Filing an LLC in Texas: Formation, $300 Fee, and Franchise Tax

To file an LLC in Texas, you submit a Certificate of Formation (Form 205) to the Texas Secretary of State and pay a $300 filing fee.¹ The filing itself is simple. What surrounds it is where new owners get tripped up: your name has to be available, a registered agent has to be in place before you file, and once the state approves your LLC, you still have an EIN, a federal tax classification, and an annual Texas franchise tax report ahead of you.

Pick a Name the State Will Accept

Your LLC name has to be distinguishable from every entity already on file with the Secretary of State, including active LLCs, corporations, limited partnerships, and reserved names.² “Distinguishable” is a lower bar than “completely different,” but names that look or sound almost identical to an existing one will be rejected.

The name also has to identify the entity type. Texas requires some form of “Limited Liability Company” or an abbreviation like “LLC” or “L.L.C.” Before filing anything, run your preferred name through the Secretary of State’s online entity search. Catching a conflict early is much cheaper than having your Certificate of Formation kicked back.

Line Up a Registered Agent

Every Texas LLC must have a registered agent and a registered office in the state. The agent is the person or company authorized to accept legal documents for the LLC, including lawsuits, government notices, and tax mail.³

The registered office has to be a physical street address in Texas where someone can hand-deliver legal papers during business hours. It cannot be only a mailbox service or an answering service.³ A commercial mail center can serve as the registered office only if that business itself is also the registered agent.⁴ An individual agent must be a Texas resident. An organization acting as agent must be authorized to do business in Texas and have an employee available at the office to accept service.

The agent must consent to the role, either in writing or electronically. The Secretary of State provides Form 401-A for this, but you don’t file it with the state. The signed consent stays in the LLC’s own records.⁵ Keep it. If anyone later disputes whether the agent agreed to serve, you’ll need proof.

Letting your registered agent lapse is one of the fastest ways to get in trouble. Without a valid agent on file, the state can administratively terminate the LLC, which strips it of legal standing to operate or defend itself in court. Commercial registered agent services usually charge between $49 and $149 per year.

Fill Out the Certificate of Formation

Form 205 is the document that actually creates your LLC. The Secretary of State reviews it for completeness rather than substance, so missing fields or errors in names and addresses lead to rejection.

Governing Authority

Form 205 asks you to pick how the LLC will be managed. A member-managed LLC means the owners run day-to-day operations. A manager-managed LLC means designated managers handle business decisions while members stay more passive. You list the name and address of each initial manager (if manager-managed) or each initial member (if member-managed).⁶ These people do not need to be Texas residents, but their information becomes part of the public record.

Purpose and Organizer

The form asks for the LLC’s purpose. Most filers use a general clause like “any lawful purpose” to keep future options open. You also identify the organizer, which is simply the person who signs and submits the form. Being the organizer does not confer ownership. It’s an administrative role.

Submit the Filing and Pay the $300 Fee

As of September 2025, the Texas Secretary of State accepts business entity filings through SOSDirect (the online portal), SOSUpload, in person, by mail, or by courier. Fax is no longer accepted.⁷

Filing Online

SOSDirect lets you submit Form 205 electronically and pay the $300 fee by credit card or a pre-funded account.¹ Online filings are generally processed faster than paper, though the Secretary of State does not publish guaranteed turnaround times for formation documents. SOSUpload is a separate option that lets you upload a completed PDF.

Filing by Mail or Courier

By mail, send two copies of the signed Certificate of Formation and a check or money order for $300 payable to the Secretary of State.⁶ The mailing address is P.O. Box 13697, Austin, TX 78711. For courier or in-person delivery, use 1019 Brazos St., Austin, TX 78701.⁸ Paper filings take longer, especially during high-volume periods.

What You Get Back

Once approved, you receive a file-stamped copy of the Certificate of Formation and a formal certificate of filing. Those documents are your proof the LLC legally exists in Texas. Save the digital versions and store any paper copies somewhere safe. You’ll need them to open a business bank account, apply for an EIN, and handle licensing and tax registrations.

Write an Operating Agreement

Texas does not require an LLC to have a written operating agreement, but skipping one is a mistake most people only make once. The operating agreement (called a “company agreement” in the Texas Business Organizations Code) governs how members relate to each other, how profits and losses are divided, what happens when someone leaves, and how major decisions get made.⁹

Without one, the LLC falls back on default rules in the Texas Business Organizations Code, which may not reflect what you and your co-owners actually intended. Single-member LLCs benefit too, because a written agreement reinforces the separation between the owner’s personal assets and the business. Banks and investors sometimes ask to see it, and courts look at whether one exists when deciding how seriously to take the LLC’s separate legal identity.

Get an EIN From the IRS

An Employer Identification Number is the business equivalent of a Social Security number. You need one to open a business bank account, hire employees, and file federal tax returns. The IRS issues EINs for free, and warns applicants to watch for third-party websites that charge for it.¹⁰

The fastest route is the IRS online application, which issues the number immediately once approved. You’ll identify a “responsible party” for the LLC and provide that person’s Social Security number, Individual Taxpayer Identification Number, or existing EIN.¹¹ Applicants who can’t use the online tool can file Form SS-4 by mail or fax, but those methods take much longer.

Choose How the LLC Is Taxed Federally

The IRS doesn’t treat LLCs as their own tax category. It assigns a default classification based on the number of members. A single-member LLC is treated as a “disregarded entity,” so its income and expenses flow onto the owner’s personal return. A multi-member LLC is treated as a partnership, filing an informational Form 1065 while each member reports their share individually.¹²

If the defaults don’t fit, you have two main alternatives. Form 8832 elects corporate taxation.¹³ Form 2553 elects S-corporation status, which can reduce self-employment taxes for owners who pay themselves a reasonable salary. The Form 2553 deadline is within two months and 15 days of the start of the tax year you want the election to apply to. Miss that window, and you either wait until the next tax year or file a late election with a reasonable cause explanation.

These elections are worth running by a tax professional before you file. The wrong choice can cost more in taxes or compliance work than the savings it was meant to produce, and changing classification later carries its own consequences.

Stay Current With the Texas Franchise Tax

Texas has no personal income tax, but it does have a franchise tax that applies to most LLCs. This is the ongoing obligation that trips up new owners more than anything else. Every Texas LLC must file a franchise tax report by May 15 each year, even if the company owes nothing.¹⁴

For 2026, LLCs with total revenue at or below $2,650,000 owe no franchise tax, but they still have to file. The report confirms the entity is active and updates ownership and financial information. LLCs above the no-tax-due threshold pay 0.375% (retail and wholesale) or 0.75% (all others) on their taxable margin.¹⁴

Penalties escalate quickly. Late reports carry a $50 penalty. Late tax payments get a 5% penalty within 30 days, 10% after that, plus interest starting 61 days past the due date.¹⁴ Keep ignoring the requirement and the Comptroller will forfeit the LLC’s right to transact business in Texas. Once that happens, the LLC cannot sue or defend itself in court, and each officer or director becomes personally liable for the company’s debts.¹⁵ That last piece is exactly the kind of personal exposure most people form an LLC to avoid.

Beneficial Ownership Reporting

The Corporate Transparency Act originally required new LLCs to file a Beneficial Ownership Information report with FinCEN within 30 days of formation. In March 2025, FinCEN issued an interim final rule that exempts all entities formed in the United States from this requirement. Only foreign entities registered to do business in a U.S. state currently have to report.¹⁶ The rule is still open to public comment and could change, so check FinCEN’s website before assuming you’re permanently off the hook.

Open a Business Bank Account

Once your LLC is approved and you have your EIN, open a dedicated business bank account. Mixing personal and business funds undermines the liability protection the LLC provides and complicates your taxes.

Most banks ask for the same core documents:

The file-stamped Certificate of Formation from the Secretary of State
Your EIN confirmation letter or online notice from the IRS
The operating agreement, especially for multi-member LLCs
Government-issued ID for each member or authorized signer

Some banks also require an initial deposit, and the minimum varies by institution. Having everything organized before you start the application keeps the process from stretching across multiple visits.

1
Texas Secretary of State. Certificate of Formation Limited Liability Company Form 205
2
State of Texas. Texas Business Organizations Code 5.053 – Distinguishable Names Required
3
State of Texas. Texas Business Organizations Code 5.201 – Designation and Maintenance of Registered Agent and Registered Office
4
Office of the Texas Secretary of State. Registered Agents
5
Office of the Texas Secretary of State. Form 401-A – General Information Acceptance of Appointment and Consent to Serve as Registered Agent
6
Texas Secretary of State. Form 205 – Instructions for Certificate of Formation – Limited Liability Company
7
Office of the Texas Secretary of State. Business Services
8
Office of the Texas Secretary of State. Contact the Corporations Section
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State of Texas. Texas Business Organizations Code 101.052
10
Internal Revenue Service. Get an Employer Identification Number
11
Internal Revenue Service. Employer Identification Number
12
Internal Revenue Service. Limited Liability Company (LLC)
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Internal Revenue Service. About Form 8832, Entity Classification Election
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Texas Comptroller. Franchise Tax
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Texas Comptroller. Franchise Tax Account Status
16
FinCEN.gov. FinCEN Removes Beneficial Ownership Reporting Requirements for US Companies and US Persons