Should you form your LLC in Texas? We’ve collected the relevant information that will help you make this decision.
- Large and wealthy population base
- Business-friendly environment
- Among top 10 "Best States for Business" (Forbes 2016)
- Home to two of the top 20 metro areas in the US
- Complex franchise tax structure
- Competitive market
Cost of doing business
- $300 filing fee / $25 periodic report
- About 4.5%
- Owner is disclosed in original filing
Forming an LLC in Texas
Your official name will need to end with one of the following signifiers (or abbreviation of): “Limited liability company”, “Limited company” “LLC”, or “L.L.C.” In addition, it is required that the name of your business is not intentionally misleading to consumers, for any reason. Your company’s new name must also be completely unique, and not deceptively similar to any other organizations name or trademarks. There are also restrictions on terms that would logically be used to represent educational or Veteran’s organizations. The word “lottery” is also ineligible for use in a business’s name. Do a FREE name search now.
The owners of an LLC are called “members.” The following information must be required regarding your LLCs members:
- Required number of members
Texas LLCs must have at least one member or manager listed in their incorporation documents.
- Age restrictions
LLC members in Texas may be of any age.
- Residence restrictions
There are no residency restrictions imposed on LLC members in Texas.
- What information needs to be included in the articles of organization?
LLC Members in Texas are required to list their name and address in their articles of organization.
Requirements for the articles of organization
The articles of organization is a document that must be filed to form your LLC. It must include:
Registered agent Information
All Texas LLCs must have a registered agent on file and submit their Texas name and address (which cannot be a P.O. Box). This agent is required to be accessible during standard business hours and acts as the state’s point of contact with the company. Learn more about registered agents in Texas.
Additional Texas filing requirements
Professional service companies are permitted to form under the professional limited liability company (PLLC) structure.
Texas LLC taxation and fee requirements
There are several tax and fee requirements that must be addressed by LLCs in Texas. They are as follows:
All states have complex taxation requirements. Texas uses a franchise tax system which comes out generally to 4.5% but varies. For more information regarding taxes in Texas, it is advised that you visit the state’s official business related website.
Annual report requirements
While LLCs in Texas are not required to file a traditional annual report; they must file a Franchise Tax and Public Information Report before May 15th every year. This report is to be sent to the Comptroller of Public Accounts. The cost of this filing varies on the taxes that your LLC pays. Learn more about annual reports.
Tax identification numbers
Texas requires an EIN (employee identification number) for all LLCs that will have employees, and most banks will require one to open accounts. Texas does not require LLCs to obtain state tax ID numbers. Learn more about EINs.
Business license requirements
The business licenses and permits required in Texas vary wildly depending on the county or municipality where your new LLC is located. If you would like to see more in-depth information on licenses and permits, please feel free to visit the content in our learning library that covers business licenses and permits.