LLC. However, there are still a few other things you must do to keep your LLC in good standing with the state.

4.   Create an operating agreement: 

Texas law does not require an operating agreement however, it is best practice to have a formal agreement in place. 

The operating agreement is a legal document summarizing how the LLC is structured and how it will be managed. It covers ownership details, management structure, initial contributions, profit distribution, tax classification, as well as what happens is ownership changes, and if the company is sold or is dissolved.

For example, the ownership section should indicate the percentage of ownership in cases where the ownership is not constant among the members. The management part should indicate whether your LLC will be member-managed or manager-managed and how the decision-making will happen. All the members should contribute capital in the formation of the LLC, and the initial contributions part of the operating agreement has all the details.

The profit distribution section indicates how profits and losses will flow to the members. The tax section should indicate the LLC’s tax classification (sole proprietorship, partnership, S- corporation). The change of ownership section summarizes how termination of the LLC happens and also include a withdrawal process in the event one of the member sells out or dies. 

If you’re unsure how to structure an operating agreement, there are numerous online resources and legal professionals that can help or provide you with templates. Remember the operating agreement can be amended as needed as business needs evolve over time.

5.   Apply for an EIN

An EIN is similar to a Social Security number for your LLC, but with the latter, you can get it for free. One can apply with the IRS either online on their website and get an immediate response or by traditional mail.

The EIN is essential for various reasons. For LLCs with several members, if you have plans to hire employees, open bank accounts, obtain loans or credit lines for the LLC, and elect for corporate tax classification, you need an EIN. Even single-member LLCs with no employees may need an EIN for some business licenses and permits. Note that an EIN isn’t just for employers – it shouldn’t be confused with the 11-digit Taxpayer Number from the Texas Comptroller.

You may not have to get an EIN if you are a single-member LLC with no employees and not ‘electing corporation’ tax status. Your Social Security number can be used as your federal tax identifier in this case. But if you think you may have employees or decide to settle for corporation tax treatment at the point of registration in the future, then you should apply for an EIN today to have it secured and put on all your business and legal documents for the future.

Once you’ve obtained your EIN, you can open bank accounts for your business, as most banks require this. But once your Texas LLC is up and running, don’t forget to put into place a process to complete annual filings, necessary licenses and permits, positive money management, annual reports and fees, business bank accounts, and insurance.

6.   Pay taxes and file an information report

LLCs that are conducting business in the state of Texas are charged a franchise tax by the Texas Comptroller of Public Accounts, and must also file a public information report, or PIR, by May 15th each year. For instance, if you began your LLC in December 2021, the time which you first need to pay your PIR plus franchise taxes is on May 15, 2022. The form has information about the members of the LLC as well as any investors in the company. The PIR exists to ensure that current business information is on file with the secretary of state.

Fortunately, most of the LLCs will be exempted from paying the franchise tax. Only those with an annual gross revenue of more than $1,230,000 are going to be liable for it in 2022 and 2023.

The second type of tax is related, to indirect operations and the tax rate is 0.375%. Most retail and wholesale activities fall into this category. Other business types pay a 0.75% tax rate. While you are relieved from the mandate of paying the franchise tax, you are not let off with less paperwork. You still have to file a no-tax due form. Normally, personal state income taxes on their share of the profits are paid by members of LLCs. But Texas is one of just nine states that do zero taxation in a state income tax. That’s a big perk for companies doing business in the Lone Star State.