How to Start an LLC in Texas (Step-by-Step) 2024 Guide

It costs $308 to start an LLC in Texas.

And then it costs $25 per year.

What are these fees for?

• The $308 is the filing fee for the Certificate of Formation – the document that creates an LLC.
• The $25 per year is the filing fee for your Annual Report – a mandatory filing that keeps your LLC in good standing.

Pro Tip: Good news, Veterans! If you’re an honorably discharged veteran of the US Armed Forces (including the Texas National Guard), you can get your LLC for free.

Follow the steps on our Free LLC for Texas Veterans page to get proof of your veteran status and request the fee waiver.

To learn more about LLC Costs, see LLC Costs in Texas.

If you file your LLC by mail, it will be approved in 4-8 weeks (plus mail time).

But if you file online using SOSDirect, your LLC will be approved in 10-12 business days.

Or, if you file online using SOSUpload, your LLC will be approved in 13-15 business days.

Please see How long does it take to get an LLC in Texas to check for any delays.

Getting an EIN Number from the IRS is completely free.

If you apply online, it takes 15 minutes.

If you apply by mail or fax, it can take 1-3 months.

You’ll want to open a business bank account for your LLC.

This makes accounting and record-keeping much easier for your business entity finances.

Having a separate business bank account also maintains your personal liability protection. This is because it keeps your business entity finances separate from your personal finances.

Good news, Texas doesn’t require an individual or business entity to get a state general business license. Meaning, there is no state general business license in Texas.

However, depending on where your LLC is located, you may need a local business license or permit.

For example, if you want to start a daycare, you may need a business license from the city or county.

You can learn more on our Texas Business License page.

All Texas LLCs must file a Franchise Tax Report and a Public Information Report (PIR) every year.

These filings keep your LLC in good standing with the state.

How much do the Franchise Tax Report and Public Information Report cost?

Both reports are free to file. And your LLC will only owe Franchise Tax if your LLC makes more than $1,230,000 per year.

This means that most LLCs in Texas file the No Tax Due Report.

When the No Tax Due Report is filed online, the Public Information Report is included with it.

When are the Franchise Tax and PIR due?

All LLC Franchise Tax Reports and Public Information Reports are due by May 15, every year.

When are my first Franchise Tax and PIR due?

Your first Annual Report is due the year after your LLC was approved.

For example, if your LLC was approved on March 15, 2024, your first Franchise Tax and PIR is due by May 15, 2025.

How do I file my LLC Franchise Tax and Public Information Report?

You can file both of these documents online or by mail. We recommend the online filing because it’s easier to complete.

Follow our step-by-step guide here: Texas LLC Annual Report.

LLCs don’t pay federal income tax. Instead, the LLC Members pay the taxes for the LLC.

Said another way, the owners pay taxes for the LLC as a part of their personal tax return.

How will my LLC be taxed?

By default, a Texas LLC is taxed by the IRS based on the number of owners your LLC has:

• A Single-Member LLC is taxed like a Sole Proprietorship.
• A Multi-Member LLC is taxed like a Partnership.

Alternatively, you can ask the IRS to tax your LLC like a C-Corporation or S-Corporation.

Married Couples: Instead of having your LLC taxed as a Partnership, married couples can elect to be taxed as a Single-Member LLC (aka Qualified Joint Venture). This is allowed in Texas because Texas is a community property state.

Besides federal taxes, there are also state and local taxes – like sales tax. Learn more in Texas LLC Taxes.

Yes, you can file your LLC online in Texas. The Certificate of Formation filing fee is $308.

When you start your LLC online using SOSDirect, your LLC filing will be approved in 10-12 business days.

The first benefit of an LLC is protecting your personal assets. Meaning, if your business is sued, your personal assets – like your home, cars, and bank accounts – are protected.

This protection applies to all LLC owners (called LLC Members). It doesn’t matter if you have a Single-Member LLC or Multi-Member LLC. All of the LLC owners are protected from the business debts and liabilities.

This type of protection wouldn’t apply if you operate as a Sole Proprietorship or Partnership. With these types of informal business structures, the owners aren’t protected in the event of a lawsuit. For that reason, Limited Liability Companies (LLCs) are a much more popular business structure.

Another benefit is LLC pass-through taxation. This means the LLC itself doesn’t pay federal income taxes. Instead, the profits “pass through” to the LLC Members. And the Members pay the taxes on their personal tax return.

To learn more, please see How are LLCs taxed.

Whether Texas is a good state to start an LLC depends on where you live – and where you’re doing business.

Meaning, if you live in or do business in Texas, then you should start your LLC in Texas. While many websites talk about tax rates and advantages of certain states, none of that applies if it’s not the state where you live and do business.

For example, if you form an LLC in Nevada, but live in and conduct business in Texas, you’ll also need to register your Nevada LLC in Texas (and pay extra fees). And you’ll end up paying Texas taxes anyway. This ends up leading to more costs and more headaches with no advantages.

In summary, if you live in and conduct business in Texas, then yes, Texas is a good state to start a business. If you don’t live in and do business in Texas, then no, Texas isn’t a good state to start a business.

Real estate exception: If you’re purchasing real estate outside of Texas, you should form your LLC in the state where the property is located.

For more information, please see Best State to Form an LLC.

The main differences between Domestic LLCs, Foreign LLCs, and Professional LLCs are where they are formed and their business purpose.

A Domestic Limited Liability Company is an LLC that is formed in its “home state”, meaning, where the business owner lives and does business.

For example, if you live in and do business in Texas, you would form your Domestic LLC in Texas.

A Foreign Limited Liability Company is an LLC that is formed in a state that isn’t its home state. In this case, the term “foreign” simply means that the LLC is foreign to its “home state”.

For example, if you live in and do business in Texas, you would form your Domestic LLC in Texas. If you later expand into New Mexico, you would register your existing Texas LLC as a Foreign LLC in New Mexico.

Said another way, LLCs are created at the state-level.

So if you want your LLC to do business in two separate states, you have to form or register an LLC in both states.

This works by forming a Domestic LLC in your home state, and a Foreign LLC in the other state.

What is a PLLC?

A Professional Limited Liability Company (PLLC) is a type of LLC formed for the purpose of providing “professional services”.

In this case, “professional” refers to business types that require special permissions (like a license, registration, or certification from the state) in order to do business legally.

For example, architects, attorneys, and social work counselors, doctors, and veterinarians often form their business practices as PLLCs.

You can read more about PLLCs, their availability, and their stricter requirements in: What’s a Professional LLC?

And for more information on Foreign and Domestic LLCs, please see:

• Foreign LLCs by State
• Difference between Domestic LLCs and Foreign LLCs