How to Form an LLC in Texas

Everything you need to form a Limited Liability Company in Texas (TX). Filing fee: $300 | Processing time: 3-5 business days

Filing Fee
$300
Annual Report
No annual report; franchise tax report due annually (no tax if revenue under $2.47 million)
Processing Time
3-5 business days
Online Filing
Yes

State Income Tax

No state income tax; franchise (margin) tax on revenue over $2.47 million

Steps to Form an LLC in Texas

1

Check LLC name availability with the Texas Secretary of State

2

Designate a registered agent in Texas

3

File a Certificate of Formation with the Texas Secretary of State

4

Pay the $300 filing fee

5

Obtain an EIN from the IRS

6

Draft a Company Agreement (Operating Agreement)

7

File the annual franchise tax report with the Texas Comptroller

Step-by-Step Texas LLC Formation Guide

Texas is one of the most popular states for LLC formation, with no state income tax and a massive, diversified economy. Filing a Certificate of Formation with the TX Secretary of State costs $300, and online filing is available for quick processing. While Texas does not impose an income tax, it does levy a franchise (margin) tax on businesses with revenue exceeding $2.47 million, which is an important consideration for growing companies.

Step 1: Verify Your LLC Name Availability

Search the Texas Comptroller's and Secretary of State's databases to ensure your desired LLC name is available. Your name must include 'Limited Liability Company,' 'LLC,' or 'L.L.C.' and be distinguishable from existing entities. Texas allows name reservations for 120 days by filing Form 501 with the Secretary of State for a $40 fee.

Step 2: Designate a Registered Agent

Texas requires every LLC to have a registered agent with a physical street address in the state. Your agent must be available during business hours to receive service of process and official correspondence. You can appoint yourself, a trusted individual, or a professional registered agent service—many Texas entrepreneurs use professional services to keep their personal address off public records.

Step 3: File Your Certificate of Formation

File your Certificate of Formation (Form 205) with the Texas Secretary of State, paying the $300 filing fee. Online filing through SOSDirect is the fastest option, with most filings processed within a few business days. The certificate requires your LLC name, registered agent information, management structure, the purpose of the LLC, and the names of the governing persons or organizers.

Step 4: Create an Operating Agreement

Texas does not mandate an operating agreement by statute, but creating one is critical for any serious business. Your agreement should detail member contributions, ownership percentages, profit distribution, management authority, and dissolution procedures. Texas courts regularly enforce well-drafted operating agreements, making this document your primary tool for internal governance.

Step 5: Obtain Your EIN from the IRS

Apply for a free Employer Identification Number through the IRS website. Since Texas has no state income tax, your EIN will be your primary tax identification for federal returns, banking, and employment. The online application is simple and provides your EIN immediately.

Step 6: Register for Texas Taxes

Register with the Texas Comptroller of Public Accounts for applicable taxes, including sales and use tax and the franchise (margin) tax. Texas has a 6.25% state sales tax plus local additions, and you will need a sales tax permit before collecting taxes. The franchise tax applies to businesses with total revenue exceeding $2.47 million, at a rate of 0.375% to 0.75% depending on your business type.

Step 7: Open a Business Bank Account

Open a business bank account with your Certificate of Formation and EIN. Texas has one of the largest banking sectors in the country, with banks of all sizes offering business-friendly products and services. Maintaining distinct business finances is essential for preserving your LLC's legal protections and simplifying your franchise tax filings.

Step 8: File Your Annual Franchise Tax Report

Texas LLCs must file an annual franchise tax report with the Comptroller by May 15 each year. Even if your LLC owes no tax—because it falls below the $2.47 million revenue threshold—you are still required to file a No Tax Due report. Failing to file can result in penalties and eventually forfeiture of your LLC's right to transact business in Texas.

Texas's combination of no state income tax, a massive economy, and a pro-business culture makes it one of the premier states for LLC formation. Be sure to file your annual franchise tax report by May 15, even if your LLC falls below the taxable threshold. With proper compliance and a strong operating agreement, your Texas LLC is positioned to thrive in one of the nation's most dynamic business environments.

Pros of Forming in Texas

  • ✓No state income tax for individuals
  • ✓Massive and diverse economy — second largest in the US
  • ✓No franchise tax for businesses with revenue under $2.47 million

Cons of Forming in Texas

  • ✗Higher filing fee of $300
  • ✗Franchise tax applies to larger businesses
  • ✗Some cities have high property taxes

Best For

Businesses of all sizes seeking no state income tax in the second-largest US economy with a huge consumer market.

Frequently Asked Questions About Texas LLCs

How much does it cost to form an LLC in Texas?▼
The filing fee for forming an LLC in Texas is $300, paid to the Texas Secretary of State. This is one of the higher filing fees in the country. The fee covers the filing of your Certificate of Formation, which can be submitted online or by mail.
How long does it take to process an LLC filing in Texas?▼
Standard processing for Texas LLC filings takes approximately 5 to 7 business days. Texas offers expedited processing for an additional fee, which can reduce the wait time significantly. Online filings through SOSDirect are typically the fastest option.
Does a Texas LLC need to file an annual report?▼
Texas does not require a traditional annual report for LLCs. However, all Texas LLCs must file an annual franchise tax report with the Texas Comptroller of Public Accounts. Even if your LLC owes no franchise tax, the report must still be filed. The no-tax-due threshold is $2.47 million in total revenue, so many small businesses owe nothing but must still file the report.
What are the registered agent requirements for a Texas LLC?▼
Texas requires every LLC to maintain a registered agent with a physical street address in the state. The agent can be a Texas resident, a domestic corporation, or a foreign corporation authorized to do business in Texas. The registered agent is responsible for accepting service of process and official government correspondence on behalf of the LLC.
Is an operating agreement required for a Texas LLC?▼
Texas does not legally require LLCs to have a company agreement (Texas's term for an operating agreement). However, the Texas Business Organizations Code strongly encourages having one. A company agreement should outline the management structure, member contributions, profit and loss allocation, voting rights, and dissolution procedures.
When does a Texas LLC need an EIN?▼
Your Texas LLC needs an EIN if it has multiple members, employs workers, or elects to be taxed as a corporation. An EIN is also required to open a business bank account in most cases. You can apply for an EIN at no cost through the IRS website and receive it immediately online.
How does an LLC compare to an S-Corp or sole proprietorship in Texas?▼
Texas has no state individual or corporate income tax, which is a major advantage for all business structures. A sole proprietorship is the simplest but provides no liability protection. An LLC offers liability protection with no state income tax on pass-through earnings. An S-Corp election is primarily beneficial for reducing federal self-employment taxes, since Texas has no state income tax. However, all business entities may be subject to the Texas franchise (margin) tax if revenue exceeds the no-tax-due threshold.
What is the Texas franchise tax (margin tax)?▼
The Texas franchise tax, also known as the margin tax, is imposed on businesses with total revenue exceeding $2.47 million. The tax rate is generally 0.375% for retail and wholesale businesses or 0.75% for other businesses, calculated on the taxable margin (total revenue minus certain deductions). LLCs below the no-tax-due threshold still must file an annual franchise tax report. This is effectively Texas's substitute for a corporate income tax.
What makes Texas attractive for LLC formation despite the higher filing fee?▼
Despite the $300 filing fee, Texas is one of the most popular states for LLC formation due to its lack of state income tax and a large, diverse economy. The state's business-friendly regulatory environment, no corporate income tax, and strong legal protections for business owners make it highly attractive. Additionally, Texas's franchise tax only applies to businesses with significant revenue, meaning most small LLCs pay nothing beyond the filing fee.

Calculate Your Texas LLC Costs

Get a detailed cost breakdown for forming your LLC in Texas, including filing fees, registered agent costs, and more.

Use the Cost Calculator

Form an LLC in Other States

AlabamaAlaskaArizonaArkansasCaliforniaColoradoConnecticutDelawareFloridaGeorgiaHawaiiIdahoView all 50 states →
Legal Info Network

Related legal resources

Part of a consumer legal information network published by Number One Son Software Development. Aggregated from publicly available sources.

Legal Cost Guide
What common legal services cost — fees, court costs, alternatives
Rehab Cost Guide
Medical rehabilitation and addiction treatment costs
Insurance Calc
Insurance premium calculators and state minimums
Claim Snap
Insurance claim filing processes by claim type and state
Injury Claim Calculator
Estimate personal injury settlement ranges by state and injury type
Truck Accident Guide
State-by-state truck accident law and claim process

Legal notice: Information provided is for general educational purposes only and is not legal advice. Laws vary by jurisdiction and change over time. For guidance about your specific situation, consult a licensed attorney in your state.

© 2026 Number One Son Software Development. Publisher of the Legal Info Network.