Texas Veteran LLC

Last updated on

Texas Veteran LLC
(Senate Bill 1049 has not been renewed)

How to form an LLC in Texas
This Quick Start Guide is a brief overview of how to form an LLC in Texas.

Detailed Lessons:

 

Texas LLC costs:
State filing fee: $300
Annual franchise tax: $0 (for most LLCs)

Need help?
Hire a reliable service to form your Texas LLC:
Northwest ($39 + state fee) or LegalZoom ($149 + state fee)

(check out Northwest vs LegalZoom)

Veterans can no longer form free LLCs in Texas

January 2020 update: Unfortunately, Senate Bill 1049 has not been renewed.

This means that Veterans can no longer form free LLCs in Texas. If you want to form an LLC in Texas, you need to pay the LLC filing fee of $300. Please see Texas LLC Certificate of Formation for filing instructions.

In the meantime, our team at LLC University® will monitor any updates on Senate Bill 1049. However, it’s important to note that Senate Bill 1049 will not be up for renewal until the next Texas legislative session, which will happen sometime between Q1 and Q2 of 2021. We will update this page as soon as we have any news.

If you would like Senate Bill 1049 to be renewed, please let your state senator know. Enter your address on the Who Represents Me page. Then click on the Texas Senate box under the map. On the next page, look in the right sidebar for the “Email your senator” link.

Most of the information below is no longer applicable and has been struck out for archival purposes.

If you have a Veteran-owned Texas LLC that was approved between 1/1/2016 and 1/1/2020 (see the date on your Certificate of Formation), you are still exempt from Texas franchise tax for the first 5 years. However, you still need to file a No Tax Due Report every year.

Veterans, thank you for your understanding and thank you for your service!

– The LLC University® Team

Dear Veteran,

Thank you for your service!

And good news, Texas LLCs are free for veterans.

In addition, you are also exempt from paying franchise tax for 5 years.

Texas LLCs became free for veterans after Senate Bill 1049 was passed.

In summary, veterans forming a Texas LLC:

  • don’t have to pay the $300 LLC filing fee
  • don’t have to pay franchise tax for 5 years

Requirements for the SB 1049 exemption

In order to form your LLC for free and be exempt for franchise tax for 5 years, the LLC Member (or Members) must:

  • own 100% of the LLC (no non-veteran members allowed)
  • all LLC members must have been honorably discharged
  • you must certify that all LLC members are veterans

Notes:
1. Active service members cannot be LLC Members (you must be finished with your service and honorably discharged).
2. You can form a veteran-owned LLC in Texas with just 1 Member or as many Members as you’d like. All Members just have to meet the requirements.

LLC must be formed before 1/1/2020

Currently, Senate Bill 1049 is in effect until January 1st, 2020.

This means in order to qualify for your exemption, your LLC must be filed by 1/1/2020. Specifically, that means your LLC effective date must be 12/31/2019 or earlier.

How to form a Texas Veteran LLC

Please follow the steps below.

1. Get a copy of your DD-214

A DD-214, also known as DD Form 214, certifies your release or discharge from active duty.

You can request a copy of DD-214 from either:

You’ll need either one of the following types of Form DD-214:

  • Member Copy 4
  • Service Copy 2

2. Block out sensitive information in your DD-214

The Texas Veteran Commission states:

We cannot ensure data integrity for documents sent digitally. Please take the necessary precautions to protect your information and redact or block sensitive credentials you send via email.”

LLC University® recommendation: We recommend making a copy of DD-214 and blacking out your Social Security Number, date of birth, and any other sensitive information.

You can either:

  • use editing software (if you’re good with computers)
  • or do it the old-fashioned way: make a copy of DD-214, use a black marker and cross out your SSN, DOB, and other sensitive information; then make a copy again

3. Get a Letter of Verification of Veteran’s Honorable Discharge

After you have a copy of your DD-214 (with sensitive information blacked out), you then need a “Letter of Verification” from the Texas Veterans Commission (TVC).

In order to get the “Letter of Verification”, you must send them a Request Letter.

Download: Here’s a Request Letter template. It’s available in Microsoft Word format or Google Docs (click “make a copy”).

You can submit your Request Letter and your DD-214 in 1 of 2 ways:

  1. by email ([email protected])
  2. by mail:

Texas Veterans Commission
Attn: VEP
PO Box 12277
Austin, TX 78711

Processing time: Please allow the TVC 7-10 business days to return your “Letter of Verification”. Having said that, and depending on how busy they are, you may receive it in as little as 1-3 business days.

You will get back the following:

  • Letter of Verification
  • Unique ID (which you’ll enter in Form 05-904; explained below)

4. Complete Form 05-904

After you have your “Letter of Verification” from the TVC, the next step is to complete Form 05-904.

Form 05-904 is called the “Certification of New Veteran-Owned Business“. It can be downloaded from the Texas Comptroller website:

Texas Franchise Tax Forms:

  • scroll down to “Additional Franchise Tax Forms”
  • click “Certification of New Veteran-Owned Business”
  • click “05-904, Certification of New Veteran-Owned Business” to download the form

Form 05-904 instructions:

  1. Enter your LLC name at the top.
  2. List each Member’s name, Unique ID (from the TVC), and how much of the LLC they own.
  3. Each LLC Member must sign the form

Note: Because you are forming an LLC, Form 05-904 doesn’t need to be sent to the Texas Comptroller’s office. It only needs to be sent to the Secretary of State as discussed below.

5. Complete your Texas LLC Certificate of Formation (Form 205)

Note: You cannot form a Texas veteran LLC online via SOSDirect. It must be submitted by mail as discussed in the next section.

6. Mail your forms to the Corporations Section (Secretary of State)

Gather your 3 final documents:

  • “Letter of Verification” from the TVC
  • Form 05-904 (Certification of New Veteran-Owned Business)
  • Form 205 (Certificate of Formation)

Mail them to the Texas Corporations Section:

Corporations Sections
Secretary of State
PO Box 13697
Austin, TX 78711

Important LLC name rules for Veterans

As per Section 5.062 of the Texas Business Organization Code:

1. Unless you have written permission from a congressionally recognized Veterans Organization, your LLC name cannot imply that your business is created by, or for the benefit of, war veterans or their families.

2. Your LLC name cannot contain the following words (or abbreviations):

  • Veteran
  • Legion
  • Foreign
  • Spanish
  • Disabled
  • War
  • World War
For more LLC naming rules and tips, please see the Texas LLC Name Search lesson.

How long does it take for my LLC to be approved?

Once the Secretary of State receives your Texas veteran LLC filing, it will be reviewed and approved within 7 to 10 business days.

It then takes the state about 1 additional week before they get your LLC approval documents to you.

They will arrive by mail. You’ll receive back the following documents:

Note: Click the links above if you’d like to see an example.

You can check the status of your LLC filing on the Secretary of State’s website:
Texas Business Filing Tracker

What if I’m a veteran and I already paid?

If you paid $300 and formed a Texas LLC (anytime after 1/1/2016), you can get a refund.

You’ll need to send the following to the Secretary of State:

  • Cover letter asking for a refund (include your name, your contact info, LLC name, and LLC file number)
  • “Letter of Verification” from the TVC
  • Form 05-904 (Certification of New Veteran-Owned Business)

Once the Secretary of State determines your Texas LLC is qualified for exemption, they’ll:

  • refund your filing fee
  • and will reclassify your LLC as a Veteran-Owned Business in the state database

Helpful video from Veteran Circles

Brandon Wong, from Veteran Circles, has recorded a helpful video which we have embedded below:


While you’re exempt from franchise tax, you still have to file Form 05-163

While you don’t have to pay franchise tax for 5 years, you still have to file a “no tax due report” every year.

The full name of the form is “Texas Franchise Tax No Tax Due Report” (Form 05-163).

Since 2016, this form can no longer be filed by mail.

It must be filed online. You can file it online via the TxComptroller eSystems.

For more information, see our Texas LLC Franchise Tax lesson.

Next Step: Operating Agreement

Once you file your Texas Veteran LLC documents, and they are approved by the Secretary of State, you can proceed to the next lesson: Texas LLC Operating Agreement.

Questions? State Contact Info

Texas Secretary of State:
You can contact the Texas Secretary of State at 512-463-5555. Their hours are Monday through Friday from 8am to 5pm, Central Time.

Texas Veterans Commission:
You can contact the Texas Veteran Commission at 512-463-6564. Their hours are Monday through Friday from 7:30am to 5:30pm, Central Time.

Texas Comptroller:
You can contact the Texas Comptroller at 800-252-1381. Their hours are Monday through Friday from 8am to 5pm, Central Time.

Matt Horwitz
Founder & Educator, LLC University®
Forming an LLC shouldn't be so complicated. Our step-by-step guide will make the process a breeze – and no complex legal jargon! LLC University® teaches people how to form an LLC for free in all 50 states. We hope you find our free guides and resources helpful in your business journey.
Disclaimer: Nothing on this page shall be interpreted as legal or tax advice. Rules and regulations vary by location. They also change over time and are specific to your situation. Furthermore, this comment section is provided so people can share their thoughts and experience. Please consult a licensed professional if you have legal or tax questions.

10 Comments

  1. Artemio Alvarez III January 30, 2019

    hi
    does the register agent need to be a veteran as well?

    reply
    • Matt Horwitz February 8, 2019

      Hi Artemio, great question. No, the Registered Agent doesn’t have to be a veteran. The requirements is that all LLC Members (owners) need to be a veteran who was honorably discharged. Keep in mind though, that an LLC Member can also be the Registered Agent for the LLC. Hope that helps.

      reply
  2. Carol Wyatt June 24, 2019

    We are setting up our LLC. My husband is DV and we are looking into using the Texas Veteran LLC. Understand that he will need to 100% own and I would most likely be the registered agent and an employee. However we’re still confused about Member-Managed vs Manager-Managed. He will be providing the service while I will be running all the accounting, orders, payroll and deductions, contracts, filing taxes, bookings, travel and expenses, etc. He just wants to do his thing and and have me handle the business (he’ll still be working a full time job). I’m thinking manager-managed, as I’ll be running it. As he would be the only Member, if he doesn’t like the way I’m doing things, I suppose he could fire me!

    reply
    • Matt Horwitz June 24, 2019

      Hi Carol, while either you or he can be the Registered Agent, you don’t have to be. It can be any Texas resident or any Texas company. That’s explained further on the Texas LLC Registered Agent page. Also, please see how can an LLC be managed for more information. We’re unable to say “this is how your LLC should be managed”, however, your understanding of a Manager-Manager LLC with you being the Manager and your husband being the Member is correct. Hope that helps :)

      reply
  3. Laura June 24, 2019

    My friend and I want to start a business. She will receive her DD-214 on Friday.
    I am still in the military until November, can I be a member of the company?
    Does her credit score effect the LLC?
    I have better credit, but won’t receive my DD-214 until November.
    Can she own 100% now then later transfer it to me?

    reply
    • Matt Horwitz June 27, 2019

      Hi Laura, active service members cannot be LLC Members in a Veteran-owned LLC. And credit score doesn’t affect the formation of an LLC. Hope that helps.

      reply
  4. Tonya January 2, 2020

    We submitted the paperwork to the secretary of the state and it was dated 12/20/19. On December 31st it was rejected. If we resubmit will they back date to the original submission

    reply
    • Matt Horwitz January 2, 2020

      Hi Tonya, LLC formations cannot be back-dated. And at this time, Senate Bill 1049 has not been renewed, so if you want to form a Texas LLC, you’ll need to file a regular one and pay the state filing fee. Hope that helps.

      reply
  5. Ken Scott January 6, 2020

    Matt,
    I appreciate your site and the work you are doing. I sent the email noted below to my TX state senator and a similar one to my state representative.

    “Dear Senator Campbell,
    I recently started the process for creating a Texas LLC, taking advantage of the Veteran’s Exemption for the associated fees. I received verification of veteran status and have just been informed the Texas Legislature has cancelled this program. It would have been simple to give a heads-up to applicants that the program was in jeopardy. As a U.S. Navy veteran, which included a tour of duty on riverboats in Vietnam, I am deeply disappointed in our State Legislature and you especially, as Chair of the State Veteran’s Affairs Committee, in your decision to cancel this program. As a business Broker and member of TABB (Texas Association of Business Brokers) I am currently dealing with two companies, one on CA and the other in VA, who are considering moving their manufacturing to South Texas. I have promoted Texas as “business friendly” but now am not so sure, especially when it comes to veteran-owned businesses. I can’t imagine the loss of revenue to the state is worth the loss of good will and appreciation from Texas Veterans.
    Sincerely, Ken Scott”

    Matt, I have also reached out to local veteran-owned businesses via email to advise them of this situation and will push or TX legislature to reinstate this veteran’s benefit in the next session.

    Again, thanks for your good work.
    Best regards,
    Ken Scott

    reply
    • Matt Horwitz January 7, 2020

      Hi Ken, you are very welcome. Thank you for your comment. Inspired by your message, we updated the notification at the top of this page, making it easier for Veterans to contact their state senator regarding the renewal of Senate Bill 1049. Thank you!

      reply

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