How To Fill Out The Texas Certificate of Formation
Are you looking to register a new Texas LLC and unsure of the steps?
You are in the right place! Below, I’ll go over the steps and answer some common questions people have when starting their business in Texas.
Zenbusiness and IncFile are running a special where you only pay state fees for your LLC formation!
Steps To Fill Out The Texas Certificate of Formation
The Texas Certificate of Formation is the official document filed with the Texas Secretary of State to establish a Limited Liability Company (LLC). After the filing is approved by the state, the business can officially begin operating and register for the necessary business licenses and permits.
To form a Texas LLC, you will need to submit the completed Form 205 – Certificate of Formation form to the Texas Secretary of State. To submit the paperwork, either file online through SOSDirect, which is the Secretary of State’s website to file online, or download the Texas LLC Certificate of Formation (Form 205).
In this example, I’ll go over filling out the paper form, however, the online filing is very similar.
Step 1: Pick a Name for the LLC
The first step in filling out the Texas Operating Agreement is to pick a business name.
There are a few requirements when choosing a Texas LLC name.
1. The name of your LLC must not be too similar to the entity name of another business entity already registered with the state of Texas. You can verify name availability by doing a Texas LLC name search with the Texas Secretary of State to be sure the LLC name is available.
2. The name of the LLC must include one of the following entity identifiers at the end of the business name:
– Limited Liability Company
– Limited Company
3. The name can’t indicate or imply that the entity is engaged in a business that the entity is not authorized to pursue
4. The name can’t falsely imply that the entity is affiliated with a governmental entity.
Enter the LLC name including the identifier to continue. If you choose a name that is taken, the Secretary of State will return your application.
Step 2: Appoint a Registered Agent
One requirement to have an LLC in Texas is to appoint a Texas Registered Agent. The Registered Agent is a party that is physically located in the state of Texas that will receive important notices and service of process (which means to accept papers that start a lawsuit) on behalf of the LLC.
Provided the LLC member lives in the state of Texas and is generally available during business hours, they may act as the Registered Agent. Additionally, any adult resident of the state, attorney or accountant in the state, or a Registered Agent Service can also act as the LLC’s Agent.
Related: Should you be the Registered Agent?
To complete this section, you will need to either fill out A & C or B&C.
If the Registered Agent is a commercial Registered Agent service, check Box A and enter the name of the service.
If the Registered Agent is an individual resident of the state, check Box B and enter their name.
Last, enter the address of the registered office. This must be a physical address and PO Boxes are not allowed.
Step 3: Indicate the Governing Authority
In the next step, provide information on the Governing Authority of the LLC. A selection regarding whether the LLC initially has Managers.
A Member-Managed LLC means the Members are involved with the day-to-day operations of the business. Many LLCs are operated and run by the owner, in which case would be Member-Managed.
A Manager-Managed LLC refers to a Limited Liability Company that hires a manager to run the business, similar to hiring a CEO of a corporation.
Many LLCs are owned and run by the owner, making them Members and not Managers.
If the LLC initially has managers, select Box A and provide the Manager’s name and address. If the LLC initially does not have Managers, select Box B and provide the name and address of each initial LLC Member.
The name of at least one person is required.
Step 4: State the Purpose of the LLC
To choose the purpose of the LLC, the general purpose statement “The purpose for which the company is formed is for the transaction of any and all lawful purposes for which a limited liability company may be organized under the Texas Business Organizations Code” can be used.
If the LLC should need a more detailed purpose, this can be entered in the Supplemental Provisions section (see step 6).
Step 5: Provide a Mailing Address
The initial mailing address will be the address the Secretary of State will send general correspondence or tax information from the Texas Comptroller of Public Accounts.
The initial mailing address may be a post office box or street address.
Step 6: Include Any Supplemental Provisions
This is an optional section should additional information regarding the regulation of the LLC needs to be included.
Step 7: Provide the LLC Organizer’s Contact Information
The Organizer is someone who is involved with the LLC formation. The Organizer may or may not be a member, such as a mentor, attorney, or accountant, but any of the initial member(s) could be listed as an organizer.
Enter the Organizer’s name and mailing address.
Step 8: Choose the Effective Date
The Certificate of Formation provides options to choose when the LLC becomes effective (starts).
The three options include:
A – When the document is filed by the Secretary of State
B – A date up to 90 days in the future. Some will delay the effective date of the LLC if they aren’t ready to start the business, but want the filing out of the way or if they are close to the end of a calendar year and don’t plan to have any business activity until the following year.
C – The date of a specific event or 90 days in the future. In order for the certificate to take effect under option C, the entity file a statement with the Secretary of State within ninety (90) days of the filing.
Step 9: File the Certificate of Formation
An LLC Organizer will review the Certificate of Formation to ensure the information provided is correct, agree to the terms, and sign the document.
The completed Certificate of Formation should be submitted in duplicate and send the forms and state filing fee to:
Texas Secretary of State
P.O. Box 13697
Austin, Texas 78711-3697
This material is property of StartingYourBusiness.com
Texas LLC FAQs
How much does an LLC cost in Texas?
The cost to start an LLC in Texas is a $300 filing fee to submit the Certificate of Formation with the Texas Secretary of State.
How long does it take for LLCs to be approved in Texas?
Texas LLCs that are formed online are processed within 2-3 business days or 7-10 business days when filing by mail.
Should I use an LLC formation service or do it myself?
Two of my top formation companies have a special offer where you can get your LLC formed without paying any additional fees (state fees still apply). Check out Zenbusiness and IncFile to learn more.
When is a registered agent needed in Texas?
All corporations and LLCs in Texas are required to have and maintain a registered agent.
The registered agent is a party that is physically located in the state of Texas that will receive important notices and service of process (which means to accept papers that start a lawsuit) on behalf of the LLC.
Related: Who can be a Texas registered agent?
Is an Operating Agreement required in Texas?
Under Texas law, Statute Sec. 101.052 states that a Texas LLC Operating Agreement is optional. Despite the Operating Agreement not being required, it is recommended to have one as it can help to prevent disputes among members and protect the LLC’s legal status.
What business licenses are needed in Texas?
The requirements for business licenses and registrations in Texas vary depending on what the business does and where it’s located.
Here is a list of common business licenses in Texas.
Do Texas LLCs need an EIN?
Only Texas LLCs that either have more than one member, will hire employees, or elect to be taxed as a partnership or corporation are required to get an Employer Identification Number (EIN).
The EIN or Employer Identification Number (also called a Federal Employer Identification Number or FEIN) is a unique 9-digit tax identification number that is assigned by the Internal Revenue Service (IRS).
If the LLC isn’t required to get an EIN (though you can still get one), the LLC will use the social security number of the business owner.
Related: How to Apply for an EIN