Form a Texas LLC

There are different turnaround times depending on the manner in which you file.

In Texas, you can file (1) through SOSDirect if you have a business account (1-3 business day turnaround time); (2) in person; (3) via fax; and (4) via the mail.

The Secretary of State normally processes non-expedited documents within 5-7 business days of receipt of the document. Expedited service is available for an additional $25 per document and expedited documents are generally processed by close of business the first business day following the date of receipt.

Please note that these timeframes are estimates and are subject to change based on staffing, resources, and workload.

To create an LLC in Texas, you must file a Certificate of Formation with the Texas Secretary of State. The Certificate of Formation must include the following information:

• Name of LLC
• Name & address of Registered Agent
• Whether the LLC is to be governed by members or managers
• Name & address of initial members or managers
• Purpose of LLC (“all lawful purposes” is typical)
• Name, address and signature of organizer
• Effective date of filing (normally the date of filing, but can be posted dated for up to 120 days)

The most cited reason for creating an LLC is to create a firewall that protects the owners of the LLC from the liabilities of the LLC. If, for example, the LLC signs and then breaches a contract, the LLC can be sued (not the owners of the LLC). Any judgment against the LLC cannot be used against the LLC’s owners.

Unlike a corporation, the LLC protects the business from the owners personal liabilities too! This is perhaps a bigger deal. Here is how it works. Suppose you own 50% of ABC, LLC. If you are personally sued for a personal obligation (i.e. a car wreck or contract you signed personally) and your personal creditor gets a large judgment against you that you cannot afford to pay, the creditor can seize your personal assets. However, your 50% interest in ABC, LLC cannot be taken by your personal creditor.

The only mechanism a creditor could use against your LLC interest is called a charging order. A charging order directs the LLC to pay to the creditor any distributions of income or profit that would otherwise be distributed to the LLC member/debtor. Since the creditor cannot control the LLC, the creditor only gets a distribution if the LLC decides to make a distribution. In the event you have control over the LLC, you probably won’t decide to make a distribution that goes to the creditor.

In sum, the LLC (1) protects the LLC’s owners from the liabilities of business AND CONVERSELY (2) protects the business from the personal liabilities of the LLC’s owners.

Each year by May 15, a Texas LLC is required to file a franchise tax return and Public Information Report (collectively, these two filings are referred to as the “annual report”) for the prior calendar year. Failure to file the annual report will result in an involuntary forfeiture of the LLC which can lead to owner liability for LLC obligations.

We get so many questions about Single-member LLCs ("SMLLCs") that we wanted to address a few issues surrounding the Texas SMLLC here. The owners of an LLC are called "members." So a one-owner LLC is called a single-member LLC. Some states have protectionary rules that are only available to multi-member LLCs, but not Texas. Texas does not make a distinction in how it handles cases involving single- and multi-member LLCs.

Texas has a few types of LLCs that we briefly discuss below. Please note that if you'd like for us to create a Series LLC or Professional LLC (PLLC) for you, please (1) choose the Complete or Premium Package and (2) let us know in the “Comments” section of the questionnaire that you want a PLLC or Series LLC.

We have three Texas LLC formation packages starting at $99 (+ the state filing fee). Let us form your LLC today!