LLC in Texas: How to Start Yours Step by Step

How to Start an LLC in Texas

To start an LLC in Texas, you choose a business name, appoint a Texas registered agent, file a Certificate of Formation with the Texas Secretary of State, get an EIN from the IRS, set up Texas tax accounts if needed, and confirm your local permits before you open.

Texas is LLC-friendly in one important way: there is no personal state income tax. But you still need to take state franchise tax, sales tax, payroll, local permits, and industry licenses seriously. The steps below walk you from idea to first paying customer.

Registration

Most first-time Texas founders choose an LLC because it separates the business from the owner, gives flexible management, and is simpler than a corporation. You can also operate as a sole proprietor, partnership, corporation, or professional entity, but an LLC is often the practical middle ground for a small business.

The Texas filing agency is the Texas Secretary of State. To form a Texas LLC, you file a Certificate of Formation — Limited Liability Company, commonly known as Form 205. You can file online through the Secretary of State’s business filing system, by mail, or in person. The state filing fee is $300.

Your LLC name must be distinguishable from names already on file with the Texas Secretary of State. It must include an approved ending such as “Limited Liability Company,” “LLC,” or “L.L.C.” Avoid words that imply you are a bank, insurer, government agency, or licensed profession unless you are allowed to use them. Before you file, search the state’s name records and check whether the matching domain and social handles are available.

A name reservation is optional. If you are not ready to form yet, Texas allows you to reserve a name for a limited period, typically 120 days, for a fee that is typically around $40. Many founders skip this step and simply file the LLC when ready.

Every Texas LLC must have a registered agent with a physical street address in Texas. This is the person or company that receives legal papers and official notices. The registered agent can be a Texas resident or a company authorized to do business in Texas. Your LLC cannot be its own registered agent. Texas also requires the agent to consent to the appointment. You generally keep that consent with your records rather than filing it with the state.

Texas does not require you to file an operating agreement, called a company agreement in Texas, but you should create one. It explains who owns the LLC, how decisions are made, how profits are handled, and what happens if someone leaves. Banks, investors, landlords, and partners may ask for it.

After approval, the Secretary of State issues evidence of filing. Keep this with your company agreement, EIN letter, ownership records, permits, and tax account confirmations.

Taxes

Texas has no personal state income tax, but LLCs still have tax responsibilities.

First, get an Employer Identification Number, or EIN, from the Internal Revenue Service. It is free. You need it to open a business bank account, hire employees, and file federal tax returns. A single-member LLC is usually taxed as a disregarded entity by default, while a multi-member LLC is usually taxed as a partnership. Some LLCs elect S corporation or C corporation tax treatment after speaking with a tax professional.

Texas LLCs are generally subject to the Texas franchise tax, administered by the Texas Comptroller of Public Accounts. Many small businesses owe no tax if their revenue is below the state’s no-tax-due threshold, but they may still have annual filing obligations. Texas franchise tax reports and public information reports are generally due each year by May 15. If your revenue grows, the tax is generally based on taxable margin, with different rates depending on your business type and reporting method. The thresholds and rules can change, so check the Comptroller’s current guidance or work with a Texas tax preparer.

If you sell taxable goods or taxable services in Texas, register for a Texas sales and use tax permit with the Comptroller before collecting tax. The Texas state sales tax rate is 6.25%, and local jurisdictions can add tax up to a combined maximum of 8.25%. Filing frequency is assigned by the Comptroller and may be monthly, quarterly, or annually based on sales volume.

If you hire employees, register with the Texas Workforce Commission for state unemployment tax. Texas does not have state personal income tax withholding, but you still handle federal payroll taxes, Form W-2 reporting, unemployment tax, and any required new hire reporting. If you use contractors, be careful with classification. Calling someone a contractor does not make them one if the work relationship looks like employment.

Also remember federal tax basics: track income and expenses from day one, choose an accounting method, save for estimated taxes if profits flow through to you, and keep business and personal money separate.

Licenses

Texas does not have one general statewide business license for every LLC. That is good news, but it does not mean you can ignore licensing. Your requirements depend on your industry, location, and activities.

Common Texas licensing agencies include:

• Texas Department of Licensing and Regulation, often called TDLR, for many occupations and trades such as electricians, air conditioning and refrigeration contractors, barbers, cosmetologists, towing operators, and some health-related facilities.
• Texas Alcoholic Beverage Commission, or TABC, for businesses that manufacture, distribute, sell, or serve alcoholic beverages.
• Texas Department of State Health Services, or DSHS, for certain food, health, and safety-regulated businesses, including some food manufacturers, wholesalers, and health-related operations.
• Texas Real Estate Commission for real estate brokers, sales agents, and related real estate professionals.
• Texas Medical Board, Texas Board of Nursing, Texas State Board of Dental Examiners, and other professional boards for licensed healthcare work.
• Texas State Board of Public Accountancy for CPAs and CPA firms.
• Texas Department of Insurance for insurance agents, agencies, and certain insurance-related businesses.

Texas does not have a single statewide general contractor license, but many cities require contractor registration, and certain trades are licensed at the state level. For example, electricians and HVAC contractors are generally regulated by TDLR, while plumbing is regulated separately by the state plumbing board.

If your LLC will operate under a name different from its legal name, file an assumed name certificate with the Texas Secretary of State. This is often called a DBA. For example, “Hill Country Foods LLC” operating as “Austin Lunch Co.” would need an assumed name filing.

Permits

Permits are where Texas business setup becomes very local. Your LLC may be formed at the state level, but your permission to operate often comes from your city, county, health department, fire marshal, or development office.

Start with zoning. Before signing a lease, confirm that your planned use is allowed at that address. A retail shop, warehouse, salon, childcare center, commercial kitchen, and auto repair shop can all trigger different zoning rules. Ask the city planning or development services department about zoning, certificate of occupancy requirements, parking, signage, and building changes.

If you work from home, check home-occupation rules. Cities such as Houston, Dallas, Austin, San Antonio, Fort Worth, El Paso, and many smaller municipalities may restrict customer visits, employees, noise, storage, signage, or commercial vehicles at a residence.

Food businesses often need health permits, inspections, food manager certification, and possibly state-level licensing depending on whether you prepare, package, wholesale, or serve food. Restaurants, food trucks, coffee shops, bakeries, caterers, and cottage food businesses all follow different rules.

You may also need:

• A certificate of occupancy before opening a physical location.
• Building permits for renovations or finish-out work.
• Fire inspections for assembly spaces, restaurants, childcare, warehouses, or hazardous materials.
• Sign permits before installing exterior signs.
• Grease trap, wastewater, or environmental permits for certain food, automotive, manufacturing, or cleaning businesses.
• County permits if you operate outside city limits.

Do not rely only on your landlord or contractor. Ask the local permitting office directly what is required before you spend money on build-out.

Insurance

Texas is unusual because most private employers are not required to carry workers’ compensation insurance. Employers that do not carry it are often called non-subscribers, and they may have extra notice and reporting duties. Even when it is not legally required, workers’ comp can protect your business if an employee is injured. It may also be required by a client, lease, loan, or government contract. Construction and public projects can have stricter requirements.

If your LLC owns or uses vehicles for business, make sure you have proper commercial auto coverage. Personal auto policies often exclude business use. Texas requires drivers to carry liability coverage, and businesses often need higher limits than the legal minimum.

Common policies for Texas LLCs include:

• General liability insurance for customer injuries, property damage, and basic third-party claims.
• Professional liability insurance for consultants, designers, bookkeepers, marketing agencies, healthcare providers, and other advice-based businesses.
• Commercial property insurance for equipment, inventory, furniture, and build-out.
• Business owner’s policy, or BOP, which bundles general liability and property coverage for many small businesses.
• Cyber liability insurance if you store customer data, take online payments, or run a software or ecommerce business.
• Product liability insurance if you make, import, distribute, or sell physical products.

Texas insurance is regulated by the Texas Department of Insurance. A local independent agent can help compare carriers and explain what clients or landlords commonly require in your industry.

Banking

Open a business bank account as soon as your Texas LLC is approved and you have your EIN. This is one of the simplest ways to protect your liability separation. Do not run LLC money through your personal checking account.

Banks commonly ask for:

• Certificate of Formation or filing confirmation from the Texas Secretary of State.
• EIN confirmation letter from the IRS.
• Company agreement, especially for multi-member LLCs.
• Photo ID for owners and authorized signers.
• Ownership information and business address.
• Assumed name certificate if you use a DBA.
• Banking resolution if someone other than the owner will sign.

Look for a Texas bank or credit union that fits how you actually operate. A restaurant may need cash handling and merchant services. A contractor may need mobile deposits and ACH payments. An ecommerce founder may care more about integrations, low fees, and fast online support. Ask about monthly fees, minimum balances, wire fees, cash deposit limits, debit cards, fraud controls, and whether the bank supports multiple owners cleanly.

Once the account is open, route all income into it and pay all business expenses from it. Use bookkeeping software or a simple spreadsheet from day one. Clean records make taxes, financing, and future growth much easier.

State Resources

Texas has several real agencies and programs that can help you form, register, and grow your LLC.

• Texas Secretary of State: Handles LLC formation, assumed name filings for entities, registered agent changes, certificates of status, and business record searches.
• Texas Comptroller of Public Accounts: Handles franchise tax, sales and use tax permits, mixed beverage taxes, and many state tax accounts.
• Texas Workforce Commission: Handles employer registration for unemployment tax, wage claims, labor market information, and workforce programs.
• Texas Department of Licensing and Regulation: Licenses and regulates many occupations, trades, and business activities.
• Texas Department of State Health Services: Oversees certain food, health, safety, and public-health-related permits and licenses.
• Texas Department of Insurance: Regulates insurance companies and agents and provides consumer and business insurance information.
• Texas Economic Development & Tourism, Office of the Governor: Provides information on Texas business development, incentives, site selection, and economic programs.
• Texas Small Business Development Center Network: Offers no-cost or low-cost advising, business planning help, market research, and startup guidance through regional SBDC offices.
• SCORE chapters in Texas: Provide volunteer business mentoring and workshops in major metro areas and online.
• Local city and county development offices: Help with zoning, certificates of occupancy, building permits, health permits, sign permits, and local rules.

FAQs

How much does it cost to start an LLC in Texas?

The Texas Secretary of State filing fee for a Certificate of Formation is $300. You may also pay for a registered agent, assumed name filing, local permits, insurance, bookkeeping software, or professional help.

How long does it take to form a Texas LLC?

Online filings are often processed faster than mail filings, sometimes within a few business days, but timing can change with state workload. Mail filings can take longer, and expedited handling is usually available for an extra fee.

Does a Texas LLC need a business license?

Texas does not require one general statewide business license for every LLC. You may still need state professional licenses, a Texas sales tax permit, city permits, county permits, health permits, or zoning approval depending on what you do and where you operate.

Do Texas LLCs pay franchise tax?

Most Texas LLCs are subject to the franchise tax system, but many small businesses owe no tax if revenue is below the current no-tax-due threshold. Annual reporting rules still matter, so check the Comptroller’s current requirements each year.

Can I be my own registered agent in Texas?

Yes, if you are a Texas resident with a physical Texas street address and you are available during business hours. Your LLC cannot serve as its own registered agent, and using your home address may make that address part of public records.

Business Launch Steps

• Choose your business idea and ownership structure. Decide whether an LLC is the right fit, usually before spending money on branding or leases. Typical timing: 1–3 days.
• Search your Texas LLC name. Check the Texas Secretary of State records, domain availability, trademarks, and social handles. Typical timing: same day.
• Choose a Texas registered agent. Use yourself, another qualified Texas resident, or a commercial registered agent. Get consent before filing. Typical timing: same day.
• File the Certificate of Formation with the Texas Secretary of State. File online, by mail, or in person and pay the $300 filing fee. Typical timing: a few business days online; longer by mail.
• Create your Texas LLC company agreement. Write down ownership, voting, profit splits, management authority, and exit rules. Typical timing: 1–3 days.
• Get your EIN from the IRS. Apply directly with the IRS after the LLC is formed. Typical timing: usually immediate online.
• Check federal beneficial ownership rules. Federal reporting requirements have changed over time, so confirm current FinCEN rules before assuming you do or do not need to file. Typical timing: same day.
• Register with the Texas Comptroller if needed. Set up sales tax, franchise tax access, and any other applicable state tax accounts. Typical timing: a few days to a few weeks.
• Confirm licenses and permits. Contact TDLR, DSHS, TABC, your professional board, and your city or county permitting office as applicable. Typical timing: several days to several weeks.
• Check zoning before signing a lease. Confirm the address is approved for your use and ask about certificate of occupancy, signs, parking, and inspections. Typical timing: 1–2 weeks, longer for build-outs.
• Open your business bank account. Bring your formation documents, EIN, company agreement, IDs, and assumed name filing if applicable. Typical timing: same day to a few days.
• Set up bookkeeping and tax calendar. Track income, expenses, sales tax due dates, payroll dates, and the Texas franchise tax deadline. Typical timing: 1 day.
• Buy the insurance you need. Start with general liability and add workers’ comp, auto, professional, cyber, property, or product coverage as needed. Typical timing: a few days.
• Prepare customer-facing operations. Finalize pricing, contracts, invoices, payment processing, website, Google Business Profile, signage, and launch materials. Typical timing: 1–3 weeks.
• Make your first sale and keep records. Collect payment through the business account, issue receipts, save tax records, and document what worked. Typical timing: as soon as your permits and operations are ready.

Starting an LLC in Texas is very doable when you take it one step at a time. If you want the exact order for your business type, city, and launch plan, Stratify can build you a personalized roadmap.