How to Form an LLC in Texas
Forming an LLC in Texas is a straightforward process that provides liability protection and tax flexibility for business owners. The initial filing fee is $300, filed with the Texas Secretary of State.
Step 1: Choose Your Business Name
Your LLC name must be distinguishable from existing business entities registered in Texas. The name must include "LLC" or "Limited Liability Company." Check name availability through the Secretary of State's website before filing.
Step 2: File Articles of Organization
Submit your Articles of Organization to the Texas Secretary of State with the $300 filing fee. This document establishes your LLC as a legal entity. Processing times vary but typically take 5-10 business days.
Step 3: Obtain an EIN
Apply for a federal Employer Identification Number (EIN) from the IRS at no cost. This is required for tax filing, opening a business bank account, and hiring employees.
Step 4: Register for State Taxes
Register with the Texas Comptroller of Public Accounts for applicable tax accounts. You will need a sales tax permit to collect the 6.25% state sales tax. Texas has no state income tax, a significant advantage for LLC owners.
Ongoing Costs
Texas does not impose an annual franchise tax on LLCs, keeping ongoing costs low.
Texas LLC Tax Advantages
One of Texas's biggest advantages is the absence of state income tax. LLC members keep more of their earnings compared to states with income tax. The 6.25% state sales tax requires proper collection and remittance procedures.