Texas can be an attractive state to do business in due to the lack of state income taxes. If you’d like to form a limited liability company in Texas and need a little assistance without costing you an arm and a leg, we can give a couple options.
First, check out the instructions below to walk you through what needs to be filed and where in order to create your LLC. These are provided totally free!
Second, we offer a do-it-yourself kit with these instructions (as well as samples of the documents), an article that breaks down the pros and cons of utilizing an LLC as your entity, and template operating agreements for just $34.95.
1. Check if the LLC name you want is available
As a first step, you may want to check if the LLC name you want to use is even available. Here is an easy and free way to do this: You can try Googling on the LLC name. Obviously, if you find a Texas LLC on the Internet with the same name as the one you want to use, you cannot use that name.
You can also pay a modest fee of $1 per search and use the Texas Secretary of State’s SOSDirect online service at:
http://www.sos.state.tx.us/corp/sosda/index.shtml
You can also inquire about name availability by calling the “New Filings Team” at:
Dial (512) 463-5583 then press 7-1-1.
2. Download the Articles of Organization form from the Texas Secretary of State’s web site, then print this form
The URL, or web page address, for this form is as shown below.
http://www.sos.state.tx.us/corp/forms/205_boc.pdf
or
http://www.sos.state.tx.us/corp/forms_boc.shtml,
where you will choose form *205 in either Word or PDF format.
Note: You can also work with an online version of this form, which is available through the Secretary of State’s SOSDirect service, which I mentioned earlier. (See step 1.) The online service’s form looks and works in basically the same way as the paper form.
3. Identify the name you want to use for your new LLC
Enter your business or investment name into box labeled, “Article 1 – Name.” As this box’s instructions indicate, the name must either include one of the phrases “Limited Liability Company” or “Limited Company”, or the name must use one of the standard abbreviations for these names such as “LLC,” “L.L.C.,” “LC,” L.C.”, or “Ltd. Co..” For example, all of the following names should be acceptable:
- Acme Explosives Limited Liability Company
- Acme Explosives Limited Company
- Acme Explosives Ltd. Co.
- Acme Explosives LLC
- Acme Explosives L.L.C.
- Acme Explosives LC
- Acme Explosives L.C.
4. Provide your name and address
Texas wants to know the name and contact information for a real person within the state of Texas, called a registered agent, who the state can contact if it has questions or concerns about an LLC’s operation. You can pay someone else to be this registered agent, but it is really easiest and cheapest to just be your own registered agent.
Accordingly, mark the “B” checkbox in the Article 2 – Registered Agent and Registered Office box and then enter your name and address information into boxes labeled “Article 2 – Registered Agent and Registered Office.”
5. Indicate how your LLC will be managed
LLCs can be managed either by all of their members, or owners. Or they can be managed by only one or some of their members, who are in this case called managers or manager-members. To indicate how your LLC will be managed, mark the appropriate checkbox in box labeled “Article 3 – Governing Authority.”
Note: If you have multiple members or managers, ideally you’ll want to have an attorney draft an operating agreement. This operating agreement should describe who the manager is or who the managers are if you are setting up a manager-managed LLC. If you are a single member LLC, you should probably also have an operating agreement because having an operating agreement and honoring its terms improves your liability protection. This kit provides excellent example operating agreements for you to consider when drafting your own.
Texas also wants to know the names and contact information for the initial members, or governing persons, of the LLC. To provide this information, enter the names and addresses of the initial members into the boxes labeled, “Governing Person 1” on page 1 of standard Texas LLC articles of formation form and into the boxes labeled, “Governing Person 2” and “Governing Person 3” on page 2 of the standard Texas LLC form.
6. Identify supplemental provisions/information to standard purpose
Article 4 on page 2 of the Texas LLC articles of formation form states a generic purpose for all Texas LLCs. If you have supplemental provisions you may input them into the box Article 4 box. Most businesses will leave this area blank.
7. Identify yourself as the LLC organizer
On the page 3 of the LLC articles of formation document, you need to provide your name and address as the LLC organizer. This information goes into the box labeled, obviously, “Organizer.”
8. Select the effective filing date
You also need to specify when you want the LLC created. Typically, you want the LLC filed immediately and so mark the “A” checkbox in the “Effective Date of Filing” area. You can, however, mark the “B” checkbox and then enter a future effective date in the space provided.
9. Duplicate, sign (twice) and send the applications
After you complete the Articles of Organization, make a copy of the almost-complete LLC application. Sign both copies. Then mail the copies of the completed form and a check for $300 to:
Secretary of State
P.O. Box 13697
Austin TX 78711-3697
Processing lead times vary, but in general, it takes several weeks to get your LLC certificate back from the Secretary of State’s office.