Forming an LLC in Texas: Filing Requirements and Costs
A step-by-step guide to registering your business with the Texas Secretary of State.
By The · · 4 min read
When you decide to start a business in Texas, one of the first real decisions is whether to form an LLC. It's a straightforward structure that protects your personal assets, keeps taxes simple, and doesn't require as much paperwork as a corporation. But there are specific steps you need to follow in Texas, and getting them right the first time saves you headaches and money down the road. The filing fees, deadlines, and documentation requirements are not complicated, but they do matter.
What Texas Actually Requires for an LLC
To form an LLC in Texas, you file Articles of Organization with the Texas Secretary of State. That document is straightforward. It includes your LLC name, your registered agent's name and address, the manager's name if you want to manage it that way, and your mailing address. You don't need a business plan, bylaws, or a minutes book like you do for a corporation. The state just wants those basic facts. The filing fee is currently $300, and you can submit it online through the Secretary of State's website. Processing takes about one business day if you file online. If you mail it in, allow five to ten business days.
Choosing Your Registered Agent and Address
Your registered agent is the person or company authorized to receive legal documents on behalf of your LLC. Many business owners in The Woodlands use a registered agent service instead of using their home address, which keeps your personal address off public records. The registered agent must have a physical street address in Texas. You cannot use a P.O. box. If you use a service, expect to pay between $100 and $300 per year. If you appoint yourself or a trusted employee, the cost is zero, but your personal address becomes part of the public filing.
Understanding the EIN and Tax Setup
After you file your Articles of Organization, you need an Employer Identification Number from the IRS. You can apply for one online at no cost. It takes about ten minutes. Even if you are a solo owner, getting an EIN keeps your personal Social Security number off business accounts and makes accounting cleaner. You do not have to wait for the state to approve your LLC before applying for an EIN. Once you have both, you can open a business bank account, which you should do immediately to keep business and personal money separate.
Ongoing Compliance and Franchise Tax
Texas requires LLCs to file a Franchise Tax Public Information Report every two years. The deadline is May 15 of every even-numbered year. The fee is $0 if your business earned less than $1.23 million in the prior year. If you exceed that threshold, the fee scales up based on revenue. Missing this deadline can result in penalties and loss of good standing status, which affects your ability to sue or do business in Texas. Many business owners set a calendar reminder for April to avoid the rush.
Common Mistakes That Cost Time and Money
The biggest mistake I see is choosing an LLC name without checking whether it is already taken or reserved. The Secretary of State's website lets you search existing names for free. If you pick a name that is too similar to an existing one, your filing will be rejected and you will have to start over. Another mistake is not keeping business records separate from personal records from day one. The whole point of an LLC is liability protection, but if you mix personal and business finances, a court might ignore that protection. Open that business bank account right away and use it consistently.
Some owners also forget that an LLC is a legal structure, not a tax structure. By default, a single-member LLC is taxed as a sole proprietorship, and a multi-member LLC is taxed as a partnership. You can elect to be taxed as an S-corporation or C-corporation if it makes sense for your situation, but that requires a separate IRS election. If you have employees or expect to make a good profit, talking to a tax professional before you file can save you money in the long run.
When to Get Professional Help
If your LLC is straightforward, a solo owner with no employees, no shared ownership, and a simple business model, you can handle the filing yourself in an afternoon. The state's website is clear, and the forms are not complex. But if you have multiple owners, plan to bring in investors, own real estate, or want to understand your tax options before you commit, it makes sense to have an attorney review your setup. We see a lot of co-owners who did not have an operating agreement and ran into serious problems when one owner wanted out or disagreed on direction. An operating agreement is not required by Texas law, but it is strongly recommended if you have partners.
If you are in The Woodlands and ready to form your LLC, the Rolon Law Firm can walk you through the filing process, help you think through your structure, and make sure you set yourself up for success. Call us to discuss your business and get started on the right foot.