How to Form an LLC in Texas (2026)

1. 1Choose a name for your LLC and verify availability by searching the Texas Secretary of State SOSDirect database. Your name must include "Limited Liability Company," "LLC," or "L.L.C."
2. 2Appoint a registered agent with a physical street address in Texas.
3. 3File a Certificate of Formation with the Texas Secretary of State through SOSDirect. The filing fee is $300. Online filing processes in 2-3 business days.
4. 4Obtain an EIN (Employer Identification Number) from the IRS at no cost.
5. 5Create an operating agreement (called a "company agreement" in Texas). Not legally required but strongly recommended.
6. 6Open a business bank account with your Certificate of Formation, EIN, and operating agreement.
7. 7Obtain any required state and local business licenses or permits.
8. 8File your first Public Information Report (PIR) and franchise tax report with the Texas Comptroller by May 15. The PIR is free, but franchise tax applies if revenue exceeds $2.47 million.

• ✓Obtain an EIN from the IRS (free, apply online at irs.gov)
• ✓Open a dedicated business bank account
• ✓File a no-tax-due franchise tax report with the Texas Comptroller (even if you owe $0)
• ✓Register for a Texas sales tax permit if selling taxable goods or services
• ✓Get business insurance (general liability at minimum)
• ✓Set up an accounting system to track income and expenses
• ✓Apply for any local business licenses or permits

Your Texas LLC name must contain "Limited Liability Company," "LLC," or "L.L.C." Restricted words like "Bank," "Insurance," "Trust," or "University" require additional licensing. The name must be distinguishable from existing business entities in Texas. Texas uses "Certificate of Formation" rather than "Articles of Organization." You can reserve a name for 120 days for $40.

Texas has no state income tax — LLC members pay zero state tax on their pass-through profits. However, Texas imposes a franchise tax (also called the "margin tax") on LLCs with total revenue exceeding $2.47 million. The rate is 0.75% for most businesses (0.375% for retail/wholesale). Below the $2.47M threshold, you owe $0 but must still file a no-tax-due report annually by May 15. You must also file a free Public Information Report (PIR) each year.

LLC vs. other structures in Texas

Texas combines no state income tax with a franchise tax that only affects businesses earning over $2.47 million — making it essentially tax-free for most small LLCs. The $300 filing fee is high, but there are no annual report fees. For large businesses, the 0.75% franchise tax rate is relatively low. Texas is an excellent choice for LLC formation if you operate in the state.

• •File the annual franchise tax report (no-tax-due or calculated) with the Comptroller by May 15
• •File the free Public Information Report (PIR) alongside the franchise tax report
• •Maintain a registered agent with a physical address in Texas at all times
• •Keep your operating agreement (company agreement) current and update it when membership changes
• •File federal tax returns (no state personal income tax returns required)
• •Renew any local business licenses or permits as required

Texas imposes additional taxes beyond the filing fee that you should factor into your decision. Make sure the total annual cost — including the franchise tax — fits your business budget before committing.

In general, you should form your LLC in the state where you physically live and conduct business. Forming in a "tax-friendly" state like Wyoming, Delaware, or Nevada sounds appealing, but if you operate in Texas, you will still need to register as a foreign LLC there — paying fees in both states.

An LLC is almost always a better choice than operating as a sole proprietorship because of the personal liability protection it provides. However, if your LLC is highly profitable, you should talk to a CPA about electing S-Corp tax treatment to potentially reduce your self-employment tax burden.

What Texas LLC Owners Need to Know

• •Texas has no state income tax, making it attractive for LLC owners
• •The $300 filing fee is high, but there are no annual report fees
• •Texas franchise tax only applies if your LLC earns over $2.47 million in revenue — most small businesses owe $0
• •You must file a free Public Information Report annually with the Comptroller
• •Texas uses Certificate of Formation rather than Articles of Organization

Frequently Asked Questions

Official Texas Resources

• Texas Secretary of State — Corporations Section
• SOSDirect Online Filing
• Texas Franchise Tax (Comptroller)