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A Step-by-Step Guide on How to Set Up an LLC in Texas

A Step-by-Step Guide to Setting Up an LLC in Texas

Establishing a Limited Liability Company (LLC) is a popular choice for small businesses due to its flexible structure and liability protection. If you’re considering setting up an LLC in Texas, this step-by-step guide will walk you through the process. From choosing a name to filing the necessary paperwork, follow these instructions to ensure a smooth and successful LLC formation in the Lone Star State.

  1. Choose a Name for Your LLC:

    Selecting a unique and distinguishable name is the first step in forming your LLC. Ensure that the name complies with Texas state laws and doesn’t infringe on existing trademarks. You can check the availability of your desired name through the Texas Secretary of State’s website.

  2. Appoint a Registered Agent:

    A registered agent is an individual or entity responsible for receiving legal documents on behalf of your LLC. They must have a physical address in Texas and be available during regular business hours. Many folks choose to act as their own LLC’s registered agent, but you can also hire a professional registered agent service.

  3. File Certificate of Formation:

    To officially form your LLC, you need to file a Certificate of Formation (also called Form 205) with the Texas Secretary of State. The form includes essential details such as the LLC’s name, registered agent information, business purpose, and member or manager names. You can file online or mail the completed form with the required fee. You can get the Certificate of Formation here and you can upload it here.

  4. Create an Operating Agreement:

    Although not mandatory, an operating agreement is highly recommended for LLCs. It outlines the ownership structure, members’ rights and responsibilities, profit distribution, decision-making process, and other important provisions. Drafting an operating agreement helps clarify internal operations and reduces potential disputes.

  5. Obtain an Employer Identification Number (EIN):

    An Employer Identification Number (EIN) is necessary for tax purposes and is issued by the Internal Revenue Service (IRS). This number is used for federal tax filings, opening business bank accounts, and hiring employees. You can obtain an EIN by completing this online application on the IRS website.

  6. Comply with State and Local Requirements:

    Ensure you meet any additional state or local requirements for your specific industry. Depending on your business activities, you may need to obtain licenses, permits, or certifications to operate legally in Texas. Research and comply with the regulations applicable to your industry or profession.

  7. Register for State Taxes:

    Depending on the nature of your business, you may need to register for state taxes such as sales tax, franchise tax, or other applicable taxes. Visit the Texas Comptroller of Public Accounts website to determine your tax obligations and register accordingly.

  8. Maintain Ongoing Compliance:

    Once your LLC is formed, it’s important to maintain ongoing compliance with state regulations. This includes filing annual reports, paying franchise taxes, updating any changes to your business or registered agent information, and keeping accurate records of your business activities.

*I am not a lawyer and cannot give legal advice. Please consult a legal professional before taking action on the items above.

**I do not endorse any entities that may be mentioned.

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