Form an LLC in Texas

Tap into the world’s 8th largest economy. Zero personal income tax, strong asset protection, and the “Big Business” brand.

🤠 Everything Is Bigger in Texas (Including Opportunities)

Texas isn’t just a state—it’s an economic powerhouse. If Texas were a country, it would be the 8th largest economy in the world, ahead of Canada, Russia, and Australia.

🎯 At a Glance: Texas LLC

💡 When Texas Makes Sense

Choose Texas if:

• ✅ You’re investing in Texas real estate (Houston, Dallas, Austin markets)
• ✅ You need a serious business address (not a “tax shelter” vibe)
• ✅ You’re building a tech startup in Austin (joining the California exodus)
• ✅ You have physical operations in Texas (warehouse, office, employees)
• ✅ You want strong asset protection under Texas law

Choose Wyoming or New Mexico if:

• 🚫 You run a pure online business with no physical presence
• 🚫 You want to save $200 on formation costs
• 🚫 You prioritize privacy over brand prestige
• 🚫 You don’t want to deal with annual tax reports (even if $0)

🎯 Step 1: Choose Your Texas LLC Name

Texas has standard naming requirements with one quirk:

• Must include “LLC”, “L.L.C.” or “Limited Liability Company”
• Cannot use restricted words like “Bank”, “Insurance”, “University” without approval
• Must be distinguishable from existing Texas entities
• Cannot imply government affiliation
• Cannot include “Texas” or “TX” in certain contexts without approval

Check Availability: Search the Texas Comptroller Taxable Entity Search to see if your name is available.

💡 Pro Tip: If you’re targeting international clients, a Houston or Dallas address in your LLC name can project stability and scale.

🩹 Step 2: Get a Registered Agent (The Privacy Band-Aid)

Texas has a privacy problem, but it’s not as bad as Florida.

🏆 Recommended: Northwest Registered Agent

Northwest has physical offices in Houston, Dallas, and Austin and provides critical privacy protection:

• ✅ $125/year – Flat rate, no hidden fees
• ✅ Their Texas address becomes your LLC’s public address
• ✅ May 15th Franchise Tax deadline reminders
• ✅ Same-day document scanning & email forwarding
• ✅ Filters spam mail and junk solicitations

💡 Why This Matters: After you form your Texas LLC, you’ll receive dozens of scam letters trying to sell you overpriced services. Northwest filters this junk so you only see legitimate documents.

Get Your Texas Registered Agent →

📝 Step 3: File the Certificate of Formation (Form 205)

Texas calls the formation document “Certificate of Formation”. You file it through SOSDirect—Texas’s online portal.

💻 Filing Options

What You’ll Need

1. LLC Name (verified as available on Texas Comptroller search)
2. Registered Agent (with a Texas physical address)
3. Registered Office Address (your agent’s Texas address)
4. Management Structure (member-managed or manager-managed)
5. Organizer Information (the person filing the document)
6. Effectiveness Date (immediate or future date)

📉 The Texas Franchise Tax (Not as Scary as It Sounds)

This is where most people panic. Let’s clear up the confusion:

The Myth vs. The Reality

How Texas Franchise Tax Works

Texas charges a franchise tax on businesses, but there’s a massive exemption:

🗓️ The May 15th Deadline (Mark Your Calendar)

How to File:

1. Log in to Texas Comptroller Webfile System
2. Select “Franchise Tax Report”
3. If revenue under $1.23M, select “No Tax Due”
4. Submit (takes 10 minutes, costs $0)

💡 Pro Tip: Northwest Registered Agent sends reminders in April so you never miss this deadline.

🛡️ Step 4: Get Your EIN & Operating Agreement

After Texas approves your LLC (usually 3-5 days), you need two documents:

1. EIN (Employer Identification Number)

Same process as other states. Non-residents can:

• Apply by fax – Fill out Form SS-4 and fax to the IRS (4-6 weeks)
• Use a service – Northwest can get your EIN in 1-2 days

👉 Read our complete EIN guide for non-residents

2. Operating Agreement

Texas does NOT require you to file an Operating Agreement with the state, but it’s legally recommended and banks will demand it.

What to include:

• Member names and ownership percentages
• Capital contributions
• Profit/loss allocation
• Management structure (member-managed or manager-managed)
• Buyout provisions (important for multi-member LLCs)

💡 Texas-Specific Note: Texas has strong asset protection laws, but only if your Operating Agreement is properly drafted. Don’t skip this step.

💸 Texas Tax Structure

Personal Income Tax: 0% (Texas’s Best Feature)

Texas has NO state income tax. This is why businesses and high earners are fleeing California for Texas.

For LLC owners: If your LLC is a pass-through entity (default for single-member LLCs), your profits flow to your personal tax return. Since Texas has no personal income tax, you pay $0 to the state.

Franchise Tax: 0.375% – 0.75% (Only Above $1.23M)

As explained above, most small businesses owe $0. The franchise tax only kicks in above $1.23M in annual revenue.

Sales Tax: 6.25% (Plus Local)

If you sell physical products to Texas customers, you must collect and remit Texas sales tax:

• Base state rate: 6.25%
• Local jurisdictions add up to 2% (varies by city)
• Total range: 6.25% – 8.25%

⚠️ E-commerce Nexus: If you store inventory in a Texas warehouse (e.g., Amazon FBA in Dallas), you have nexus and must collect Texas sales tax.

🏦 Opening a US Bank Account

Texas LLCs are highly trusted by banks—they signal “real business” rather than “tax optimization”:

1. Mercury (Best for Tech Startups)

• ✅ 100% online application
• ✅ No minimum balance or monthly fees
• ✅ Fast approval (24-48 hours)
• ✅ Perfect for Austin startups

2. Wise Business (For International Payments)

• ✅ Multi-currency accounts (USD, EUR, GBP, MXN, etc.)
• ✅ Low fees for sending money internationally
• ✅ Easy approval for Texas LLCs

3. Relay Bank (For Real Estate Investors)

• ✅ Multiple checking accounts (separate by property)
• ✅ Excellent customer support
• ✅ Built for small businesses

Documents banks will ask for:

1. Certificate of Formation (from Texas Secretary of State)
2. EIN Confirmation Letter (from IRS)
3. Operating Agreement
4. Your passport + proof of address

💡 Pro Tip: Banks trust Texas LLCs more than Wyoming/Delaware for real estate deals. If you’re buying property, a Texas LLC signals legitimacy.

⚖️ Texas vs. Wyoming vs. Delaware

*Texas annual fee is $0 if revenue is under ~$1.23M, but you must file a Franchise Tax Report.

Choose Texas if:

• ✅ You’re investing in Texas real estate (Dallas, Houston, Austin markets)
• ✅ You need a “Big Business” address that commands respect
• ✅ You’re building a tech startup and want an Austin address
• ✅ You have physical operations in Texas
• ✅ You want strong asset protection under Texas law
• ✅ You’re okay with filing an annual tax report (even if $0)

Choose Wyoming if:

• ✅ You run an online/digital business with no physical presence
• ✅ You want maximum privacy (no public ownership records)
• ✅ You prefer lower formation costs ($100 vs $300)
• ✅ You don’t want to deal with franchise tax reports

Choose Delaware if:

• ✅ You’re raising venture capital or planning an IPO
• ✅ Investors require a Delaware entity
• ✅ You need the Court of Chancery for complex disputes

👉 Still deciding? Compare all 50 states side-by-side

❓ Frequently Asked Questions

🤠 Ready to Form Your Texas LLC?

You have two paths—but with a $300 non-refundable filing fee, professional help makes sense:

Launch Your Texas LLC →

🤠 World’s 8th Largest Economy + 0% Income Tax + Strong Asset Protection

✅ Fast 3-5 day approval | ✅ Houston/Austin/Dallas addresses | ✅ $0 annual tax (under $1.23M)