How to Start an LLC in Texas: A Step-by-Step Guide From a Houston Bookkeeper

Last Tuesday a woman sat down in our office on Westheimer with a folder full of printouts from the Texas Secretary of State website, three browser tabs open on her phone, and a look on her face that said she’d been Googling for two hours and was more confused than when she started. She wanted to start an LLC in Texas for her cleaning company in Spring Branch. The internet had given her 47 different answers about how to do it.

I walked her through the whole process in about 40 minutes. By Friday she had her Certificate of Formation filed, her EIN from the IRS, and a business bank account at a credit union off Gessner. The entire filing cost her $300 to the state and zero to a lawyer because she did it herself.

That’s what this guide is. The same conversation I have in our office three or four times a week, written down so the next person Googling “how to start an LLC in Texas” at midnight doesn’t have to sort through contradictory advice from websites that haven’t been updated since 2019.

Step 1: Pick a Name and Check if It’s Available

Texas requires your LLC name to include “Limited Liability Company,” “LLC,” or “L.L.C.” somewhere in it. That’s the only hard rule on format.

The real issue is availability. Two businesses in Texas can’t have the same or a “deceptively similar” name. A food truck operator on Harrisburg came to us last year after filing his Certificate of Formation and getting it rejected — turns out “HTX Tacos LLC” was already taken by a catering company in San Antonio.

Check availability before you file. Go to the Texas Secretary of State’s SOSDirect website and run a name search. It’s free. Search for exact matches and close variations. If your name is clear, you’re good to move forward.

One thing people skip: checking for federal trademark conflicts. The Texas name search only covers state business filings. If someone in California has a registered trademark on your business name and they find you, that’s a legal headache an LLC won’t protect you from. A quick search on the USPTO website takes five minutes and costs nothing.

Step 2: Choose a Registered Agent

Every Texas LLC is required to have a registered agent — a person or company that accepts legal documents on behalf of the business. The registered agent has to have a physical street address in Texas. No P.O. boxes.

You can be your own registered agent. Plenty of single-member LLCs do this, especially when starting out. The downside is your home address becomes part of the public record, and if someone sues your LLC, a process server shows up at that address.

Registered agent services run $50 to $300 per year. For a business based out of a home office, it’s worth considering. For a business with a commercial address, being your own agent is usually fine.

Step 3: File Your Certificate of Formation

This is the document that officially creates your LLC. In Texas, it’s Form 205 filed with the Secretary of State. You can file online through SOSDirect or mail a paper form.

Online filing costs $300. Paper filing also costs $300 but takes longer to process. Online filings typically come back approved within a few business days. Paper filings can take a couple of weeks.

Here’s what the form asks for:

Entity name. The LLC name you already checked.

Registered agent. Name and Texas street address.

Governing authority. Texas LLCs are managed by either members (owners) or managers. If it’s just you running the show, member-managed is the standard choice. If you have investors who own a piece but don’t run the business day to day, manager-managed makes more sense.

Organizer. The person filing the form. This can be you, your attorney, or anyone authorized to form the LLC. The organizer doesn’t have to be a member.

Purpose. Texas allows “any lawful purpose.” That’s what most people put. There’s no advantage to being more specific unless your industry requires it.

I’ve watched people agonize over the Certificate of Formation for days. It’s a one-page form. The state doesn’t care about your business plan, your revenue projections, or your marketing strategy. They care about your name, your agent, and your $300.

Step 4: Create an Operating Agreement

Texas doesn’t require an operating agreement to form an LLC. This is where people get tripped up — because something being optional doesn’t mean it’s unimportant.

An operating agreement is the internal document that spells out how the LLC operates. Who owns what percentage. How profits are distributed. What happens if a member wants to leave. How decisions get made.

For a single-member LLC, the operating agreement is simple — usually two or three pages confirming you’re the sole owner and how you’ll manage the business. Banks ask for it when you open a business account. If you ever bring on a partner or apply for business credit, the operating agreement is the first document they request.

For multi-member LLCs, the operating agreement is critical. I had two brothers in the Heights who started a remodeling company together, split everything 50/50 on a handshake, never wrote an operating agreement, and ended up in a dispute over equipment when one wanted out. Texas default LLC rules kicked in, and neither brother liked the result. An operating agreement would have cost them maybe an hour with an attorney. The dispute cost them eight months and a lawyer bill neither one wants to talk about.

Step 5: Get Your EIN From the IRS

An EIN is your business’s tax identification number. Think of it as a Social Security number for your LLC. You’ll use it to open bank accounts, file taxes, and hire employees.

Applying is free. Go to the IRS website, answer about 10 questions, and get your EIN immediately. The online application is available Monday through Friday, 7 AM to 10 PM Eastern. Yes, the IRS has business hours for their website. No, I don’t know why.

Single-member LLCs technically can use the owner’s Social Security number instead of an EIN, but I don’t recommend it. Your SSN is on every form, every bank document, every vendor agreement. An EIN keeps your personal information one step removed from your business paperwork.

Step 6: Open a Business Bank Account

This step is not optional in practice, even though no law requires it. An LLC provides liability protection by keeping your personal assets separate from your business. The moment you start running business transactions through your personal checking account, that separation blurs. If someone sues your LLC and your finances are commingled, a court can “pierce the corporate veil” and go after your personal assets.

Walk into a bank or credit union with your Certificate of Formation, your EIN letter, your operating agreement, and your driver’s license. Most accounts open the same day.

A consultant near the Galleria came to us after running her LLC’s income through her personal account for two years. Untangling those transactions for tax filing took us 14 hours of bookkeeping time. Setting up a separate account on day one would have taken 30 minutes.

The Texas-Specific Details People Miss

No state income tax — but there’s a franchise tax. Texas doesn’t tax personal income, which is a major advantage for LLC owners since most LLC income passes through to the owner’s personal return. But Texas does have a franchise tax (also called the margin tax) on businesses. LLCs with total revenue under $2.47 million still have to file an annual franchise tax report but owe $0. Go above that threshold and you owe 0.375% to 0.75% of your Texas taxable margin, depending on your calculation method. Every LLC, regardless of revenue, has to file the annual report or face penalties.

I wrote a full breakdown of the Texas franchise tax if you want the details.

Community property matters. Texas is a community property state. If you’re married, your spouse technically has a community property interest in your LLC unless you address it. This matters most when bringing on outside investors or partners. Some operating agreements include a spousal consent clause to clarify ownership. It’s not something most people think about when forming an LLC, but it’s something a good attorney or accountant will flag.

Annual requirements. Your Texas LLC doesn’t expire, but it’s not maintenance-free. You have to file the annual franchise tax report (even if you owe nothing). You have to maintain a registered agent. If your registered agent or business address changes, you have to update the Secretary of State. Fail to file your franchise tax report and Texas will forfeit your LLC’s right to do business — which means you lose your liability protection until you fix it.

What an LLC Costs in Texas (Real Numbers)

Let me break this down because the internet is full of inflated numbers from companies trying to sell you formation services.

Filing fee: $300 (Certificate of Formation with the Secretary of State)

EIN: Free (directly from the IRS)

Registered agent: $0 if you’re your own agent, $50-$300/year if you use a service

Operating agreement: $0 if you write your own using a template, $200-$500 if an attorney drafts it

Business bank account: Usually free for basic business checking

Total minimum cost to start an LLC in Texas: $300. That’s it. The $300 state filing fee is the only non-negotiable expense.

Now, those formation services you see advertising “Start your LLC for $0 plus state fees” — they charge $300 for the state fee (which you’d pay anyway) and then upsell registered agent services, rush processing, operating agreement templates, and EIN filing for hundreds of dollars in add-ons. The EIN is free from the IRS. The operating agreement templates are available free online. Rush processing from the state is an additional $25 for 24-hour turnaround. Save your money.

LLC vs. Other Structures: A Quick Comparison

This is the question that usually comes right after “how do I form an LLC” — is an LLC even the right choice?

For most small businesses, yes. An LLC combines liability protection (your personal assets are shielded from business debts) with tax flexibility (you choose how to be taxed). It’s simpler than a corporation, more protective than a sole proprietorship, and the maintenance requirements are minimal.

But it’s not always the right answer. If you’re planning to raise venture capital, investors typically want a C-Corp. If your net self-employment income is consistently above $50,000-$60,000, an S-Corp election on your LLC could save you thousands in self-employment tax.

We wrote a full comparison of business structures for accounting success that covers sole proprietorships, LLCs, S-Corps, and C-Corps side by side.

After You Form: The First 30 Days

Your LLC exists. The state approved your filing. Here’s what to handle in the first month:

Get business insurance. General liability at minimum. If you have employees, workers’ comp (not required in Texas for most employers, but a good idea). If you’re in a profession that gives advice — consulting, accounting, marketing — professional liability insurance.

Set up accounting from day one. Not next month. Not “when things get busy.” Day one. Open QuickBooks or whatever accounting tool fits your business and start recording every transaction. The number of new LLCs that come to us six months in with a shoebox of receipts and no records is staggering.

Understand how you’ll pay yourself from your LLC. Single-member LLC owners take owner’s draws, not paychecks. The tax implications are different from being an employee, and the quarterly estimated tax payments start immediately. Don’t wait until April to figure this out.

Get your city permits and licenses. Forming your LLC with the state is just the business structure. Depending on your industry and location, you’ll also need city or county permits, occupational licenses, or sales tax permits from the Texas Comptroller. Houston’s permitting requirements depend on your business type — a food truck on Harrisburg needs different permits than a consulting firm in the Galleria.

The Bottom Line

Starting an LLC in Texas is straightforward. It costs $300, takes a few days for approval, and the paperwork is minimal compared to most states. The mistakes people make aren’t in the filing — they’re in what comes after. Mixing personal and business finances. Skipping the operating agreement. Forgetting the franchise tax report. Those are the things that erode the protection an LLC is supposed to provide.

If the filing process itself feels overwhelming, a bookkeeper or accountant can walk you through it — often for less than a formation service charges. And unlike a formation service, we stick around for the tax questions, the bookkeeping setup, and the “wait, I owe quarterly taxes?” conversation that happens about three months in.