How to Start an LLC in Texas: 2026 Step-by-Step Guide
Figuring out how to start an LLC in Texas doesn't have to be complicated. Texas consistently ranks as one of the most business-friendly states in the country, with no personal state income tax, a high franchise tax exemption threshold, and a straightforward formation process. Whether you're launching a freelance business, an e-commerce brand, or a consulting firm, forming a Texas LLC protects your personal assets and gives your business instant credibility. At Next Step Filings, we've helped thousands of entrepreneurs file their LLCs quickly and correctly, and this guide walks you through every step for 2026.
Texas LLC Formation at a Glance
Before diving into each step, here's a quick overview of what forming an LLC in Texas involves. This snapshot covers cost, timeline, and key requirements so you know exactly what to expect.
| Requirement | Details |
|---|---|
| State Filing Fee | $300 (online filing with the Texas Secretary of State) |
| Formation Document | Certificate of Formation (Form 205) |
| Processing Time | Typically 2 to 5 business days for online filings |
| Registered Agent | Required (must have a Texas street address) |
| State Income Tax | None |
| Franchise Tax | No tax due if revenue is below $2.47 million (2026 threshold) |
| Annual Report | No annual report required; franchise tax report filed annually by May 15 |
| Operating Agreement | Not legally required but strongly recommended |
The process is similar to starting an LLC in Florida, though Texas has higher filing fees and no annual report requirement. If you'd rather skip the paperwork and have professionals handle the filing, Next Step Filings offers a complete LLC formation service with 24 to 48 hour turnaround and a 99.8% approval rate across more than 20,000 filings in 12 states.
Step 1: Choose Your Texas LLC Name
Your LLC name is the first thing customers, banks, and state agencies will see. Texas has specific rules you'll need to follow.
Texas LLC Naming Requirements
- The name must include "Limited Liability Company," "LLC," or "L.L.C."
- It must be distinguishable from any existing entity on file with the Texas Secretary of State.
- Restricted words like "bank," "insurance," or "university" may require additional documentation or licensing.
- The name cannot imply a purpose the LLC isn't authorized to conduct.
Run a free name availability search on the Texas Secretary of State's SOSDirect database before filing. If your ideal name is taken, consider slight variations or a DBA (doing business as) filing later.
Pro tip: Secure a matching domain name and social media handles at the same time. Consistency across platforms builds trust from day one.
Step 2: Appoint a Texas Registered Agent
Every Texas LLC must designate a registered agent. This is the person or company authorized to receive legal documents, tax notices, and official correspondence on behalf of your business.
Who Can Serve as a Registered Agent in Texas?
- Any Texas resident with a physical street address in the state
- A business entity authorized to do business in Texas
- You can serve as your own registered agent, though this means your personal address becomes public record
Many business owners choose a professional registered agent service for privacy and reliability. A missed legal notice can lead to default judgments or administrative dissolution. Next Step Filings provides a registered agent service that keeps your personal address off public records and ensures you never miss a critical document.
Step 3: File Your Certificate of Formation ($300 Online)
The Certificate of Formation (Form 205) is the core document that officially creates your Texas LLC. You'll file this with the Texas Secretary of State, and it's the most important step in the entire process.
Information You'll Need for Form 205
- LLC name (must comply with Texas naming rules)
- Registered agent name and address (Texas street address required)
- Governing authority (whether the LLC is manager-managed or member-managed)
- Organizer information (the person filing the document)
- Purpose statement (Texas allows a general "any lawful purpose" statement)
- Duration (perpetual is the default and most common choice)
How to File
You can file Form 205 online through SOSDirect at the Texas Secretary of State website. The filing fee is $300, payable by credit card or check. Online filings typically process within 2 to 5 business days.
Mail filings are also accepted but take significantly longer, sometimes several weeks. For speed and accuracy, online filing is the clear winner.
If you want to avoid errors that cause rejections and delays, consider using a professional service. Our team at Next Step Filings has processed over 20,000 filings with a 99.8% success rate, so your formation gets done right the first time.
Step 4: Create an Operating Agreement
Texas doesn't legally require an operating agreement, but operating without one is a risk most business owners shouldn't take. This internal document defines how your LLC operates, how profits are distributed, and what happens if a member leaves or a dispute arises.
What to Include in Your Texas LLC Operating Agreement
- Member names, ownership percentages, and capital contributions
- Profit and loss distribution rules
- Management structure (member-managed vs. manager-managed)
- Voting rights and decision-making procedures
- Rules for adding or removing members
- Dissolution procedures
- Buy-sell provisions
Even single-member LLCs benefit from an operating agreement. It strengthens the legal separation between you and your business, which is the entire point of forming an LLC. For a deeper look at what goes into this document, check out our guide to LLC operating agreements.
Step 5: Get Your EIN from the IRS
An Employer Identification Number (EIN) is essentially a Social Security number for your business. The IRS issues EINs at no cost, and you'll need one for most business activities.
Why You Need an EIN
- Opening a business bank account (almost every bank requires it)
- Hiring employees
- Filing federal and state tax returns
- Applying for business licenses and permits
- Building business credit
You can apply for an EIN online through the IRS EIN application portal. The process takes about 10 minutes, and you'll receive your EIN immediately upon completion. For a complete walkthrough, see our EIN application guide.
Important: Apply for your EIN after your Certificate of Formation is approved. The IRS requires your LLC to be officially formed before issuing an EIN.
Step 6: Understand Texas Franchise Tax
Texas doesn't have a personal state income tax, but it does impose a franchise tax (sometimes called a "margin tax") on most businesses operating in the state. The good news: most small LLCs won't owe anything.
Key Franchise Tax Thresholds for 2026
- No-tax-due threshold: LLCs with total revenue at or below $2.47 million owe no franchise tax. (Note: this threshold adjusts periodically. Always confirm the current figure with the Texas Comptroller's office.)
- Tax rates: 0.375% for qualifying wholesale and retail businesses, 0.75% for all other businesses
- EZ computation rate: 0.331% on total revenue for businesses under $20 million in revenue
Filing Requirements
Even if your LLC owes no franchise tax, you're still required to file a franchise tax report (or a no-tax-due information report) with the Texas Comptroller by May 15 each year. The first report is due the year after your LLC's formation. Missing this deadline can result in penalties and even forfeiture of your LLC's right to do business in Texas.
This is one compliance obligation that catches many new business owners off guard. Set a calendar reminder well before the May 15 deadline.
Texas LLC Ongoing Compliance Requirements
Forming your LLC is just the beginning. Staying compliant ensures your liability protection remains intact and your business stays in good standing with the state. Here's what Texas requires on an ongoing basis.
Annual Franchise Tax Report
As noted above, every Texas LLC must file a franchise tax report with the Texas Comptroller by May 15 each year. Even if you qualify for the no-tax-due threshold, you still need to file.
Maintain a Registered Agent
Your registered agent must remain active and available at a Texas street address at all times. If your agent changes, you'll need to file an updated statement with the Secretary of State.
Keep Your Operating Agreement Updated
Whenever ownership changes, new members join, or the management structure shifts, update your operating agreement. An outdated agreement can weaken your liability protection.
Separate Business and Personal Finances
Open a dedicated business bank account and never commingle personal and business funds. Courts can "pierce the corporate veil" if they determine you haven't maintained proper separation, which means your personal assets could be at risk.
Business Licenses and Permits
Depending on your industry and location, you may need city, county, or state permits. Check with your local government offices and the Texas Department of Licensing and Regulation for specifics.
If keeping track of compliance deadlines feels overwhelming, Next Step Filings offers an annual renewal and compliance service that handles franchise tax filings, registered agent maintenance, and deadline reminders so nothing slips through the cracks.
How Next Step Filings Helps Texas LLC Owners
Next Step Filings is a professional business formation and compliance company that specializes in helping entrepreneurs start and maintain their LLCs. Here's what sets us apart.
- 20,000+ filings processed across 12 states with a 99.8% success rate
- 24 to 48 hour turnaround on most formation filings
- Expert compliance support to keep your LLC in good standing year after year
- Transparent pricing with no hidden fees or surprise upsells
- Registered agent services included with formation packages
Whether you're forming your first LLC or expanding into Texas from another state, our team handles the paperwork so you can focus on building your business. Explore our state-by-state business registration guide to see how Texas compares to other states, or get started with our LLC formation service today.
Frequently Asked Questions About Starting an LLC in Texas
How much does it cost to start an LLC in Texas?
The state filing fee for a Texas LLC is $300, paid to the Texas Secretary of State when you submit your Certificate of Formation. For a full comparison of fees across all 50 states, see our LLC formation cost by state guide. Additional costs may include a registered agent service (if you hire one), an operating agreement drafted by an attorney, and your EIN application (which is free through the IRS). Professional formation services like Next Step Filings typically charge a service fee on top of the state filing fee.
How long does it take to form an LLC in Texas?
Online filings through the Texas Secretary of State usually process within 2 to 5 business days. Mail filings can take several weeks. When you file through Next Step Filings, we submit your documents within 24 to 48 hours and monitor the process until approval.
Do I need a registered agent for my Texas LLC?
Yes. Texas law requires every LLC to maintain a registered agent with a physical street address in the state. You can serve as your own agent, but many business owners prefer a professional service for privacy and to ensure legal documents are received promptly. Learn more in our registered agent guide.
Does Texas require an operating agreement for LLCs?
No, Texas does not legally require an operating agreement. However, every LLC should have one. Without an operating agreement, your LLC defaults to Texas state law for dispute resolution, profit distribution, and management rules, which may not align with what you and your co-members actually want.
What is the Texas franchise tax, and will my LLC owe it?
The Texas franchise tax is a margin tax imposed on most businesses in the state. However, LLCs with total revenue at or below the no-tax-due threshold ($2.47 million for 2026) owe no franchise tax. You're still required to file an annual report with the Texas Comptroller by May 15, even if no tax is due.
Can I form a Texas LLC if I live in another state?
Yes. You don't need to be a Texas resident to form an LLC in the state. You will, however, need a registered agent with a physical address in Texas. Many out-of-state business owners use a professional registered agent service for this purpose.
What's the difference between a member-managed and manager-managed LLC?
In a member-managed LLC, all members (owners) participate in daily operations and decision-making. In a manager-managed LLC, one or more designated managers handle operations while the remaining members serve as passive investors. Single-member LLCs are typically member-managed. Multi-member LLCs with investors often choose the manager-managed structure.
Do I need a business bank account for my Texas LLC?
Technically, Texas law doesn't mandate a separate business bank account. Practically speaking, you absolutely need one. Commingling personal and business funds weakens your liability protection and makes tax filing significantly more complicated. Most banks require an EIN to open a business account.
Can I change my Texas LLC name after formation?
Yes. You can change your LLC name by filing a Certificate of Amendment with the Texas Secretary of State. The filing fee is $150. Make sure to update your EIN records with the IRS, your bank accounts, contracts, and any business licenses that reference the old name.
What happens if I don't file my Texas franchise tax report?
Failure to file the annual franchise tax report by May 15 can result in penalties, interest charges, and eventually forfeiture of your LLC's right to do business in Texas. A forfeited LLC cannot maintain lawsuits, and officers may become personally liable for business debts incurred during the forfeiture period. If your LLC has been forfeited, you can reinstate it by filing the overdue reports and paying all penalties and fees.
Start Your Texas LLC with Confidence
Texas offers one of the best environments in the country for small business owners. No state income tax, a generous franchise tax threshold, and a streamlined formation process make it an ideal state to launch an LLC. By following the six steps in this guide, you'll have a properly formed, legally compliant Texas LLC ready to operate. For a complete checklist of everything you should do next, see our guide on what to do after forming your LLC.
If you'd rather have experts handle the details, Next Step Filings is here to help. With more than 20,000 successful filings, a 99.8% approval rate, and support across 12 states, we make LLC formation fast, affordable, and stress-free. Get started with your Texas LLC today.
Next Step Filings is a private business services company and does not provide legal advice.
Written by Lisa Matthews, General Manager and Business Compliance Advisor at Next Step Filings.
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