What are the requirements to form an LLC in Texas?

Creating a Texas LLC involves a series of legal steps outlined in the Texas Business Organizations Code (BOC). Skip any of these, and you're setting yourself up for serious headaches down the road.

These requirements cut across:

• Naming requirements
• Registered agent requirements
• Articles of Organization 
• Operating agreement 
• Other ongoing compliance obligations, like franchise tax filings

1. Name requirements

Your LLC name must end with "Limited Liability Company," "Limited Company," or abbreviations like "LLC," "L.L.C.," "LC," or "L.C." Texas won't process your Certificate of Formation without this.

Next comes uniqueness. Your name can't resemble an existing business so closely that people might get confused. Check the state's online business database before filing, or you'll waste $300 on a rejected application. Begin with a broad search using partial words on the SOSDirect database, then refine it until you're confident you have found the correct information.

Some names are off-limits regardless of uniqueness:

• Words suggesting government connections are banned outright. 
• Terms like "bank," "insurance," "trust," or "university" require extra paperwork or special licenses. 
• Texas also rejects names hinting at illegal activity or professional services you aren't qualified to provide. The Texas naming guide spells this out.

Need time to get your paperwork together? Reserve your chosen name for 120 days. Submit the reservation form online or by mail, pay the fee, and the name stays yours while you handle the rest. Check domain availability too, so your online presence matches your legal name.

2. Registered agent requirements

Texas demands a real person at a real address. The Business Organizations Code requires every LLC to have someone at a physical Texas street address who can receive legal documents, tax notices, and official mail. This registered agent must be in place from day one.

You have two choices:

• Any Texas resident who is at least 18 and willing to be present at their address during business hours can serve. You, a friend, or an employee works, but not the LLC itself. 
• Alternatively, hire a business that's authorized in Texas and offers professional registered agent services. These commercial agents keep your personal address private and forward documents immediately.

Either way, your Texas registered agent must sign a consent form, which you should keep with your records, and notify the Secretary of State of the agent's name and street address.

3. Articles of Organization (Certificate of Formation) requirements

In Texas, they're called Certificates of Formation, not Articles of Organization. You'll submit Form 205 to the Secretary of State to create your LLC.

Form 205 needs six key elements: 

• Your LLC's legal name and main address  
• A registered agent with a Texas street address (P.O. boxes are rejected) 
• Whether members or managers will run things 
• Your business purpose (simply saying "any lawful business" works) 
• Names and addresses of initial members or managers 
• The organizer's contact info. 

The organizer signs, and your registered agent must provide written consent.

You have three ways to file. Online through SOSDirect costs about $308.10 with processing fees added to the $300 base rate. Mailing or delivering the form to Austin keeps the cost at $300 flat, but it takes longer. You can pay extra for same-day or 24-hour processing.

Timing matters for business launches. Form 205 lets you delay the effective date up to 90 days by completing the elective date section. Otherwise, your LLC exists as soon as the Secretary of State stamps it "filed."

Double-check all signature requirements before submitting. The organizer must sign, and each additional organizer requires their own signature. Missing signatures or listing an unavailable agent will result in your filing being rejected, costing you time and the non-refundable fee.

4. Operating Agreement requirements

Texas doesn't require an Operating Agreement, but skipping it could be detrimental to your operations.  Without your own rules, you default to the Texas Business Organizations Code, and those generic terms rarely fit how you actually run your business.

A good Operating Agreement covers several critical areas:

• Start with who owns what percentage and what everyone contributed
• Specify whether members or managers run things and how voting works 
• Detail how profits and losses flow to members and when distributions happen.
• Include how meetings work, from giving notice to what counts as a quorum, plus clear rules for joining and leaving with buy-sell terms and valuation methods 
• Lay out exactly how dissolution and winding up would work

Writing all this down prevents expensive disputes later and reassures lenders, investors, and potential buyers that you've thoroughly considered the situation. Keep the signed document with your company records; you don't send it to the state, and there's no filing fee. Update it whenever ownership changes or new managers join the team.

5. Initial and ongoing compliance requirements

Getting your Certificate of Formation approved is just the start. Once Texas stamps your paperwork, a series of federal and state requirements kicks in, each with different deadlines and consequences.

• You'll need an Employer Identification Number from the IRS right away to open a bank account and maintain liability protection. 
• Licensing adds another puzzle piece. Texas does not have a general business license, so you must hunt down industry-specific permits from counties, cities, and professional boards.
• Opening a business bank account requires perfect timing. You need your approved Certificate of Formation, EIN confirmation, and operating agreement (for partnerships) all ready at once.
• Texas requires a Public Information Report to be filed annually by May 15, along with your franchise tax return. Even zero-tax LLCs are required to file this report, and penalties begin immediately if it is not submitted on time.

Additionally, your registered agent information must stay current. If your agent quits or moves, you have a small window to update the Secretary of State or risk default judgments and administrative dissolution.

Consequences of non-compliance

Skip one filing deadline or let your registered agent information expire, and Texas quickly escalates consequences. Immediate consequences include:

• Loss of good standing status
• Administrative dissolution 
• Personal liability exposure 
• Default judgments 

Staying compliant costs far less than rebuilding trust after dissolution, and significantly less than defending against lawsuits you never knew existed. The modest annual filing fees pale in comparison to the cascade of problems that follow non-compliance.

Eliminate Texas LLC compliance complexity with Discern

Discern automates your compliance filings from formation through ongoing requirements. Our platform:

• Handles your Certificate of Formation filing 
• Provides professional registered agent services 
• Tracks every federal and state deadline automatically.

Ready to transform Texas LLC compliance from administrative burden into automated background protection? Book a demo and discover how Discern eliminates formation complexity across all states where you operate.