How to open your LLC in Texas?
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[seopress_breadcrumbs]Registering an LLC in Texas is an excellent option for foreigners who want to establish their LLC in the United States in a state with a dynamic and growing economy, as well as a welcoming business environment.
Although the $300 LLC opening costs in Texas are a little high compared to other states, the registration process is simple and the state offers many tax and legal benefits for business owners. Additionally, Texas is one of the few states that does not have a state personal income tax, which can be very attractive to entrepreneurs.
If you are considering the option of opening your LLC in Texas, but you still don't know if it is the best option for you, or if you have questions about the steps to follow to do so, don't worry. In this complete guide, we will provide you with all the necessary information you need to know before creating your LLC in the state of Texas. Let's get started!
Article indexWhy open an LLC in Texas?
There are numerous reasons why registering an LLC in Texas may be a great option for you:
Limited Liability
In the event that your Texas LLC is sued or accumulates debt, the limited liability that LLCs enjoy ensures that its members' personal assets are not vulnerable. This is what is known as a corporate veil, which is essentially a legal barrier that separates personal assets from business assets.
Tax Advantages
Forming an LLC in Texas can also provide the business with tax benefits. In a Texas limited liability company, the operating costs and expenses of the business can be deducted from the gross income of the business. Texas limited liability companies can also deduct depreciation on the company's assets as part of the limited liability company's balance sheet.
In addition, like all LLCs, Texas LLCs also take advantage of “Pass-Through Taxation”: the company's tax responsibilities are transferred to the members' personal tax returns.
Tax flexibility
An LLC can choose how to pay taxes. LLCs are taxed as “Sole Proprietorships” if they are Unipersonal LLCs, or as “Partnerships” if they have several members. However, LLCs can choose to be taxed as an S Corporation or a C Corporation.
Series LLC
Texas is one of the few states that allow series LLCs. This can allow you to create essentially a single LLC with an unlimited number of LLCs underneath, paying for the creation of a single LLC.
Series LLCs are very popular for separating assets and liabilities between multiple real estate properties, franchises, branch offices or other types of businesses.
Easy to establish and maintain
Opening an LLC in Texas is easy. It can be done online on the Texas secretary of state website. It usually takes about 2 weeks and the registration fee is $300, which is affordable for most businesses.
Another important advantage of forming your LLC in Texas is the lack of legal restrictions on who can be a member of an LLC. Specifically, the Texas Business Organizations Code does not impose residency or age requirements on who can be a member of an LLC. A member may be an individual, partnership, corporation, trust or any other legal or business entity and is not required to be a resident of Texas.
Who can open an LLC in Texas?
Anyone can open an LLC in Texas, whether it is a single person, a company, a group of people, or a foreign company. Texas law does not establish specific requirements regarding the residency or nationality of the owners of an LLC, which means that the owners can be residents of any part of the world.
How to register an LLC in Texas?
Now that you know that Texas is the state you prefer when open your LLC in the United States and that you meet the requirements to open it, let's see the steps that must be followed to have an LLC up and running in Texas.
1. Choose the name of your LLC
Choosing the name of the LLC is the first stage to carry out. Names must meet Texas naming requirements. The following are the most important requirements to keep in mind:
- Your business name must include the words Limited Liability Company, LLC, or L.L.C.
- Your name must not have been registered by another LLC in Texas. To find out the availability of names in Texas, we recommend using this LLC name validator.
- The company name cannot contain words used to name a government agency (i.e. Department of State, CIA, FBI, Treasury, etc.)
- Certain restricted words (bank, lawyer, credit union, etc.) may require additional documentation and licensing procedures.
Additional considerations:
- Domain availability for your website: Before deciding on the name of your company, it is a good idea to check if the domain is available.
- Reserve your name: If you are not going to open your LLC immediately, but want to reserve your name, you can do so for up to 120 days by paying a reservation fee and submitting the corresponding form to the state authority.
2. Choose the registered agent
It doesn't matter if you decide register your LLC in Delaware, open it in Florida, create it in Wyoming or in New Mexico, every LLC must have a registered agent. A registered agent is the person or entity authorized to receive notices and other official legal documents on behalf of your LLC. Once the registered agent receives the documents, they are in charge of transferring them to the owners of the LLC.
A registered agent can be a person (including yourself or an employee of your LLC) or an entity that offers registered agent service. They must meet the following criteria:
- Entities (or companies) must offer registered agent services.
- The agent must have an address in Texas.
- The agent must be on-site and available to accept documents during normal business hours.
If you are interested in an entity that offers registered agent service, we have these recommended companies, which are responsible for registering your LLC and providing you with registered agent services, with annual renewal
3. Prepare and present the Certificate of Incorporation
The Certificate of Incorporation (commonly called Articles of Organization in other states) is a document that officially establishes your LLC in Texas by submitting basic information about it.
To create your LLC, you must download, complete and file the Certificate of Formation with the Texas Secretary of State. Submitting it costs $300. Although it may seem like a lot of work, it simply means filling out a relatively simple online form and submitting it. You can also mail it.
To prepare your Certificate of Incorporation, you will typically need the following information:- The name of your LLC
- The name and address of your registered agent.
- A reason you formed the LLC
- The duration of the LLC (perpetual or with a closing date)
- Management structure: Will managers or members manage the LLC?
- Name and address of each member or manager
- Name and address of the organizer of the LLC
- The effective date of the Certificate.
- The person forming the LLC must sign the Certificate.
5. Write your Operating Agreement
Un operating agreement is a document that describes the way your LLC will conduct its business. This document lists the details of the financial, legal and management rights of all members of the LLC: distribution of dividends, abandonment clauses, non-competition, capital contributions...
Texas does not require LLCs to file an operating agreement, but it is an essential component of your business. Having a written operating agreement is useful for several reasons, including resolving disputes that may arise over financial arrangements and other potential disputes. Without an agreement in place, courts make decisions based on state law, not necessarily what is in the best interests of the LLC and its members.
What you include in your operating agreement depends on you, your partners and the specific needs of your business. Here we have a free template, which will allow you to have a good basis on which to write your operating agreement. .
Download Operating Agreement template6. Get an EIN
The Business Identification Number (EIN) assigned by the IRS serves to identify your LLC for tax purposes. EINs are free and available on the IRS website.
The EIN will help us with the following:
- Declare and manage taxes at the state and federal level.
- Open a business bank account.
- Hire employees.
Delegate the opening of your LLC in Texas and avoid all these complex processes
What do I do after registering my LLC in Texas?
Registering your LLC is just the beginning. Once you have carried out all the previous steps, there are some points that we recommend that you take into consideration.
Dar de alta una cuenta de banco dedicada a tu LLC de Texas
In order to benefit from the protection of your personal assets that opening an LLC in Texas offers, it is essential that you haveseparate your personal assets from those of the company.
For this, it is necessary to open a business bank account, 100% dedicated to the activities of your Texas LLC.
Likewise, by having a bank account dedicated exclusively to your company, you will be able to obtain other complementary privileges such as simple and unified accounting management, which will allow you to save a lot of time when complying with your tax obligations and submitting financial reports.
The recommended banks for your business account as a foreigner from the USA are Mercury, Relay, Revolut, AirWallex, Wise, Bank of America, Chase.
Planifica la imposición fiscal de tu LLC de Texas
Texas requires all LLCs to file an Annual Franchise Tax Report with the Texas Comptroller of Public Accounts each year. Your rate will be determined by your LLC's total income and/or the type of business you own. Most businesses will not pay any taxes. However, you will have to file a declaration. Here's a quick breakdown of the rates:
- If your total income is $1,230,000 or less, you probably won't pay taxes.
- If your income is greater than $1,230,000, but less than $20 million, you will pay 0.331%.
- Retail or wholesale businesses with revenues over $20 million will pay 0.375%.
- Non-retail or wholesale businesses with profits over $20 million will pay 0.75%.
If your LLC in Texas has American employees, you will have to pay employer taxes.
Meet your annual obligations
Your LLC must meet certain obligations every year, such as renewing your Registered Agent.
As we said before, if your LLC does not have a registered agent, you will be violating state legal requirements and could lose important notices and documents. .
Then there is the Texas annual report that we cited previously, which must be submitted each year by May 15. The first report should not be submitted until one year after your LLC is incorporated.
The penalty for delay is $50 + 5% interest on the fee + 5% additional interest if there is a delay of more than 30 days.
Apply for Licenses
The State of Texas does not require a general "business" license. However, some types of businesses require state licenses. For more information, visit the Texas Department of Licensing and Regulation. You can also download the Guide Texas Business Licenses and Permits. Most cities and counties in Texas do not require a local business license. Check your city or county government website to determine local requirements.
Do you still have questions about registering an LLC in New Mexico?
What is an LLC?
A limited liability company or LLC is a business structure that legally separates the business from its owners, which protects the members of the business from legal liabilities.
In addition, the LLC offers tax transparency, meaning that taxes are not paid through the company, but instead the members of the LLC are taxed individually as individuals. If all members of the LLC are foreigners and non-U.S. citizens, then no taxes are due in the United States.
How much does an LLC cost in Texas?
The cost to register a Texas LLC is $300. This does not include other costs such as renewing the registered agent or paying the annual franchise tax (which for many businesses, is $0).
How long does it take to open an LLC in Texas?
According to the Texas Secretary of State, the standard processing time for LLC formation documents is 10 to 12 business days.
Deadlines may fluctuate depending on demand and staff capacity.
What are the obligations of an LLC in Texas for Non-Resident?
A Non-Resident Texas LLC must:
- File the Annual Franchise Tax Report with the Texas Comptroller of Public Accounts each year.
- Renew your registered agent.
How many members can an LLC have in Texas?
Texas LLCs can have a single member (Single Member LLC) or more members (Multi-Member LLC).
How are Texas LLCs taxed?
By default, LLCs in Texas are taxed as pass-through entities This means that the profits of the LLC are distributed to the members, who then report their shares on their personal tax returns.
LLCs can also file paperwork with the IRS to be taxed as an S-corp or C-corp.
Are Texas LLCs anonymous?
Although Texas law does not allow anonymous LLCs to be formed within the State of Texas, you can protect the privacy of your LLC by establishing your LLC in a state that allows anonymous LLCs (Delaware, Wyoming, Nevada or New Mexico) and then continue doing business in Texas.
Written by
Ignacio Navarro
Ignacio Navarro is a Certified Public Accountant, graduated in 2020 from the National University of Tucumán. Founder of Start Companies since 2023, he advises clients worldwide on forming LLCs in the United States and on proper tax filing. His expertise combines legal, tax, and practical knowledge, offering a comprehensive service that spans from company formation to bank account setup and sales platform integration.
