Form a Texas LLC
At LawInc we are Texas LLC formation experts who can help you form a Texas LLC, the right way. We file the Texas LLC Certificate of Formation with the Texas Secretary of State and prepare a customized operating agreement. We can also obtain the Texas LLC’s EIN, in an quickly as 24 hours.
Texas LLC Name
The first step in forming a Texas Limited Liability Company (LLC) is selecting the business name. Texas LLC names:
- Must contain with “Limited Liability Company,” “Ltd. Liability Co.,” LLC,” “L.L.C,” “LC” or “L.C.”
- Must be distinguishable from the name of any domestic or foreign LLC, corporation, non-profit corporation, limited partnership, limited liability partnership on file with the Texas Secretary of State.
- Must not imply that it was formed for a business purpose different than that stated in the Texas Certificate of Formation or that is unauthorized by law.
An available name may be reserved for a 120-day period.
A Texas Limited Liability Company may apply to choose a name that is indistinguishable from the Secretary of State records if the other entity consents to the use in writing.
LawInc.com permits you to choose up to three names and will conduct a name search for your Texas LLC, prior to filing.
Texas LLC Formation
Texas LLC Filing Procedure: When forming a Texas LLC, a Texas Certificate of Formation must be filed with the Texas Secretary of State. The filing fee is $300. The Texas Certificate of Formation must state the:
- Texas LLC name.
- Entity type.
- Purpose of the Texas LLC, which may be stated to be or include any lawful purpose for that type of entity.
- Texas LLC duration, if it is not formed to exist perpetually.
- Texas LLC address and registered agent address.
- Name and address of each Texas LLC organizer.
Texas LLC Publication: Texas LLCs have no publication requirement.
Texas LLC Organizers: An Texas limited liability company can be formed by one (1) or more individuals, 18 years or older.
Texas LLC Members: Texas LLCs require 1 or more members. There is no residence or age requirement. Texas LLC members are not required to be listed in the Articles of Organization.
Texas LLC Duration: The period of duration of a limited liability company shall be perpetual unless the Texas Articles of Organization place a limitation on the company’s existence or until dissolution or termination.
Texas LLC Registered Agent: An Texas LLC must maintain a registered agent and office to receive service of process in Texas. The Texas registered agent should be available, at an Texas physical address, during normal business hours to accept important legal and tax documents on behalf of the Texas LLC.
Texas LLC Operating Agreement: After filing, it is highly advised that an operating agreement is drafted which dictates the LLC internal affairs and management. There is no set criteria, but an Texas LLC operating agreement should reference how the Texas LLC is managed, allocation of profits and losses and member capital contributions. The Texas LLC operating agreement does not need to be filed.
Texas LLC Post-Filing Requirements
Texas Franchise Tax Public Information Report: A public information report must be filed each year with the Texas Comptroller, which will then be forwarded to the Secretary of State. For more information, visit: For more information, visit: http://www.window.state.tx.us/taxinfo/taxforms/05-102.pdf
Texas LLC Taxes
Texas LLCs are classified for Texas tax purposes based on their federal income tax classification. The LLC tax rate for Texas is variable, depending on Texas taxable net income.
Federal Income Tax: An advantage of the LLC is its tax flexibility. LLC members are allowed to select how the entity will be taxed. An LLC may be classified for federal income tax purposes as either a:
- Sole proprietorship
- Partnership, or
Single member LLCs are treated the same as sole proprietorships. Profits are reported on Schedule C as part of your individual 1040 tax return. Self-employment taxes on Texas LLC net income must be paid just as you would with any self-employment business.
Most Texas multi-member LLCs elect to be treated as partnerships by the IRS and file IRS Form 1065. On this form, Texas LLC profits are reported and allocated to each of the owners according to the Texas LLC’s operating agreement. Each owner is given a Schedule K-1, which shows each owner’s share of LLC income or loss. The owner then reports and pays taxes on this income on the owner’s annual 1040 income tax return. It is important to note that as with sole proprietorships, all Texas LLC profits are taxed to the owners, even if they are not actually distributed by the LLC. This situation can arise when the LLC needs to use its profits to pay ongoing expenses.
If pass-through taxation is not desired, an LLC may elect to be taxed as a corporation by completing IRS Form 8832. If this election is made, the LLC is taxed as a C corporation by the federal government. Because the corporate income tax rates for the first $75,000 of corporate taxable income are lower than the individual income tax rates that apply to the taxable income of non-corporate taxpayers, it is possible a net income tax savings can result from this tax election. Additionally, an LLC can be taxed like an S corporation by filing IRS Form 2553.
Federal Tax Identification Number/Employer Identification Number (EIN): The Federal Tax Identification Number, also known as the Employer Identification Number (EIN) is a number that is assigned to a business by the Internal Revenue Service. An EIN is like a Social Security Number for a business. It is a requisite for certain business functions such as opening bank accounts or hiring employees. An EIN is typically required if the Texas LLC has more than one owner, or any employees.
Texas LLC Dissolution
In order to dissolve or cancel an Texas LLC, the members or managers must file a Certificate of Termination of Domestic Entity (Form 651) with the Texas Secretary of State. The certificate of termination must be accompanied by a certificate of account status indicating that all taxes have been paid and the entity is in good standing for purposes of termination. The fee for filing a Texas Certificate of Termination is $40.
Acts Triggering Texas LLC Dissolution: A Texas LLC can be dissolved upon the happening of one of the following:
- Events specified in the articles of organization or operating agreement
- Consent by the specific number or percentage of members indicated in the operating agreement.
- Event that makes it illegal for the Texas LLC to continue.
- When a member leaves the Texas LLC, unless either of the following applies: Within 90 days, the remaining members agree to continue the business or the company continues under a right specified in the operating agreement.
- Judicial decree.