How to Start an LLC in Texas: Certificate of Formation, Franchise Tax, and the Filings That Follow

A Texas LLC exists once the Secretary of State accepts a Certificate of Formation, usually Form 205 (opens in a new tab). Before you file, you pick a name that is distinguishable in state records and carries an LLC identifier, line up a registered agent who agrees to serve, give a Texas street address for the registered office, and decide whether members or managers will run the company at the start. The Form 205 PDF lists a $300 filing fee as of October 1, 2026. After the state accepts the certificate, the work shifts to a company agreement, an EIN, a Texas franchise tax account, the annual Public Information Report or Ownership Information Report, and any sales tax, professional, local or employer registrations that fit the business.

What are the steps to start a Texas LLC?

The order matters because each filing depends on the one before it. The Form 205 instructions (opens in a new tab) and the Comptroller's franchise tax requirements (opens in a new tab) point to this sequence:

1. Choose a name that is distinguishable in the Secretary of State's records and includes an LLC identifier.
2. If you want to hold the name before you file, reserve it for 120 days with Form 501.
3. Choose a registered agent and get that person's or company's consent.
4. Pick a Texas registered office where someone can personally deliver legal papers during normal business hours.
5. Complete Form 205 with the name, agent, office, governing persons, organizer and purpose.
6. File Form 205 with the Secretary of State and pay the filing fee.
7. After acceptance, keep the filed certificate and put the company agreement and business records in place.
8. Get an EIN from the IRS and decide how the LLC will be taxed at the federal level.
9. Set up the Texas Comptroller account and keep up with franchise tax reporting and the annual information report.
10. Add any sales tax permit, professional license, local permit or employer registration the business needs.

The sections below take these in turn.

What name can a Texas LLC use?

Under Business Organizations Code Chapter 5 (opens in a new tab), including Section 5.053, a proposed LLC name has to be distinguishable in the Secretary of State's records from existing filing-entity names, registered foreign entities, certain assumed names, and name reservations or registrations. The name must also contain "limited liability company," "limited company," or an abbreviation of one of those phrases. Form 205 gives "LLC" as the usual abbreviation. A name cannot suggest that the LLC does business it is not authorized to do, and it cannot falsely imply a tie to a government body.

Reserving a name is optional. The Form 501 instructions (opens in a new tab) describe a 120-day reservation with a $40 fee, and the reservation can be renewed during the 30 days before it ends.

If the LLC will regularly do business under a name other than its legal name, it files an assumed name certificate. The Form 503 instructions (opens in a new tab) list a $25 fee. An assumed name certificate reports a name; it does not create an LLC.

Name approval is also separate from trademark rights. The Secretary of State's trademark FAQs (opens in a new tab) explain that approval of an entity name speaks only to distinguishability in state records and does not authorize use that violates another person's trademark or other legal rights. When the brand itself matters to the business, a separate trademark review is worth planning for, and you can look at intellectual property law firms in Texas for that question.

Who can be the registered agent?

A registered agent receives service of process and other official communications for the LLC. According to the Form 205 instructions (opens in a new tab) and Chapter 5 (opens in a new tab):

• The agent can be an individual who lives in Texas.
• The agent can be a domestic entity, or a foreign entity registered to do business in Texas.
• The LLC cannot name itself as its own registered agent.
• The agent must consent in writing or electronically, and that consent does not have to be filed with Form 205.
• The registered office must be a Texas street address where process can be personally served on the agent during normal business hours.
• A mailbox-only address or a telephone-answering-service address does not qualify.

Form 205 must state the agent's name and the registered office address. A commercial registered agent service sets its own price, and that price is not a state formation fee.

What goes in Form 205?

Business Organizations Code Chapter 3 (opens in a new tab), Section 3.005, requires the certificate to state the entity's name and type, its purpose, its duration if it is not perpetual, the initial registered office and registered agent, an initial mailing address, and information about the organizer. The section also allows additional provisions that are consistent with the law.

Form 205 (opens in a new tab) turns that into practical fields:

• Entity name and type
• Registered agent and registered office
• Whether the LLC initially has managers
• Initial managers, or initial members if there are no managers
• Purpose
• Organizer
• Supplemental provisions
• Effectiveness of the filing

The "managers or members" choice matters later. Under Chapter 101 (opens in a new tab), Section 101.251, the governing authority consists of managers if the certificate or the company agreement provides for manager management; otherwise it consists of the members.

Form 205 also warns that forming an LLC does not by itself authorize it to carry on an activity that requires a license the LLC cannot hold.

How much does formation cost, and how long can it take?

The Form 205 PDF lists a $300 filing fee. The Secretary of State's filing options page (opens in a new tab) points filers to the online SOSPortal, and the agency's announcement about the change (opens in a new tab) says SOSPortal replaces SOSDirect and SOSUpload as of September 29, 2026. Filing by mail or delivery is also an option on the form. For the routine processing time of an online or mailed filing, confirm the current figure with the Secretary of State.

Texas Express (opens in a new tab) adds faster review for an extra fee in addition to the filing fee. These are review periods, and they do not guarantee that a filing will be accepted.

A single total is hard to state, because name reservations, assumed names, expedited review, commercial agent services, local permits, professional licenses and tax elections vary from one business to another.

What happens after the state accepts the certificate?

The first internal document is the company agreement. Texas law uses that term for what many people call an operating agreement. Section 101.001 (opens in a new tab) defines it as an agreement of the members about the company's affairs or the conduct of its business, and the definition covers written, implied or oral agreements. Section 101.052 says the company agreement governs relations among the members, managers, officers, assignees and the company, and that Chapter 101 fills in where the agreement is silent. Form 205 does not require you to file the agreement with the Secretary of State, so it stays a record the company keeps.

The agreement also connects to liability. Section 101.114 (opens in a new tab) says that, except as and to the extent the company agreement specifically provides otherwise, a member or manager is not liable for a debt, obligation or liability of the LLC, including one under a court judgment, decree or order. How that language applies to a particular owner or situation depends on the facts and the agreement, which is a question for a Texas attorney.

What federal filings and reports apply?

EIN. The IRS issues Employer Identification Numbers. The Form SS-4 instructions (opens in a new tab) describe the responsible party as the person who ultimately owns or controls the entity or has authority over its funds and assets, and changes to that information generally must be reported to the IRS within 60 days.

Default tax classification. Under the IRS LLC classification FAQ (opens in a new tab), a domestic LLC with one member is generally disregarded as separate from its owner for federal income tax, and a domestic LLC with two or more members is generally classified as a partnership. An LLC can elect to be treated as a corporation with Form 8832.

S corporation election. An eligible LLC can elect S corporation status with Form 2553. That is a federal tax election, and the Form 1120-S instructions (opens in a new tab) cover its timing. The IRS says a timely Form 2553 is treated as a corporate classification election if the entity meets the S corporation requirements.

Beneficial ownership reporting. FinCEN's August 11, 2026 final rule (opens in a new tab) exempts domestic U.S. companies and U.S. persons from the revised beneficial ownership (BOI) reporting requirements. Certain foreign entities registered to do business in the United States may still have reporting duties.

What Texas filings follow formation?

Texas franchise tax applies to taxable entities, including Texas LLCs. The 2026 franchise tax instructions (opens in a new tab) set the no-tax-due threshold at $2,650,000 in annualized total revenue, up from $2,470,000 for the 2024 and 2025 report years. An entity at or below the threshold owes no franchise tax, and since reports due in 2024 it no longer files a No Tax Due Report. It still files a Public Information Report (Form 05-102) or an Ownership Information Report (Form 05-167), according to the Comptroller's PIR and OIR requirements (opens in a new tab).

The Franchise Tax Overview (opens in a new tab) says reports are generally due May 15 each year. How a first report's accounting period and due date work depends on when the entity formed and its accounting year, so the Comptroller's instructions are the place to check for a new LLC.

Late filing carries penalties. The Comptroller's franchise tax FAQ (opens in a new tab) states a $50 penalty for each late report, even when no tax is due. Tax Code Section 171.362 (opens in a new tab) adds a 5 percent penalty for failing to pay tax or file a report, another 5 percent if the failure continues past 30 days, and a minimum penalty of $1.

Which other registrations might a Texas LLC need?

Formation is only the entity filing. Depending on what the business does, other registrations may apply:

• Sales tax permit. The Comptroller (opens in a new tab) says a business needs a Texas sales and use tax permit if it sells, leases or rents taxable tangible personal property, sells taxable services, or meets the out-of-state seller threshold. The application is online or on Form AP-201, there is no permit fee, and a security bond may be required.
• Local business licenses. Texas does not use one statewide general business license for every activity. Requirements vary by city, county, location and type of business, so the local offices are the place to ask.
• Professional licenses. Regulated occupations go through the licensing agency for that field.
• Employer registration. A business with employees may need to register with the Texas Workforce Commission and report unemployment tax, depending on its workforce and circumstances. Texas also lets employers opt out of workers' comp; see workers' comp rules for a first employee (opens in a new tab).

For these items, confirm what applies with the relevant city, county, licensing agency and the Texas Workforce Commission.

Do you need a lawyer or an accountant to form a Texas LLC?

The Form 205 instructions (opens in a new tab) provide the formation form and say it is not a substitute for advice from an attorney or a tax professional. They do not say a lawyer must file it. The Secretary of State's legal responsibilities page (opens in a new tab) says the Business and Public Filings Division cannot give legal advice or legal referrals and directs people with legal questions to private attorneys.

An accountant is not listed as a required filer either. Questions about federal tax classification, payroll, sales tax, franchise tax and an S corporation election can call for tax-professional help, depending on the structure and the activity. A Texas attorney or tax professional can analyze a specific situation.

Frequently asked questions about starting an LLC in Texas

Can one person form an LLC in Texas?

Yes. The IRS describes a domestic LLC with one member as disregarded by default for federal income tax, which means the LLC is generally not treated as separate from its owner for that purpose. Form 205 still asks for the same name, agent, office and organizer information.

Does a DBA replace forming an LLC?

No. An assumed name certificate lets a business operate under a name other than its legal name, and the Form 503 instructions list a $25 fee. It does not create a limited liability company.

Does a Texas LLC still file something when it owes no franchise tax?

Yes. At or below the $2.65 million threshold the LLC owes no franchise tax and files no No Tax Due Report, but it still files a Public Information Report or Ownership Information Report. A report filed late can carry a $50 penalty.

Does a domestic Texas LLC file BOI information with FinCEN in 2026?

FinCEN's August 11, 2026 final rule exempts domestic U.S. companies and U.S. persons from the revised beneficial ownership reporting requirements. Foreign entities registered to do business in the United States may still have obligations under the rule.

A next step

If your questions go beyond the filings, such as a company agreement, a tax election or a trademark, you can look at business and intellectual property practice areas and compare law firms in Texas, or browse the other legal guides on starting and running a business.