You have a big idea, truckloads of ambition, dreams of a thriving Texas LLC, and you’re mentally prepared to make it happen.
But the Chinese philosopher Lao Tzu once said, “a journey of a thousand miles begins with a single step,” and for you, that first step is filing the Certificate of Formation.
With such grand plans, the last thing you might want to do is file paperwork, but completing the Certificate of Formation is what authenticates your LLC, making it official in Texas. It’s perhaps the most important step in starting your Texas LLC. Following this guide will help take the tedium out of paperwork and get your business started quickly.
But before you dive into the Certificate of Formation, you should have a few pieces of information ready to help streamline the process.
Recommended ✔If you want to make sure your LLC is formed correctly, hire an LLC service. Below are the top two that will take care of all the legal paperwork:
If getting the most value out of an LLC service is your priority, choose ZenBusiness. They charge one of the lowest rates online and include all the most important features when starting a business. Read Review. If you're on a strict budget and prefer using the cheapest LLC service, choose IncFile. They will form an LLC for free (plus state filing fee) and give you great features along the way. Read Review.
If getting the most value out of an LLC service is your priority, choose ZenBusiness. They charge one of the lowest rates online and include all the most important features when starting a business. Read Review.
If you're on a strict budget and prefer using the cheapest LLC service, choose IncFile. They will form an LLC for free (plus state filing fee) and give you great features along the way. Read Review.
Choosing an LLC Name
Before anything else, you will need to decide on an LLC name. You must include a business name on your Certificate of Formation, and if the Secretary of State deems that name unacceptable or unavailable, the document will be rejected, so make sure you nail down a good name right away.
Set yourself up for success by choosing a name that contains the terms “limited liability company,” “limited company,” or an abbreviation thereof. Plus, make sure that your name doesn’t falsely imply affiliation with government agencies, banks, higher education institutions, the U.S. Olympic Committee, and veterans programs (see a list of restricted words here). And your name also cannot be any deemed “grossly offensive” by the state.
Following all these rules means nothing, however, if your name is already taken by someone else. Perform a name search to see if your desired name is distinguishable from all other business names on record with the Secretary of State.
Once you’ve found your perfect name, include it on your Certificate of Formation to automatically register it. In the event that you’re not quite ready to file an LLC, you can place a 120-day hold on your name by submitting a name reservation request.
IMPORTANT: Don’t forget to get your business domain name so nobody else can use it. This will protect your brand and make things much easier for you down the road. Secure it easily through GoDaddy.
Choosing a Texas Registered Agent
A registered agent is your LLC’s liaison to the state, the mediator who takes care of all your important legal, tax, and compliance documents, keeping your business in good standing. You cannot successfully submit the Certificate of Formation without including your registered agent’s name and address. If you leave the registered agent section blank or include invalid information, your form will be rejected, so have an acceptable agent ready to go when you fill it out.
Your registered agent can be either an individual Texas resident or a business entity, like a registered agent service, that’s authorized to do business in the state.
No matter who you choose, that person or organization will need to sign an Acceptance of Appointment form. There’s no need to include this form with your Certificate of Formation, but you should keep it with your internal business files.
Quick Note: If your first choice doesn’t work out, don’t worry. You can always change your registered agent in the future.
Preparing to File Your Texas Certificate of Formation
Now for the main event: the Certificate of Formation. Here’s your opportunity to get your LLC officially on record and authorized to conduct business in Texas.
This is the big one, the all-important form that officially puts your LLC on the record. But don’t worry, it’s not overly difficult or time-consuming. In fact, if you collect all the necessary information beforehand, you’ll breeze right through it and your business will hit the ground running. Here’s the information you should have ready:
- The LLC name
- Registered agent name and address
- Governing authority – whether the LLC is managed by members or managers
- Name and address for each member/manager
- The LLC’s business purpose
- Any supplemental provisions or information
- The organizer’s name and address
- Filing effectiveness date (can be up to 90 days after the filing)
The hardest part of the Certificate of Formation is the filing fee. At $300, it’s the most expensive form required by the Secretary of State (unless your LLC is a foreign entity), so have a check or credit card ready.
Have all your information ready? Perfect. It’s time to choose a filing option. The Secretary of State offers three different submission options, so choose the one that works best for you.
If you’re in a hurry, online filing is your go-to method. Set up an account on the Secretary of State’s SOSDirect portal, then choose the appropriate form and follow the instructions. Your form will be processed within one day.
Download the paper application, fill it out, and mail it (in duplicate) with your payment to:
Office of the Secretary of State
P.O. Box 13697
Austin, Texas 78711-3697
Once the Secretary of State receives your form, it will be processed in three business days.
Submitting by fax will get your application there sooner, but it doesn’t speed up the three-day processing time. Access the application linked above, complete it, and fax it to (512) 463-5709.
If you live in Austin and are out running errands, you can also hand-deliver your finished document to:
James Earl Rudder Office Building
Austin, Texas 78701.
What About Foreign LLCs?
The process outlined above works for domestic LLCs (those formed in Texas), but what if your business is expanding to Texas from another state? Disregard the Certificate of Formation, as it’s not the form for you.
All LLCs that come to Texas from out of state must instead foreign qualify by filing an Application for Registration. The privilege of doing business in Texas, however, comes with a hefty fee – $750 – so include it in your budget. And don’t begin any business activity in the state without first foreign qualifying, or else your LLC might face some serious fines and penalties.
Once your Application for Registration has been accepted, you’re authorized to start doing business in Texas.
Want Help Filing Your Certificate of Formation?
Let’s be honest: you’ve got a lot on your plate. Filing paperwork can take time away from your other tasks, ones more focused on setting your budding LLC up for success.
The good news is that you don’t need to file the Certificate of Formation yourself. But if an attorney is out of your price range, hiring an LLC creation service is a great option.
There’s no shortage of business incorporation services out there, but not all of them are equal. Each one offers different packages, costs, and processing times, so it’s important to find the right fit for your LLC.
While each service has optional upgrades and perks packages, on the most basic level, they will review your business information, prepare your formation documents, and submit them to the Texas Secretary of State. They will complete everything outlined in this guide and notify you when your Certificate of Formation has been filed. You won’t have to lift a finger.
There are other benefits too. Some services will include a year of free registered agent service when you hire them. Other services offer order tracking, notifications on future documents (like Franchise Tax Reports), assistance drafting your operating agreement, or coverage of certain LLC formation costs.