Two people can walk into this guide with very different needs. Find yours, then go straight to the sections that fit.

Path A: I know I want an LLC and I need it done

You already know the structure you want and you are ready to file. Go to Module 3 to form your Texas LLC, then Module 4 to get your EIN, then Module 5 to finish state and local setup. With online filing and expedited processing, a Texas LLC can realistically be formed in about one week.

Path B: I need to figure out the right structure first

You are not sure whether to be a sole proprietor, an LLC, or something else. Start with Module 2 to understand the differences and the tradeoffs, decide with the help of a licensed attorney or CPA, then follow the same path once you know your answer.

Here is what each common structure is and the tradeoffs that usually drive the decision. Read this to get oriented, then confirm your choice with a licensed attorney or CPA.

Sole proprietorship

The simplest form. One owner, no formation filing with the state. You and the business are the same legally, so there is no liability separation, and business income goes on your personal tax return. If you operate under a name other than your own legal name, you file an assumed name certificate with your county clerk (Module 6). Lowest cost and effort, least protection.

General partnership

Two or more owners running a business together without forming a separate entity. Like a sole proprietorship, there is no liability shield, and each partner can be responsible for the business debts. A written partnership agreement is strongly recommended. Assumed name filing is at the county level.

Limited liability company (LLC)

A separate legal entity you create by filing with the Texas Secretary of State. The main draw is liability protection: your personal assets are generally separated from the business if you keep the two apart. Taxes are flexible. By default an LLC is taxed as a pass-through, and it can later elect to be taxed as an S corporation. This is the structure most small businesses choose when they want liability protection without heavy formality. Steps are in Module 3.

S corporation

Not a separate entity type. It is a tax election an LLC or a corporation can make with the IRS. For a profitable business, the S election can reduce self-employment tax, but it adds payroll, bookkeeping, and compliance. Whether it saves you money depends on your numbers. This is a conversation to have with a CPA.

C corporation

A separate taxpaying entity, formed with the state. Profits can be taxed at the corporate level and again when distributed. Most small local businesses do not start here. It tends to fit companies raising outside investment or planning to scale in a specific way.

Nonprofit

Formed to serve a charitable, educational, or similar purpose rather than to earn profit for owners. It is a separate path, including a federal tax-exempt application with the IRS if you want 501(c)(3) status. If this is your direction, tell PV Extension and get professional guidance early.

A Texas LLC is created by filing one document, the Certificate of Formation (Form 205), with the Texas Secretary of State. This module walks the whole path in order, from picking a name to saving your approved paperwork. Take it one stage at a time.

Stage 1: Choose your name and check that it is available

Texas will reject your filing if the name breaks the rules or is too close to a name already in use, and the filing fee is not refunded. So check first.

The naming rules, in plain terms

• The name must include an ending that shows it is an LLC, such as "LLC," "L.L.C.," or "Limited Liability Company."
• It must be clearly different from names already on file. Adding "the," changing one letter, or only changing punctuation is not different enough.
• It cannot suggest the business is a government agency, and some words (like "bank" or "university") are restricted.

How to search availability, free, step by step

1. Go to comptroller.texas.gov and open the Taxable Entity Search (also called Franchise Tax Account Status). This is free and needs no account.
2. Type your proposed name into the Entity Name box.
3. Complete the "prove you are human" check if it appears, then search.
4. Read the results. No close match means your name is likely available. A match or a very similar name means pick your backup.

Stage 2: Set up your registered agent

The rules

• The agent must have a physical street address in Texas. A P.O. box is not allowed.
• The agent must be available at that address during normal business hours.
• The agent must agree to serve. Keep their signed consent (Form 401-A) in your records. You do not file it with the state, but you should have it.

Your options

• Be your own agent. Free, but your address becomes public record and you must be reliably available during business hours.
• Name another person you trust who meets the rules, such as a partner or attorney.
• Hire a registered agent service. Usually about $100 to $125 a year. This keeps your home address private and makes sure legal mail is never missed if you travel.

Stage 3: Complete Form 205, field by field

Whether you file online or on paper, Form 205 asks for the same information. Here is what each part means.

• Entity name. Type it exactly as you want it, including the LLC ending.
• Registered agent and registered office. The agent's name and the physical Texas address from Stage 2.
• Governing authority. You choose member-managed or manager-managed. In plain terms: member-managed means the owners run the business day to day, which is what most small businesses pick. Manager-managed means you appoint one or more managers to run it, which fits when owners want to step back or there are outside investors.
• Organizer. The person submitting the filing. This can be you, and the organizer does not have to be an owner.
• Purpose. A general purpose statement is fine for most businesses. The form provides standard wording you can use.
• Effective date. Usually effective when filed. You can set a later date if you have a reason to.

Stage 4: File online, the fastest way

1. Go to the Texas Secretary of State filing site, SOSDirect at sosdirect.sos.texas.gov (or SOSUpload).
2. Create an account. SOSDirect uses a credit card to open the account.
3. Choose to form a new domestic limited liability company, which files the Certificate of Formation (Form 205).
4. Enter everything from Stage 3: name, registered agent and address, management structure, organizer, and purpose.
5. Review every field slowly. A mistake can cause a rejection, and the $300 is not refunded.
6. Pay the $300 filing fee by credit card. Filing online adds a state card fee of about 2.7 percent, roughly $8.
7. If you need it fast, add expedited processing for $25. This usually returns your approved filing the same or next business day.
8. Submit, then watch for your confirmation and your file-stamped Certificate of Formation.

Stage 5: File by mail, if you prefer paper

1. Download the current Form 205 PDF from sos.texas.gov.
2. Fill it out completely, typed or in black or blue ink.
3. Print two copies. One is kept by the state, one is stamped and returned to you.
4. Write a check or money order for $300 payable to Secretary of State.
5. Mail both copies and the payment to: Secretary of State, Corporations Section, P.O. Box 13697, Austin, TX 78711-3697. Or deliver in person to 400 W. 15th Street, Austin, TX 78701.
6. Plan for extra time. Mail is slower than online and does not get the expedite speed.

Stage 6: Save these the moment you are approved

One more thing: an operating agreement is not filed with the state, but it is strongly recommended, especially with more than one owner. It sets out who owns what, who does what, and how decisions get made.

People use the phrase "tax ID" to mean several different numbers, and mixing them up causes real delays. Start here, then follow the steps to get the one you need.

Do you need an EIN?

Yes if you formed an LLC or corporation, if you have employees, or if you file certain taxes. Even a solo sole proprietor should get one, because it keeps your personal Social Security number off business paperwork and lets you open a business bank account and register as a vendor.

How to get your EIN online, step by step

This is the free, fastest way, and it gives you the number immediately.

1. Go to irs.gov and open "Apply for an EIN online," the EIN Assistant. It is free. Only use irs.gov.
2. Apply during the tool's hours: Monday through Friday, 7:00 a.m. to 10:00 p.m. Eastern time. It is closed nights and weekends.
3. Have ready: your legal business name, your address, your entity type, and the responsible party's SSN or ITIN. The responsible party is the person who controls the business.
4. Complete it in one sitting. You cannot save and return, and the session times out after 15 minutes of inactivity.
5. Answer the short interview: Identify, Authenticate, Addresses, Details, then Confirmation.
6. Your EIN appears on the final screen right away. Download and print the confirmation letter (called the CP 575) immediately. This is the moment to save it.

If you cannot apply online

If you do not have an SSN or ITIN, or your business is outside the United States, use Form SS-4:

• Fax a completed Form SS-4 to 855-215-1627. With a return fax number, you get your EIN in about four business days.
• Mail Form SS-4 to the IRS EIN Operation in Cincinnati. This takes about four to five weeks.
• International applicants can call 267-941-1099.

What to save immediately

Forming the entity is step one. These are the pieces that make the business real and keep it in good standing.

Business bank account

Open a dedicated business account as soon as you have your approved formation document and your EIN. Keeping business and personal money separate is what preserves your liability protection and makes your books defensible. Banks will usually ask for your Certificate of Formation, your EIN letter, and, for unincorporated businesses, your assumed name certificate.

Texas franchise tax report

Texas LLCs and corporations file an annual franchise report with the Texas Comptroller, due May 15 each year. For report years 2026 and 2027, a business with annualized total revenue at or below $2,650,000 owes no franchise tax, but it still must file the required information report. In short: most new small businesses owe nothing, but you still file. Do not skip it.

Sales and use tax permit

If you sell taxable goods or services in Texas, register for a sales and use tax permit with the Texas Comptroller before you make taxable sales. The permit is free. Not sure if what you sell is taxable? Call the Comptroller at (800) 252-5555.

Federal beneficial ownership reporting (BOI)

Local permits and licenses

Texas has no single statewide general business license. Depending on your city and your industry, you may still need local permits, a certificate of occupancy, or a health or trade permit. Check with your city about local requirements for your specific business.

A DBA, or assumed name, lets you operate under a name that is not your legal name. Where you file depends entirely on your structure, and this is the step people get wrong most often.

Note: a sole proprietor operating under their own exact legal name usually does not need a DBA at all. Adding words like "Studio" or "and Company" typically triggers the filing.

County clerk filing, sole proprietors and general partnerships

The details below are current at the time of writing. County fees and processes change, so confirm the current fee, form, and whether you can start online before you go.

Other North Texas counties

The process is the same across the region: sole proprietors and general partnerships file the assumed name certificate with that county's clerk, signatures are notarized or signed in person, the fee is typically in the $15 to $25 range plus a small amount per additional owner, and the certificate is good for up to 10 years. Contact the county clerk directly to confirm the current fee, get the correct form, and ask whether you can begin online.

• Johnson County Clerk (Cleburne)
• Parker County Clerk (Weatherford)
• Ellis County Clerk (Waxahachie)
• Rockwall County Clerk (Rockwall)
• Kaufman County Clerk (Kaufman)
• Wise County Clerk (Decatur)
• Hood County Clerk (Granbury)

Forming a business is the start line, not the finish line. If your goal is government contracting, the documents you just created are the first pieces of a vendor readiness file, the folder buyers expect you to have.

What formation gives you toward the file

• Your stamped Certificate of Formation, proof the business legally exists.
• Your EIN confirmation letter, your business tax ID.
• Your assumed name certificate, if you use a DBA.
• A business bank account, which separates your finances and supports your W-9.

What still needs building

A complete vendor readiness file usually also includes a current W-9, proof of insurance, any licenses and certifications, a capability statement, and past performance or references. Two registrations open the door to government work in Texas:

• CMBL, the state Centralized Master Bidders List, so agencies can find you.
• HUB, the Historically Underutilized Business certification, if your business qualifies.

You also do not have to win a large contract to start. Many businesses begin by subcontracting under a company that already holds a contract, then grow into bidding as a prime. The Academy covers both.

Start with a real person. PV Extension provides free business counseling and connects North Texas entrepreneurs to their next step.

Official government filing offices

These are the agencies you actually file with. Always start from the official site so you are not paying a third party for something that is free or low cost.