Starting your own business is an exciting prospect. But while some owners and entrepreneurs have access to vast amounts of capital or are lucky enough to have investors, this isn’t the case for everyone.
Despite this, forming a limited liability company (LLC) in Texas is a fairly straightforward process that won’t cost you an arm and a leg as long as you know the steps to take. Let’s take a closer look at how to start an LLC in Texas.
We’ll also discuss when to call experienced Waco business formation lawyers like those at The Zimmerman Law Firm, P.C., for help.
What Is a Limited Liability Company?
A limited liability company (LLC) is a common business structure that combines the flexibility and tax benefits of a partnership with the limited liability protection of a corporation. In an LLC, owners are referred to as members, and the company itself is a separate legal entity from its owners.
This separation means that members’ personal assets are generally protected from company debts and liabilities. One of the key advantages of an LLC is its flexibility in management and taxation.
Members can choose to manage the LLC themselves or appoint managers, and they can elect to be taxed as a partnership, corporation, or sole proprietorship, depending on what is most advantageous for their situation.
Starting an LLC in Texas
Forming an LLC in Texas involves several key steps and legal requirements to ensure compliance with state law.
- Choose a name: Select a unique and distinguishable name for your LLC that complies with Texas naming requirements.
- Check name availability: Verify that your chosen name is available by searching the Texas Secretary of State’s website.
- Fill out and file a certificate of formation: Prepare and file a Certificate of Formation with the Texas Secretary of State, including the LLC’s name, purpose, duration, registered agent information, and organizer details.
- Appoint a registered agent: Designate a registered agent in Texas who will receive legal documents and official notices on behalf of the LLC.
- Create an operating agreement: Although not required by law, it’s advisable to create an operating agreement outlining the management structure, member responsibilities, and ownership interests.
- Obtain an EIN: Obtain an Employer Identification Number (EIN) from the IRS, which is necessary for tax purposes, hiring employees, and opening a business bank account.
- File a BOIR: Report information to FinCEN about the individuals who ultimately own or control the LLC, as required starting January 1, 2024. https://www.fincen.gov/boi
- Additional requirements: Depending on the nature of your business, obtain any additional licenses or permits required by the state or local authorities.
If you have further questions about forming an LLC in Texas, seek legal advice from a qualified business formation attorney.
Texas LLC Costs
While it is possible to start an LLC in Texas without spending thousands of dollars, there are still costs required to start and run your enterprise properly. The primary cost is the filing fee for the Certificate of Formation, which is $300 as of 2024.
This fee is payable to the Texas Secretary of State and is required to officially register your LLC. In addition to the initial filing fee, there are ongoing costs associated with maintaining an LLC in Texas.
One of the most common ongoing expenses is the state’s annual franchise tax, which is based on the LLC’s annualized total revenue. Additionally, there may be costs associated with obtaining any necessary business licenses or permits at the state or local level. These are all necessary to properly register and operate your company in the Lone Star State.
Optional Additional Costs
While not required, business owners should still consider possible additional costs when forming a Texas LLC.
- Legal assistance. Costs for legal advice, drafting operating agreements, or other legal documents may be necessary, depending on your location and the type of business you plan to operate. Some industries are subject to more regulation than others.
- Professional services. This includes any accounting, bookkeeping, or other professional services to help manage your LLC. Tax management services, for example, may be helpful if you’re just getting started and are unfamiliar with state and federal requirements.
- Registered agent services. While some companies pick an individual, there are other businesses that you can pay to serve as the LLC’s registered agent for a monthly or annual fee. Choosing a registered agent service can ensure legal compliance, maintain privacy, provide convenience, simplify operations across multiple states, and enhance the LLC’s professional image.
While these may add to your formation costs, seeking out additional services may be the best way for you to run and grow your venture as smoothly as possible.
Tools to Help You Get Started
To help keep costs low, potential business owners can access resources provided by the Texas Secretary of State. These resources include guides on company formation and access to small business resources at both the state and federal levels.
Local governments and nonprofit organizations often provide free or low-cost business advisory services and workshops that cover the basics of starting an LLC, including legal requirements and best practices.
Some localities even provide grants to help entrepreneurs get started. For example, McLennan County’s Small Business Development Center offers technical assistance, mentoring, training, and resources for each stage of your company’s life.
Call (254) 752-9688 or complete the free case evaluation form below
Ready to Start Your LLC in Texas? Let Zimmerman Law Firm Guide You
If you have questions about forming an LLC in the Waco area, the business formation attorneys at The Zimmerman Law Firm are here to help.
With decades of experience supporting entrepreneurs in Texas, our attorneys can guide you through the formation process and let you focus on growing your company. Give us a call to schedule a free case evaluation, or fill out our online contact form to get started today.
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Where You Can Find Our Waco Office
Michael Zimmerman
Michael was born in Houston, Texas. His education at Baylor and Texas State Universities earned him a Bachelor of Science degree in 1987. His major was in Biology with a Minor in Chemistry. He finished his legal education at Texas Southern University in 1990, earning a Juris Doctorate from Thurgood Marshall School of Law. He was admitted to the State Bar of Texas in 1990.
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