Start Your Business with the Right Essentials
If you’re wondering, “What exactly is an LLC?”—you’re not alone.
Many aspiring entrepreneurs start with little understanding of what a Limited Liability Company is or how to form one; they just know it’s an important step for their business. But don’t worry! While starting an LLC might seem complex at first glance, it’s actually a clear, step-by-step process.
By following the steps below, you can have your LLC set up and ready to operate in no time:
DISCLOSURE: While AdminPro assists with the LLC formation process, we are not a law firm or providing legal advice.
Forrm your LLC starting at $0 + state filing fees.
Step 1: Name your LLC
Choosing the right name is the first step in establishing your LLC. Your business name must:
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Include an appropriate designation, such as "LLC" or "Limited Liability Company."
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Avoid prohibited terms, like words suggesting governmental affiliation.
We check the Texas Secretary of State's database to ensure your name is available.
Reserving your LLC name
When you find the perfect business name but aren’t ready to make an LLC, you can reserve it by filing with your secretary of state’s office.
Step 2: File Formation Application
The secong step in registering your business is to file the appropriate formation document with your state. You can typically download this form for free from your state’s official website. Filing fees in Texas are $300. We like to ensure you know the state’s specific costs to budget accordingly.
Once your filing is approved, you’ll receive a state-issued Certificate of Formation from the Secretary of State. This certificate officially establishes your LLC as a legal entity, allowing you to start conducting business. After you begin operations, you will be required to file annual reports and depending on the business you may be required to pay quarterly sales tax fees to maintain your LLC’s good standing.
These fees go by various names, such as Sales Tax Reports, Public Information Reports, and Franchise Tax Reports. These reports are mandatory and are essential to keeping your business compliant with state regulations.
Step 3: Choose a Registered Agent
A registered agent is a person or business entity responsible for receiving important documents on behalf of your LLC. These documents can include tax and regulatory notices, and other official correspondence from the state.
The where a registered agent and office ensures your LLC has a designated address for receiving legal notifications during standard business hours.
In Texas, the requirements for a registered agent are as follows:
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An individual 18 years or older who is a resident of Texas.
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A business entity authorized to conduct business in Texas (like a professional registered agent service). The entity must have a physical address in Texas.
Physical Address in Texas:
The registered agent must have a physical street address in Texas (P.O. Boxes are not acceptable). This address is where legal and official documents will be delivered.
Availability During Business Hours:
The registered agent must be available to receive documents during regular business hours (Monday through Friday, 8 AM to 5 PM).
Ultimately, you can hire AdminPro to handle this responsibility, reduce your paperwork, and help you fulfill all the necessary requirements so you can focus on building your business.
Step 4: Create an Operating Agreement
An Operating Agreement outlines the ownership structure and operating procedures of your LLC. While not legally required in Texas, it is highly recommended. This document define roles and responsibilities of members or managers, outlines profit distribution and decision-making processes and establishes rules for adding or removing members.
This document protects your business from internal disputes and provides clarity among stakeholders. This is sometimes a requirement when applying for financial grants or loans.
Step 5: Apply for EIN
An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is a unique 9-digit number issued by the IRS to identify a business entity for tax purposes. It is required for businesses that need to file business tax returns.
There are three ways to apply for an EIN ( Form SS-4 ):
Online Application
Mail
Fax
Regardless of the method you choose, obtaining an EIN is an essential step in establishing your business and complying with federal tax laws.
Step 7: Comply with Tax Requirements
Before you can start operating your business in Texas, you’ll need to obtain and file the required licenses and permits with state and local agencies (if applicable), as well as ensure you meet your tax obligations. If you are required to pay any quarterly or monthly sales tax you will receive correspondents from the Texas Comptroller's Office with the information needed.
Texas has specific requirements for business licenses, permits, and tax filings, which can vary depending on your business type and location. To find out what you need, you can visit the Texas Comptroller's website for more information.
Additionally, local government offices may have their own requirements, so it’s important to check with your city or county as well.
As your Registered Agent, AdminPro makes sure you are aware of your obligations so that you business stays compliant.
What to Expect After Filing Your LLC in Texas
Once you’ve filed your LLC formation in Texas, you’re one step closer to officially launching your business. Here's what to expect next:
Certificate of Formation
After filing your LLC with the Texas Secretary of State, you will receive an official Certificate of Formation. This document is proof that your LLC has been legally established in the state of Texas. You will need to keep this document safe as it is essential for various future processes, such as opening a bank account and securing licenses.
EIN Letter from the IRS
If you applied for an Employer Identification Number (EIN) as part of your LLC formation process, you will receive an EIN letter from the IRS. This letter is confirmation of your EIN, which acts as your business’s federal tax identification number. This is crucial for filing taxes, opening a business bank account, and hiring employees.
Mail from the Texas Comptroller
Soon after your LLC is formed, you will receive important mail from the Texas Comptroller of Public Accounts. This will contain essential information for the following:
Franchise Tax: You’ll need to file an annual franchise tax report to stay in compliance with the state.
Sales Tax: If your business sells taxable goods or services, you may be required to file for a sales tax permit.
Public Information Report (PIR): This must be filed annually to update your business’s contact information with the state.
**Be sure to read these documents carefully and take the necessary steps to maintain compliance with Texas regulations.
Opening a Business Bank Account
Once you’ve received your Certificate of Formation and EIN letter, you can move forward with opening a business bank account. This is an important step for keeping your personal and business finances separate, which is essential for maintaining your LLC’s limited liability protection.
To open a business account, you will typically need:Your Certificate of Formation (official proof that your LLC is registered)Your EIN letter (from the IRS)
Note: Some banks may also require an Operating Agreement for your LLC, especially if your business has multiple members. An operating agreement outlines the management structure and responsibilities within the company. Even though Texas doesn’t require an operating agreement by law, having one is highly recommended to clarify internal operations and protect your LLC’s status.
By following these steps, you’ll be well on your way to successfully operating your LLC in Texas. Be sure to keep all documents organized, stay compliant with state requirements, and consult with AdminPro if you have any questions along the way.
Ready to Form Your LLC?
If you were feeling a bit uncertain about forming an LLC before reading this, you're not alone—many new business owners feel the same way. The process can seem overwhelming at first, but now that you understand the steps involved you're unstoppable!
If you have additional questions questions feel free to contact us. We're here to help!
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Do I need a registered agent for my LLC?Yes, Texas requires LLCs to have a registered agent to receive legal and tax documents on behalf of the business. If you form your business with AdminPro we act as your registered agent.
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- What is an Operating Agreement, and is it required in Texas?An Operating Agreement outlines the ownership and operating procedures of an LLC. It’s not legally required in Texas but highly recommended.
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What is annual compliance, and why is it important?Annual compliance involves filing mandatory reports, maintaining good standing with the state, and updating business records. This ensures your business remains legally protected and active.
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- What happens if I don’t file my annual reports?Failure to file can lead to penalties, loss of good standing, or even dissolution of your business by the state.
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Why should I form an LLC?An LLC (Limited Liability Company) is a business structure that provides personal liability protection for its owners while offering flexible tax options.
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How long does it take to form a business in Texas?Processing times for LLC formation depend on the state workload. Standard processing typically takes 3–5 business days, but expedited options are available.
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Do I have to pay taxes if I form an LLC in Texas?Texas does not have a state income tax. However, LLCs may be subject to franchise tax and federal taxes depending on their structure. Add on annual compliance service to make sure you stay compliant.
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Can I change my LLC name after forming it?Yes, you can file an amendment with the Texas Secretary of State for $125 to change your LLC name.
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Can I use my home address for my LLC?es, you can use your home address, but many business owners prefer a registered agent to keep their personal address private.