Forming a limited liability company in Texas is a sequence of filings, not a single event. The Certificate of Formation is the step most people know about, but the filings that come before and after it - name clearance, registered agent consent, EIN, franchise tax registration, beneficial ownership reporting - are where new owners lose time and, occasionally, their liability protection. The order matters, because several of the steps depend on an output from the step before.
This guide walks the Texas formation sequence as it is actually processed, in order, with the requirement behind each step. It describes procedure only. Whether an LLC is the right structure for your business, how a company agreement should be drafted, and how your entity should be taxed are legal and tax questions that belong with a Texas-licensed attorney and a qualified accountant respectively.
Clear the name
Search Secretary of State records for a distinguishable name, and search USPTO separately - state acceptance is not trademark clearance.
Appoint a registered agent
Texas resident or authorised organisation, physical Texas street address, written consent retained.
A PO box never qualifies
File the Certificate of Formation
Form 205, via SOSDirect or by mail. This is the filing that creates the entity.
Adopt a company agreement
Not filed with the state, and not optional in practice. Governs how the business actually runs.
Apply for the EIN
Free, at irs.gov, using the exact name on the stamped certificate.
Only after the state accepts
Open a business bank account
Certificate, EIN letter, company agreement and member identification.
Register with the Comptroller
Franchise tax account, plus a sales tax permit if you sell taxable goods or services.
Calendar the annual filings
Franchise tax report and Public Information Report, every year, with no reminder from the state.
Each step depends on the one before it. Applying for the EIN before the state accepts the certificate is the most common way this sequence goes wrong.
Step 1: Clear the name before you commit to it
Texas requires that an entity name be distinguishable in the records of the Secretary of State from any existing filing entity or reserved name. It must also include an appropriate designator - Limited Liability Company, Limited Company, or an accepted abbreviation such as LLC or L.L.C. Certain words are restricted and require additional approval or a licensed professional entity, most commonly words implying banking, insurance, or a regulated profession.
Name checks are done through the Secretary of State's records, most conveniently via the SOSDirect online system, with a telephone preclearance option also available. Two points that trip up first-time filers:
- Distinguishable is a narrow test. It is not the same as "not confusingly similar." Small differences may be enough for the state to accept a filing while still leaving you exposed to a trademark dispute.
- Acceptance is not a trademark. The Secretary of State does not clear your name against federal or common-law trademark rights. A separate search of the USPTO database, and typically counsel, is how businesses handle that risk.
If you are not ready to file immediately, Texas allows a name reservation for a limited period through its own form. Reserving is worth considering when your formation is waiting on funding, a partner signature, or a licence.
Step 2: Appoint a registered agent who meets the statutory requirements
Every Texas LLC must continuously maintain a registered agent and a registered office. The agent is the person or entity authorised to receive service of process and official notices. The requirements are specific:
- The agent is either an individual resident of Texas or an organisation registered to do business in Texas. The LLC cannot serve as its own agent.
- The registered office must be a physical street address in Texas. A post office box alone is not acceptable, because process must be capable of being delivered in person.
- The address must be one where the agent can be found during normal business hours.
- The agent must have consented to the appointment, in writing or electronically. Texas does not file the consent with the certificate, but the entity is required to keep it, and appointing someone without consent is a violation.
Owners often serve as their own agent to save the annual fee of a commercial service. That is permitted, but weigh two practical consequences: the registered office address becomes part of the public record, which is a real concern for home-based businesses, and someone must reliably be at that address during business hours. A missed service of process can lead to a default judgment entered without your knowledge.
A commercial registered agent service solves both problems for a modest annual fee and can be changed later by filing a change of registered agent form.
Step 3: File the Certificate of Formation (Form 205)
The Certificate of Formation is the document that brings the LLC into existence. Texas publishes Form 205 for limited liability companies. It can be filed online through SOSDirect, by mail, by fax, or in person, and the state charges a filing fee per document plus a card-processing fee for online submissions. Expedited processing is available for an additional per-document fee.
The certificate asks for a defined set of information:
| Item | What it means in practice |
|---|---|
| Entity name | The cleared name including the LLC designator, spelled exactly as intended |
| Registered agent and office | The consenting agent and the Texas street address |
| Governing authority | Whether the LLC is member-managed or manager-managed, plus the name and address of each initial member or manager |
| Purpose | Texas accepts a general purpose clause for most businesses; regulated activities require specific language |
| Organiser | The person submitting the filing, who need not be a member |
| Effective date | On filing, on a stated later date, or on a future event, within the statutory limit |
| Signature | Executed by the organiser |
The management election deserves a moment of thought. Member-managed means the members run the company directly. Manager-managed means members appoint managers - who may be members or outsiders - to run it. The choice affects who has authority to bind the company, and it appears in the public record. Changing it later means amending the certificate and, usually, the company agreement. Which structure suits a particular ownership arrangement is a question for an attorney.
Step 4: Adopt a company agreement
Texas calls the operating agreement a company agreement. It is not filed with the Secretary of State, is not part of the public record, and no state agency will ever ask to see it. It is also the document that determines how the business actually works when something goes wrong.
Without one, the default rules of the Texas Business Organizations Code fill the gaps, and those defaults are unlikely to reflect what the owners assumed. A company agreement typically addresses ownership percentages and capital contributions, how profits and losses are allocated and distributed, voting rights and decision thresholds, management authority and officer roles, admission of new members, transfer restrictions, buy-sell provisions on death, disability, divorce or departure, deadlock resolution, and dissolution.
Single-member LLCs benefit too. The agreement is a piece of the evidence that the company is a separate entity from its owner, which matters if anyone later argues that the liability shield should be disregarded.
Template agreements are widely sold, and they are a reasonable way to understand the vocabulary. They are a poor way to allocate control and money between real people with real disagreements ahead of them. Multi-member companies, in particular, should have the agreement drafted or reviewed by a Texas business attorney.
Texas LLC formation sequence
Search entity name availability
SOSDirect records search, plus a separate trademark search where the brand matters.
Reserve the name if filing is delayed
Optional, limited duration, separate form and fee.
Appoint a registered agent and obtain written consent
Texas street address, available during business hours, consent retained in company records.
File Certificate of Formation (Form 205)
Online via SOSDirect, or by mail, fax or in person. Expedited handling available for an added fee.
Receive the filed certificate and file number
Store the stamped certificate; downstream filings and the bank will ask for it.
Adopt a written company agreement
Not filed with the state. Draft or review with a Texas attorney, particularly for multi-member LLCs.
Apply for an EIN with the IRS
Free, direct from irs.gov. Use the exact legal name on the filed certificate.
File the FinCEN beneficial ownership report if required
Federal requirement administered by FinCEN; confirm current applicability and deadlines on fincen.gov.
Open a dedicated business bank account
Filed certificate, EIN letter, company agreement and member identification are the usual requirements.
Register with the Texas Comptroller
Franchise tax account, and sales and use tax permit if you sell taxable goods or services.
Check local permits and licences
City and county requirements, plus any state occupational licence for your industry.
Calendar the annual filings
Franchise tax report and Public Information Report, plus registered agent renewal.
Fees, forms and thresholds change. Verify each item against the Texas Secretary of State, the Texas Comptroller and the IRS before filing.
Step 5: Apply for the EIN after formation is confirmed
The Employer Identification Number is the federal tax identifier for the business, issued by the IRS. Apply after the Certificate of Formation is filed and accepted, because the application asks for the legal name and formation date of an entity that must already exist.
Applying is free and takes minutes through the IRS online application, which issues the number immediately during its published hours of operation. Applicants without a US taxpayer identification number use the alternative paper or fax routes. A responsible party - a real individual who controls the entity, not a service company - must be named on the application.
Two practical cautions. First, apply directly at irs.gov: numerous commercial sites charge a fee for a free federal filing. Second, enter the entity name exactly as it appears on the filed certificate, including punctuation and the designator. Mismatches between the EIN record, the state record and the bank record cause friction for years afterwards, from rejected filings to frozen accounts.
An EIN is generally required where the LLC has more than one member, has employees, files certain excise tax returns, or elects to be taxed as a corporation. Even where it is not strictly required, most banks want one, and using it instead of a personal social security number on business paperwork is good practice.
Step 6: Handle the federal beneficial ownership report
Separately from the state formation, the federal Corporate Transparency Act created a beneficial ownership information reporting regime administered by FinCEN, requiring many companies to report information about their beneficial owners and, for newer entities, their company applicants. Scope, exemptions and deadlines in this area have been the subject of significant regulatory and litigation activity, and the requirements applicable to any particular company can change.
Because of that volatility, check the current position directly on the FinCEN website at the time you form, and confirm with counsel whether your entity must report and by when. Do not rely on secondary sources, including this guide, for that determination.
Step 7: Separate the money immediately
A dedicated business bank account is where the liability shield either becomes real or quietly stops working. Mixing personal and business funds is the single most cited fact when someone argues that an LLC and its owner should be treated as the same thing.
Banks typically ask for the filed Certificate of Formation, the EIN confirmation letter, the company agreement, and identification for the authorised signatories. From the day it opens, run every business receipt and expense through that account, pay yourself by documented transfer rather than by paying personal bills from the business account, and keep the bookkeeping current.
Step 8: Calendar the recurring obligations
Formation is the beginning of a compliance calendar. Texas does not require an annual report to the Secretary of State in the way many states do, but it does impose ongoing obligations elsewhere.
- Franchise tax and Public Information Report. Administered by the Texas Comptroller, generally filed annually by taxable entities including LLCs, with a no-tax-due threshold below which tax is not owed but a filing may still be required. Thresholds, forms and due dates change - verify with the Comptroller each year.
- Sales and use tax. A permit and periodic returns are required if the business sells taxable goods or services in Texas.
- Federal and payroll tax filings. Determined by the tax classification of the LLC and whether it has employees.
- Registered agent maintenance. Changes of agent or registered office are reported to the Secretary of State on the applicable form. Letting the agent lapse can lead to involuntary termination of the entity.
- Local licences and permits. Set by city and county, and by industry regulators.
Put every date in a calendar with a reminder several weeks ahead, and keep the filed certificate, EIN letter, company agreement, minutes or written consents, and annual filings in one place. A well-kept company record book is inexpensive to maintain and expensive to reconstruct.
When to bring in professionals
Filing forms is administrative. The decisions around them are not. Talk to a Texas business attorney about entity choice, the company agreement, multi-owner arrangements, industry licensing and any transfer or investment terms. Talk to a CPA or tax adviser about tax classification, franchise tax exposure, payroll setup and whether an S corporation election makes sense for your circumstances.
Nothing in this guide is legal or tax advice, and it is not a substitute for either. It is a description of the procedural sequence, published so that the conversation you have with those professionals starts from an informed position.