Some links on this website may be affiliate links. If you purchase through them, we may earn a commission at no extra cost to you.
Starting an LLC in Texas comes down to one core filing: the Certificate of Formation (Form 205), submitted to the Texas Secretary of State with a $300 filing fee. Before you file, you need a business name and a registered agent with a physical Texas street address. Once the state approves your filing — typically within about a week online — your LLC officially exists.
This guide covers every step in order — name, registered agent, Form 205, operating agreement, EIN, tax registrations, and a business bank account — plus the annual compliance Texas founders owe each year, because the May 15 franchise tax deadline trips up most new Texas LLCs. Whether you’re launching in Houston, Austin, or Dallas, or forming from outside the United States, the steps below apply to you.
Table of Contents
- Why Form an LLC in Texas?
- Form in the State Where You Operate (The Home-State Rule)
- How Much Does a Texas LLC Cost?
- How to Start an LLC in Texas: Step by Step
- How Long Does Texas LLC Formation Take?
- Annual Compliance: Franchise Tax and the Public Information Report
- Texas LLCs for Non-US Founders
- Common Mistakes to Avoid
- FAQ
- Conclusion
Why Form an LLC in Texas?
Texas is one of the most popular formation states in the country, and the reasons go beyond the “no state income tax” headline:
- Liability protection. An LLC separates your personal assets from business debts and lawsuits. If the business is sued or can’t pay its bills, your personal assets are generally off the table.
- No state personal income tax. Texas doesn’t tax personal income, so pass-through LLC profits aren’t taxed again at the state level.
- A franchise tax most small LLCs don’t pay. Texas has a franchise (margin) tax, but the no-tax-due threshold is high — $2.65 million in annualized revenue for 2026–2027 reports — so most new LLCs owe $0.
- Credibility and structure. A formal entity makes opening bank accounts, signing contracts, and taking payments easier.
- Flexible management. Run it yourself (member-managed) or appoint managers, and set profit splits in your operating agreement.
For non-US founders: foreigners can own 100% of a Texas LLC — no US citizenship, residency, or Social Security Number required.
Form in the State Where You Operate (The Home-State Rule)
Before paying the $300, make sure Texas is where you should form. The rule is simple: form your LLC in the state where your business physically operates.
If you live and work in Texas, have employees or an office there, or serve Texas customers in person, Texas is your home state. Forming in a cheaper state instead doesn’t avoid Texas obligations — you’d have to register that LLC as a foreign LLC in Texas (a $750 filing), keep up compliance in both states, and still owe Texas franchise tax filings. For most people, that costs more, not less.
The exception is founders with no physical US presence at all — many non-US founders. If you run an online business from abroad with no US office, employees, or inventory, you can generally choose your state freely, so compare Texas with other popular states on fees, annual costs, and privacy first.
How Much Does a Texas LLC Cost?
| Item | Cost | When |
|---|---|---|
| Certificate of Formation (Form 205) | $300 | One-time, at filing |
| Registered agent | $0 if you serve as your own (Texas street address required); commercial services vary — check current pricing | Annual |
| EIN (federal tax ID) | Free from the IRS | One-time |
| Operating agreement | Free if you draft it yourself | One-time |
| Name reservation (Form 501, optional) | $40 | Holds a name for 120 days |
| Assumed name certificate / DBA (optional) | $25 | If you operate under a different name |
| Public Information Report | Free to file | Every year, due May 15 |
| Franchise tax | $0 for most small LLCs (annualized revenue at or below $2.65M for 2026–2027 reports) | Every year |
The $300 state fee is the same whether you file yourself or use a service, and paying online by card adds a small convenience fee (about 2.7%, roughly $8). A formation service instead charges $100 + state fee — meaning a $100 service fee on top of the same $300 state fee, not a flat hundred all-in. Your DIY first-year cost is often just the $300, but budget for a registered agent service if you don’t want your own Texas address on the public record.
How to Start an LLC in Texas: Step by Step
Step 1: Choose a Name for Your Texas LLC
Your LLC name must contain “Limited Liability Company,” “LLC,” or “L.L.C.”, be distinguishable from other businesses registered in Texas, and avoid restricted words like “Bank” or “University,” which require extra approval. Check availability first using the Secretary of State’s Taxable Entity Search (or SOSDirect) — a conflicting name will be rejected. Also check that the matching domain is available. You can reserve a name for 120 days with Form 501 ($40), though most founders skip it and file directly.
Step 2: Appoint a Registered Agent
Every Texas LLC must maintain a registered agent and registered office in Texas. The agent receives lawsuits, state notices, and tax correspondence for you.
The rules: the agent needs a physical Texas street address (a P.O. box alone doesn’t qualify) with someone available during normal business hours; it can be a Texas resident individual or an entity authorized to operate in Texas; it must consent to serve — naming an agent in your Certificate of Formation counts as your affirmation that they consented; and your LLC cannot serve as its own agent.
You can be your own agent if you have a Texas street address and are reliably there during business hours. Most founders hire a service instead — your agent’s address goes on the public record (so a home address gets published), and a service ensures legal documents are never missed. Registered Agents Inc includes one year of free registered agent service with its $100 + state fee formation package, and the agent’s address, not yours, appears on your public filings.
Step 3: File the Certificate of Formation (Form 205)
This filing creates your LLC. File online through the Secretary of State’s SOSDirect/SOSPortal system (fastest; evidence of filing is emailed to you) or by mail — fax filings are no longer accepted.
Form 205 asks for: your LLC’s name; your registered agent’s name and Texas street address; an initial mailing address; whether the LLC is member-managed or manager-managed; the names and addresses of the initial members or managers (this becomes public record); and the organizer’s name, address, and signature — no notarization required. A delayed effective date (up to 90 days out) is optional. The fee is $300, so double-check every field: fixing errors later means a Certificate of Amendment (currently $150) and a second wait.
Rather not deal with SOSDirect? Registered Agents Inc will prepare and file it for you in its $100 + state fee package, including a domain name, a website, and the first year of registered agent service.
Step 4: Create an Operating Agreement
Texas doesn’t require you to file an operating agreement, or technically to have one — but skipping it is a mistake. This internal contract spells out ownership percentages, profit splits, decision-making and voting, what happens if a member leaves or sells, and how the LLC would be dissolved. Even single-member LLCs should have one: banks routinely ask for it, and it’s key evidence that your LLC is a real, separate business. Draft it, sign it, and keep it with your company records.
Step 5: Get an EIN
An EIN is your LLC’s federal tax ID — required for a business bank account, employees, and federal taxes. It’s free from the IRS; never pay a third party just for the EIN itself. US founders with an SSN or ITIN can apply online and get it immediately. Non-US founders without an SSN can’t use the online system: complete Form SS-4 and submit it by fax or mail, writing “Foreign” in the SSN field. Processing takes several weeks (check current IRS timelines), so start as soon as your Certificate is approved, using your LLC’s exact legal name.
Step 6: Handle Taxes, Permits, and Licenses
You may also need a Texas sales tax permit (free, from the Comptroller) if you sell taxable goods or services in Texas; local licenses and permits — Texas has no general statewide license, but cities, counties, and industries like food and construction have their own rules; and an assumed name certificate (DBA, currently $25) for operating under a different name.
Step 7: Open a Business Bank Account
Bring your filed Certificate of Formation, EIN confirmation letter, operating agreement, and government-issued ID (a passport works for non-US founders). Non-residents can generally open accounts remotely with US business banking fintechs once the LLC and EIN are in place. Keep business and personal money strictly separate — commingling funds undermines your liability protection and makes tax time miserable.
How Long Does Texas LLC Formation Take?
Online filings through SOSDirect are typically approved within a few business days to about a week; mail filings take weeks. Expedited handling is available for an additional state fee — check current expedited fees and turnaround times with the Secretary of State before counting on them. Your LLC exists once the state files your Certificate of Formation (or on your delayed effective date). Budget one to two weeks from filing to bank-ready as a US founder; non-US founders should add several weeks, spent waiting on the IRS to process the faxed or mailed SS-4.
Annual Compliance: Franchise Tax and the Public Information Report
Keeping your LLC in good standing in Texas comes down to one annual deadline: May 15.
- The franchise tax applies to almost every Texas LLC. Texas treats LLCs as taxable entities for franchise tax purposes regardless of federal classification — even single-member LLCs. It’s calculated on your margin (roughly, revenue minus certain costs), not your profit.
- Most small LLCs owe $0. If annualized revenue is at or below the no-tax-due threshold — $2.65 million for 2026–2027 reports ($2.47 million for 2024–2025) — no franchise tax is due. Above the threshold, rates depend on industry and method (currently 0.75% for most businesses, 0.375% for retail and wholesale), and if the calculated tax is under $1,000, none is due.
- The Public Information Report is still mandatory. Even at $0 tax, every Texas LLC must file a Public Information Report (Form 05-102) with the Texas Comptroller by May 15 each year. It’s free and lists your members or managers, registered agent, and principal business address. (The old No Tax Due Report form was discontinued.)
- Missing it is expensive. A late report carries a $50 penalty, and continued delinquency can lead the Comptroller to forfeit your LLC’s right to transact business in Texas until you reinstate.
- Extensions exist. Form 05-164 extends the deadline to November 15 (most tax owed is still due May 15).
Keep your registered agent in place continuously — dropping one can lead to involuntary termination. Texas has no separate Secretary of State annual report; the Comptroller’s filing is the annual obligation.
Texas LLCs for Non-US Founders
Texas works well as a home state for foreign founders. What differs for you:
- Ownership: You can own 100% of a Texas LLC — no US citizenship, residency, visa, or SSN required.
- Registered agent: Without a Texas street address of your own, a commercial registered agent is effectively required. Note that Form 205 makes initial members’ or managers’ names and addresses public, so structure with privacy in mind.
- EIN: Apply with Form SS-4 by fax or mail (Step 5) right after formation — it’s the longest part of the process.
- Federal taxes: A foreign-owned single-member LLC is disregarded by default for federal purposes, but it still has a real annual IRS obligation: Form 5472 attached to a pro-forma Form 1120, due April 15 (automatic extension available). The penalty for not filing is substantial (currently $25,000), so diarise it from day one. Whether you owe US income tax depends on your income sources and any tax treaty — get cross-border advice before trading.
- Banking: No US visit needed — remote-friendly US business accounts can generally be opened from abroad once you have the EIN.
Common Mistakes to Avoid
- Forming in another state while operating in Texas. You’ll pay the $750 foreign registration anyway and maintain compliance in two states.
- Listing a registered agent who hasn’t consented, or using a P.O. box as the registered office — both can get your filing rejected or your LLC terminated later.
- Skipping the Public Information Report because “no tax is due.” The PIR is required even at $0 tax — the most common Texas compliance failure.
- Not having an operating agreement. Banks ask for it, and it proves your LLC is genuinely separate from you.
- Mixing personal and business money. One account for everything weakens your liability protection.
- Forgetting sales tax or local permits. Forming the LLC doesn’t license your activity — check Comptroller and city requirements.
- (Non-US founders) Missing Form 5472. Formation is the easy part; the annual IRS return is where foreign owners get penalized.
FAQ
How much does it cost to start an LLC in Texas?
The state filing fee is $300 for the Certificate of Formation (Form 205), and filing yourself, that can be your only required upfront cost. If you use a formation service, Registered Agents Inc charges $100 + state fee ($100 plus the $300 Texas fee), including the state filing, a domain name, a website, and one year of free registered agent service.
How long does it take to form a Texas LLC?
Online filings are typically approved within a few business days to about a week; mail takes weeks. Non-US founders should add several weeks for the EIN (fax or mail, no SSN).
Do I need a registered agent in Texas?
Yes. Every Texas LLC must maintain a registered agent with a physical Texas street address, available during business hours, who has consented to serve. You can act as your own agent if you qualify, but most founders use a service to keep their home address off the public record.
Does a Texas LLC have to pay tax every year?
Your LLC must file every year, but most small LLCs don’t pay. The franchise tax no-tax-due threshold is $2.65 million in annualized revenue for 2026–2027 reports, so smaller LLCs owe $0 — but the Public Information Report (Form 05-102) is still due every May 15, with a $50 late penalty.
Can a non-US resident own a Texas LLC?
Yes, completely. Foreigners can own 100% of a Texas LLC — no US citizenship, residency, or SSN required. You’ll need a Texas registered agent, an EIN (Form SS-4 by fax or mail), and an annual Form 5472 with pro-forma Form 1120 to the IRS. Texas franchise tax filings apply the same as for any other LLC.
Does Texas require an operating agreement?
Texas doesn’t require one, but you should create one anyway. It documents ownership, profit splits, and decision-making; banks commonly require it; and it helps prove your LLC is separate from you if your liability protection is ever challenged.
Conclusion
Forming a Texas LLC is straightforward: choose a name, appoint a registered agent, file Form 205 with the $300 state fee, write your operating agreement, get your EIN, and open a business bank account. Then file the Public Information Report every May 15 — even when, like most small LLCs, you owe $0 in franchise tax.
If you’d like the formation handled for you, Registered Agents Inc will file your Texas LLC for $100 + state fee — including the state filing, a domain name, a website, and one year of free registered agent service, with no SSN needed if you’re forming from abroad. Prefer the DIY route? The Secretary of State’s online system is open whenever you’re ready.
This article is for general educational information only and is not legal, tax, or financial advice. LLC formation and tax rules change, and your situation may have specific requirements — consult a qualified attorney or tax professional, and verify current fees and forms with the Texas Secretary of State and the Texas Comptroller before filing.