- Choose a Distinctive Name for Your Texas LLC:
Texas law mandates that your LLC name must include “Limited Liability Company” or “Limited Company.” You can abbreviate it as “L.L.C.,” “L.C.,” or “Ltd. Co.”
Ensure your chosen name is distinguishable from existing business names in the state.
- Reserve Your LLC Name:
If your desired name is available, consider reserving it by filing a Reservation or Renewal of Reservation of Name form (Form 501). The filing fee is $40, and it allows you to hold the name for up to 120 days.
- Appoint a Registered Agent:
Every Texas LLC must have a registered agent. This individual or service accepts legal documents on behalf of your business.
The registered agent must have a physical address within Texas (not a P.O. box).
- File the Certificate of Formation:
Submit the Certificate of Formation (Form 205) to the Texas Secretary of State. This document officially establishes your LLC.
Include details such as your LLC’s name, registered agent information, and management structure.
- Create an Operating Agreement:
Although not required by law, having an operating agreement is advisable. It outlines how your LLC will operate, including ownership percentages, decision-making processes, and more.
- Obtain an Employer Identification Number (EIN):
Apply for an EIN from the IRS. This unique number is essential for tax purposes, hiring employees, opening business accounts, and more.
- Understand Tax Options:
Llc in Texas have flexibility in how they’re taxed. You can choose to be taxed as a sole proprietorship, partnership, S corporation, or C corporation.
Consult with a tax professional to determine the best tax structure for your LLC.
- Comply with Annual Filings and Fees:
Stay informed about annual filings and fees required by the state. Failure to comply can result in penalties or loss of good standing.
- Obtain Necessary Licenses and Permits:
Research and obtain any licenses or permits relevant to your industry. Compliance with local, state, and federal regulations is crucial.
- Keep Business and Personal Finances Separate:
Open a separate business bank account for your LLC. Mixing personal and business finances can jeopardize your limited liability protection.
