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Guide: Starting a Texas LLC

Forming a Texas LLC: the Certificate of Formation and what comes next

Filing the paperwork takes an afternoon. Opening accounts, getting permits and surviving the first slow months is where cash planning starts.

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The filing itself

In Texas an LLC is created by filing a Certificate of Formation with the Secretary of State. The Secretary of State publishes the form for a limited liability company as Form 205, and the filing can be submitted online through SOSPortal without attaching the PDF. The filing fee is listed on the state’s fee schedule, so read the current amount there before you budget instead of relying on a number from a blog.

The certificate asks for the basics: the entity name, its registered agent and registered office, and the names and addresses of the people who will govern the company. Everything else about how the business runs lives in a separate document you write yourself.

A checklist in the order it usually happens

  1. Pick the name and check it against the state’s name records before you order signs or a website.
  2. Choose a registered agent with a Texas address who can accept legal papers during business hours. Owners often serve as their own agent at first and move to a service as the company grows.
  3. File Form 205 through SOSPortal and save the filed certificate.
  4. Write a company agreement. Even a one-owner LLC benefits from stating who owns what and who may sign.
  5. Get an EIN from the IRS if you will hire people or want a business bank account that is clearly separate from you.
  6. Open a business bank account and run every dollar of revenue and expense through it from day one.
  7. Register for the taxes that apply to you, such as the sales tax permit if you sell taxable goods or services, and calendar the franchise tax report that the Comptroller requires each May 15.

Where the first-year money goes

StageTypical cash needWho sets the timing
Formation and registrationsSmall, one-timeYou
Licenses and insuranceOften paid up frontRegulators and carriers
Equipment, build-out, first inventoryThe largest single outlayVendors and landlords
Payroll and rent before revenue stabilizesRecurring, every cycleThe calendar

The first row is cheap and the last is the one that closes new businesses. Plan for the months when the doors are open and revenue has not caught up with the cost of being open.

The bank account matters more than the entity

New owners often assume the filing is what makes a company fundable. In practice a funder looks at what comes through the business bank account: deposits, balances and consistency. An LLC whose owner pays groceries from the business account and vendors from a personal card leaves a muddy record. Keep the two separate from the first week.

That is also why a business with only a few months of history can still be considered. What a funder reads is the account, not the age of the certificate.

When working capital enters the plan

An LLC with steady deposits and a clear use for cash can ask for working capital without waiting years. Texas Biz Funding considers requests from $25,000 to $5,000,000, funded in as little as 24 hours after approval. The application takes about five minutes and uses a soft credit pull. Sole proprietors can apply too, so skipping the LLC is not a barrier to asking, though many owners choose one for liability reasons and should talk it through with an attorney or accountant.

This page is general information, not legal or tax advice.

Common Questions

What is the Texas form for forming an LLC?

The Secretary of State publishes it as Form 205, Certificate of Formation for a Limited Liability Company. It can be filed online through SOSPortal.

Do I need an LLC to apply for business funding?

No. Sole proprietors can apply. An LLC is a liability and structure decision, separate from whether a business can be funded.

Where do I find the filing fee?

On the Secretary of State’s fee schedule, which the form page points to. Check it on the day you file because fees can change.

When is the Texas franchise tax report due?

The Comptroller sets the annual report due date at May 15, moving to the next business day if it falls on a weekend or holiday.

Should the LLC have its own bank account right away?

Yes. A separate account keeps your books clean and gives any funder a clear record of the business’s deposits.

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