How to Start a Single-Member LLC in Texas
Texas is one of the most business-friendly states in the US, so your venture’s chances of success are pretty high. And a single-member LLC (SMLLC) structure will not only ensure liability protection for you but also add credibility to your whole enterprise.
If you want to open an SMLLC in this jurisdiction, you should be aware of the unique regulations valid in the state. Our article will take you through how to create a single-member LLC in Texas in a stepwise manner.
File a Single-Member LLC in Texas by Sticking to This Simple Plan
- Select a Name for Your Texas SMLLC
- Designate a Registered Agent in Texas
- File the SMLLC Formation Form in Texas
- Write Down the Bylaws for Your Texas SMLLC
- Obtain an EIN for Your SMLLC in Texas
Or delegate the formation job to a professional helper:
- Northwest: $100 + state fee
- Tailor Brands: $199 + state fee
How to Set up a Single-Member LLC in Texas: Instructions to Follow
Limited liability companies are easy to set up. Formally, Texas single-member LLC registration is about state filing. Yet, maintaining and operating a company is more than registering a legal entity.
Launching a business is a multi-stage process. And we’ve made a step-by-step guide to help you open a single-member LLC in Texas without a hassle.
- Select a Name for Your Texas SMLLC
Each state has its own naming rules for LLCs, and Texas is not an exception. The naming requirements you’ll have to stick to in this state are as follows:
- You should include the term “Limited liability company”, “Limited company”, “Limited”, “LLC”, or “Ltd.” in the company name;
- You are forbidden to use official terms in your future company name such as “state department”, “treasury”, “FBI”, “CIA”, etc.;
- You should make sure your LLC name is unique in Texas by doing a name search. You cannot use the name of an already existing legal entity;
- Avoid using monikers that sound very similar to already registered business names, this could cause trademark problems;
- To use such terms as “bank”, “doctor”, “attorney”, “college” and the like in your company name, you should get appropriate certifications first.
Should the chosen name version fail to match any of the above rules, your filing application will be rejected in Texas.
- Designate a Registered Agent in Texas
A registered agent (RA) is a law requirement for limited liability companies across the states, no matter if you file a single-member or a multi-member entity. So, you should appoint one in Texas before submitting your application.
You need to choose someone with a physical address in the state who will be permanently present under that address during normal business hours to handle official correspondence on behalf of your Texas SMLLC.
Taking into account the fact that you can designate anyone older than 18 years of age or a legal entity authorized to operate in TX, you’ll have the following RA options:
- Yourself or someone you trust enough to delegate this function;
- A third party with an appropriate professional background such as an accountant, tax advisor, financial consultant, or business attorney;
- A professional RA service that will organize the mail processing process in the best manner and provide other business assistance you might need.
Our recommendation is one of Texas registered agent services. Though payable, it won’t cost you a fortune. Meanwhile, it will save your peace of mind and stand on guard for your company’s compliance.
- File the SMLLC Formation Form in Texas
At a legal level, creating a single-member LLC in Texas is about filing the Articles of Organization with the TX Secretary of State. It’s a kind of LLC passport that validates a company as an independent legal entity.
To file the Articles of Organization in Texas, you need to fill out Form 205 and submit it
- Online via the SOS official website;
- By mail to
Secretary of State
P.O. Box 13697
Austin, TX 78711
- In-person to
James Earl Rudder Office Building
1019 Brazos
Austin, TX 78701
- Write Down the Bylaws for Your Texas SMLLC
Many entrepreneurs would disregard this point when forming a single-member LLC in Texas. Yet, we strongly recommend that you treat it seriously and have it set during the business formation stage.
An Operating Agreement or Company Agreement in TX is not a statutory requirement. Yet, this document is a vital operating tool to have for the following reasons:
- To clearly determine the ownership structure and authorities;
- To outline operating procedures for efficient company management;
- To prevent conflicts and disagreements between the company members regarding some important issues and business situations.
You can hire an attorney to complete the document for you or do it on your own by downloading one of the free online templates.
- Obtain an EIN for Your SMLLC in Texas
An Employer Identification Number (EIN) or Federal Tax ID is issued by the Internal Revenue Service for legal entities and has the same function as a Social Security Number for individuals.
An EIN is used to identify the company as a taxpayer and make it traceable for statutory and government authorities. You will need an EIN to do the following:
- Set up a separate bank account for your business;
- Employ workers and pay salaries to them;
- Handle some types of taxes and regulatory charges.
The IRS issues EINs for free. You can obtain one once your SMLLC is registered with the TX Secretary of State. You can apply for an EIN either online or by mail. Online filings are processed immediately.
How Much Is a Single-Member LLC in Texas
In some states, a filing fee depends on the filing method you choose. However, the cost of a single-member LLC in Texas is $300, no matter how you submit your formation docs to the Secretary of State.
Some expenses that might add to your final payment list include:
| Service | Cost |
|---|---|
| Name reservation if you need to put your desired business name on hold for a period of up to 120 days | $40 |
| RA service annual subscription if you hire a dedicated assistant for your RA function | $50 to $300 |
| Licensing charges to get must-have certifications for your business | Varies |
| DBA registration if you decide to run your enterprise under a name different from your registered business moniker | $25 |
| Domain and URL registration to set up your online presence from the start | Varies |
Prime Post-Formation Tasks for Your SMLLC in Texas
When you’ve done with your Texas single-member LLC registration, there are three important steps you should take immediately after formation to launch your business on the right foot and make it operable:
- Settle a dedicated bank account for your entity to split personal and business assets and cash flows to maintain the liability shield;
- Get the licenses and permits required to run a business in Texas;
- Purchase insurance policies to safeguard your enterprise against the most common risks and potential damages.
Keeping Your Company Compliant in TX
When forming a single-member LLC in Texas, you will not only get rights and protections but also have certain obligations to keep your entity eligible. Those are compliance requirements you should observe such as:
- Maintaining a valid RA in Texas;
- Maintaining active licenses and other certifications pertinent to your type of business activity;
- Filing an annual information report to the State Comptroller’s office before May 15 to keep up-to-date company records;
- Filing an annual franchise tax report if your business receipts exceed $1.18 million.