To open an LLC in Texas, you generally must choose a unique business name and designate a registered agent (a person or company with a physical address in Texas to receive legal documents). Next, you must file a Certificate of Formation with the Texas Secretary of State and it can take 4-12 business days to process if filed online.
Although it is not legally required, it is highly recommended to draft an Operating Agreement detailing the management of the LLC and the responsibilities of its members. Finally, you will need to obtain an Employer Identification Number (EIN) IRS for banking and tax purposes, in addition to considering any specific state or local licenses or permits that your type of business may require.
Reasons to form an LLC in Texas
Starting a business in the United States may seem like a complicated process, but states like Texas offer an excellent combination of tax benefits, administrative ease and growth opportunities for those who wish to form an LLC (Limited Liability Company).
This type of business structure has become a favorite among entrepreneurs, freelancers, investors and small businesses, thanks to its legal flexibility, tax advantages and operational simplicity.
If you are considering opening an LLC in Texas, this article is for you. We will explain step by step what an LLC is, why Texas is one of the best states to incorporate, what are the requirements and necessary paperwork, how to keep your company in order and, above all, how to take advantage of its tax and legal benefits in a strategic way.
Forming an LLC doesn't just mean registering a name: it means making important decisions that will impact your legal liability, your tax burden, your financing opportunities and the growth of your business. That's why good advice from the start can make the difference between a successful filing and a long-term headache.
At JJRB, we help entrepreneurs and business owners from the U.S. and abroad every day to open and operate their LLCs in Texas, with a comprehensive approach that includes legal, tax and accounting. Because it's not just about starting a business, but to create a solid, profitable and legally compliant structure.
In this guide you will find:
- What is an LLC and why is it convenient to open one in Texas.
- Requirements, costs and detailed steps to form an LLC.
- Tax and accounting obligations of an LLC in Texas.
- Practical advice for foreigners who want to start a business from abroad.
What is an LLC?
An LLC (Limited Liability Company) is a corporate legal structure that combines the best of two worlds: limited liability protection offered by a corporation and fiscal flexibility and management of a sole proprietorship or partnership. In other words, forming an LLC means that your personal assets (such as your home or savings) will be protected from debts or claims of the business, as long as proper legal separation is maintained.
In addition, the LLC allows you to choose how you want your business to be taxed: as a pass-through entity or, if you prefer, as a corporation. This adaptability is one of its greatest attractions.
Why open an LLC in Texas?
Texas is one of the most business-friendly states in the U.S., especially if you're looking for stability, low taxes and a dynamic business environment. Let's see why many entrepreneurs choose this state:
a) No state income tax: Texas does not charge income tax at the state level for individuals or businesses. This means that your earnings will be subject to federal taxes only, which can be a considerable savings compared to states like California or New York.
b) Affordable training and maintenance costs: Forming an LLC in Texas costs about $300 (form 205 with the Texas Secretary of State). Unlike other states, it does not require complex annual reports, only a simple franchise tax report and no cost if your LLC bills below certain thresholds.
c) Strong legal protection: Texas offers clear and stable legislation for the operation of LLCs. In addition, it allows LLCs to be formed with a single member (which facilitates individual entrepreneurship) and protects the identity of the owners if properly structured.
d) Competitive business environment: Texas has one of the most robust business ecosystems in the country, with cities like Austin, Houston and Dallas leading the way in economic growth, innovation, labor talent and access to capital.
e) Facilities for foreigners: Texas does not require residency to open an LLC. In fact, anyone in the world can own an LLC in Texas, as long as the proper processes are followed, such as obtaining an EIN (Employer Identification Number) and tax registration.
If you are thinking about entrepreneurship in the U.S., either as a local or as a foreigner, an LLC in Texas can be your best letter of entry. It allows you to operate legally, protect your assets, organize your finances and plan your tax strategy from a solid and flexible platform.
At JJRB we have helped dozens of entrepreneurs to form their LLC in Texas quickly and correctly, adapting the structure to their needs. Because opening a company is not just about filing a document... it is about preparing the ground to grow with security and vision.
Requirements and steps to form an LLC in Texas (step by step)
Forming an LLC in Texas is an accessible process, but it requires following specific steps and complying with certain legal requirements. A good planning and accompaniment at this stage is key to avoid costly mistakes or rejections in the process. Below we explain the process step by step:
Step 1: Choosing the LLC name
Your company name should:
- Include the phrase "Limited Liability Company" or the acronym "LLC" or "L.L.C.".
- Be unique to Texas (you can check availability on the Texas Secretary of State's website).
- Not contain restricted words (such as "bank", "insurance", "university") without special authorization.
Practical recommendation: Before registering it, also verify that the web domain is available and that there is no trademark registered with that name in the USPTO.
Step 2: Appoint a Registered Agent
This agent is the person or entity that will receive legal and tax notices on behalf of the LLC. Must:
- Have a physical address in Texas (PO Boxes are not accepted).
- Be available during business hours.
Reflection: If you live outside of Texas or outside of the U.S., you can hire an authorized registered agent service. At JJRB we offer this integrated solution for remote customers.
Step 3: Submit Training Certificate (Form 205)
This is the official document that legally creates the LLC with the state. You must submit it to the Texas Secretary of State, either online or by mail.
- Cost: $300 USD
- ContentThe following information is required: name of the LLC, address, registered agent, business purpose (may be "general purpose"), duration (perpetual or limited) and signature of the organizer.
Step 4: Create the Operating Agreement
Although Texas does not legally require it, this document is essential to define:
- How the LLC will be managed.
- Rights and duties of members.
- Profit sharing.
- Voting processes, admission or withdrawal of members, etc.
Practical applicationThis document protects you in case of internal disputes and before the IRS if you want to opt for a specific tax treatment (such as S Corp).
Step 5: Obtain an EIN (Employer Identification Number)
It is the "fiscal number" that allows you to:
- Open business bank accounts.
- Hiring employees within the country.
- File federal taxes.
You can get it for free at the IRS website, even if you are a foreigner (although in that case you will have to do it by mail or fax).
Step 6: Comply with tax obligations and licenses
Once the LLC is created, you must:
- File the Texas Franchise Tax Report each year.
- Obtain local permits or licenses if your activity requires it (e.g., sales license or municipal permits).
- Register your LLC to collect Sales Tax if you sell taxable products.
ImportantAlthough Texas does not charge state income tax, it does require compliance with the franchise tax, although in many cases the rate is zero.
Step 7: Open business bank account and separate finances
Never mix personal money with business money. A business bank account is crucial for:
- Maintain liability protection.
- Facilitate accounting and audits.
- Access to financing or business cards.
Although the process of forming an LLC in Texas can be done without an attorney, having specialized advice avoids mistakes that can be costly: rejected names, poorly defined structures, unfavorable tax treatment or non-compliance that can result in fines.
At JJRB we guide our clients step by step, including drafting the operating agreement, handling the EIN, initial tax compliance and bank opening. Because the key is not only to open your LLC, but to do it right from day one.
Tax and Accounting Obligations of an LLC in Texas
Creating an LLC is only the first step. Once incorporated, it is essential that the company complies with its tax and accounting obligations to avoid penalties, optimize its tax burden and maintain the legal protection that the structure offers. In this section we explain the main duties that an LLC must comply with, both at the state and federal level.
Texas Franchise Tax (State Tax)
All LLCs registered in Texas are required to file a Franchise Tax Report before the Comptroller of Public Accounts each year, even if they have no activity or income.
- If your LLC has revenues less than $1.23 million (2024), you only need to file a No Tax Due Report.
- If you exceed that threshold, you will have to pay a percentage (generally 0.375% for wholesalers and retailers; 0.75% for other businesses).
- Expiration date: May 15 of each year.
Practical recommendationEven if you don't have to pay, filing the report is mandatory. Failure to do so may suspend your LLC with the state.
2. Federal Income Tax Return
The tax treatment of the LLC before the IRS will depend on its structure:
- Single-member LLCThe income is treated as a pass-through entity, and the income is reported on Schedule C of the owner's Form 1040.
- LLC with several membersThe partnership is treated as a partnership, and must file Form 1065 (Partnership Return).
- LLC electing to be treated as a corporation: you may elect to file Form 1120 (C Corp) or 1120S (S Corp), if you qualify.
3. Payment of Estimated Taxes
Owners of LLCs (especially pass-through entities) must pay quarterly estimated taxes on their income, since they do not have automatic withholding as in an employment.
Key dates: April 15, June 15, September 15 and January 15 of the following year.
4. Local licenses and permits
Although Texas does not require state licenses for all activities, many counties or cities do require specific permits (e.g., health, construction, alcohol sales, etc.).
CouncilAlways check with the county where your LLC operates. Failure to obtain a license can result in fines and even closure of operations.
5. Accounting obligations
Although Texas does not require detailed bookkeeping as in other countries, it is necessary to keep clear records for
- To declare taxes correctly.
- Obtain financing or credit
- Prepare financial reports for investors or partners.
- Facilitate audits or reviews.
Organized accounting helps to identify deduction opportunities, such as:
- Operating expenses
- Depreciation of equipment
- Vehicle use
- Home office (if applicable)
6. Payroll taxes (if you hire employees)
If your LLC has employees, you must register as an employer and comply with:
- Withholding and payment of Social Security and Medicare (FICA).
- Payment of Federal Unemployment Tax (FUTA).
- Federal and state income withholdings.
- Periodic filings with the IRS and the state.
Note: Payroll management can be complex. Automating with software or outsourcing the process is a smart decision.
The tax obligations of a Texas LLC are clear, but compliance requires organization, planning and - in many cases - expert advice. Failure to do so can compromise not only your business, but also your personal liability if the legal separation breaks down.
At JJRB we help our clients not only comply, but optimize their tax burden, identify deductions, structure the LLC to pay less legally and avoid common mistakes that can cost thousands of dollars.
Because The success of an LLC depends not only on how much it sells, but also on how it manages what it earns.
For any business in the USA, from a freelancer billing on their own to an LLC with employees, tax planning can be the difference between surviving or scaling up strongly. Below, we review the main strategies you can legally apply to reduce your tax burden, protect your business and reinvest wisely.
Conclusions
Opening an LLC in Texas is one of the smartest decisions entrepreneurs, investors and professionals looking to start or expand a business in the United States can make. Thanks to its friendly tax environment, low maintenance costs, sound legislation and ease of incorporation, Texas has become one of the preferred destinations for business formation by both U.S. citizens and foreigners.
As we have seen, forming an LLC involves much more than filling out a form: it requires strategic thinking about legal structure, tax planning, regulatory compliance and medium and long-term growth projection. A well-formed and properly managed LLC not only protects your personal wealth, but also allows you to save taxes, improve your business credibility and prepare you to access financing or investment.
The advantages are clear: legal protection, operational flexibility, multiple tax options and access to one of the most competitive markets in the world. But there are also responsibilities: comply with annual reports, keep orderly books, file timely returns and, above all, make informed decisions from the outset.
At JJRB, we understand that each case is unique. That is why we offer comprehensive advice to form your LLC in Texas, from choosing the name and obtaining the EIN to designing the most efficient tax structure. We accompany both local and foreign entrepreneurs who wish to operate legally and safely in the U.S., ensuring that your company starts with solid foundations and vision for the future.
Because opening an LLC is the first step. Getting it right is the real beginning of success.
