How to Set Up an LLC in Texas and Why It’s Important to Maintain It

Setting up a Limited Liability Company (LLC) in Texas can be a smart move for entrepreneurs looking to protect their personal assets and establish a formal business structure. An LLC offers the flexibility of a partnership while providing the liability protection of a corporation. Here’s a brief guide on how to set one up and why maintaining it is essential.

How to Set Up an LLC in Texas

1. Choose a Name: The name of your LLC must be unique and not too similar to other registered businesses in Texas. You can check name availability on the Texas Secretary of State’s website.
2. File the Certificate of Formation: You’ll need to file Form 205 (Certificate of Formation) with the Texas Secretary of State either online or by mail. This form includes details like your LLC’s name, address, and the name of its registered agent.
3. Designate a Registered Agent: An LLC in Texas must have a registered agent — a person or business entity authorized to receive legal documents on behalf of the LLC.
4. Create an Operating Agreement: While not mandatory in Texas, it’s highly recommended to have an operating agreement. This document outlines the management structure and operational procedures of the LLC.
5. Apply for an EIN: If your LLC has more than one member or plans to hire employees, you’ll need an Employer Identification Number (EIN) from the IRS. This number is required for tax filings and business operations.

File Annual Reports: While Texas does not require annual reports, your LLC must file an annual franchise tax report with the Texas Comptroller’s office.

Why It’s Important to Maintain Your LLC

Once your LLC is set up, it’s critical to maintain its good standing with the state. Here’s why:

• Liability Protection: One of the biggest advantages of an LLC is liability protection, which shields your personal assets from business debts and lawsuits. Failing to maintain your LLC can risk losing this protection.
• Tax Benefits: LLCs enjoy tax flexibility. However, if the LLC is not maintained properly, you may lose certain tax benefits, or you might be subject to additional fees and taxes.
• Avoid Penalties: Regularly filing required documents and paying taxes ensures you avoid fines or penalties that can harm your business. In some cases, neglecting maintenance can result in your LLC being dissolved by the state.
• Professional Credibility: A well-maintained LLC presents a professional image to clients, suppliers, and investors, which can help build trust and grow your business.

Conclusion

Setting up an LLC in Texas is a relatively straightforward process, but it’s essential to stay on top of its maintenance. From filing necessary documents to paying taxes on time, maintaining your LLC ensures that your business remains protected and operates smoothly. If you’re unsure about the steps or need guidance on maintaining your LLC, it’s always wise to consult a business attorney or accountant to ensure everything stays in order.

Burns & Black, PLLC © 2025  |  All Rights Reserved  |  San Antonio Law Firm Website Design by Strottner Designs, LLC