How to get an LLC in Texas (2025)- Step-by-Step Guide
A Step-by-Step Guide to Starting an LLC in Texas in 2025
If you’re an entrepreneur or small business owner, starting a Limited Liability Company (LLC) in Texas can provide you with liability protection, tax benefits, and a simplified structure to run your business. In this detailed guide, we’ll explain how to get an LLC in Texas, cover the costs, and explore why Texas is one of the best states to start an LLC.
By the end of this article, you’ll have a clear understanding of the process, costs, and benefits of forming an LLC in Texas in 2025.
Why Start an LLC in Texas?
Texas has long been recognized as one of the best states to set up an LLC, and for good reason. Its business-friendly climate, robust economy, and simple LLC formation process make it an excellent choice for entrepreneurs.
Here are some reasons why Texas is the best state for LLC formation:
- No State Income Tax: Texas is one of the few states with no personal income tax, which can save business owners a significant amount of money.
- Strong Economic Climate: Texas is home to industries like technology, healthcare, real estate, and energy, providing endless opportunities for new businesses
- Low Maintenance Cost: Compared to some other states, Texas offers competitive maintenance fees with no annual renewal fee.
- Flexible Management Structures: Texas allows LLCs to choose between member-managed and manager-managed structures, giving business owners flexibility in how they run their companies.
So whether you’re starting a real estate business and need help with creating an LLC for property in Texas, or you’re launching a law firm, this guide will help you navigate the process for all businesses.
What Is an LLC?
A Limited Liability Company (LLC) is a type of business entity that combines the liability protection of a corporation with the tax benefits and operational flexibility of a sole proprietorship or partnership. LLCs protect your personal assets from being used to settle business debts or liabilities, making them one of the best LLC structures for small business owners.
Step 1: Choose a Name for Your LLC
When exploring how to open an LLC in Texas, the first step is choosing a unique name. Here are the key rules to follow:
- Uniqueness: The name must be distinguishable from other businesses registered in Texas. You can search for existing names using the Texas Secretary of State’s online Company’s database.
- Inclusion of LLC Identifier: The name must include “Limited Liability Company,” “LLC,” or “L.L.C.”
- Avoid Restricted Words: Words like “bank,” “insurance,” or “university” require additional approvals.
Pro Tip: Reserve your business name with the Texas Secretary of State for $40 if you’re not ready to file your LLC yet.
Step 2: File a Certificate of Formation
The Certificate of Formation (Form 205) is the official document required to register your LLC with the state of Texas. Here’s what you need to know:
- Filing Fee: The cost to file the Certificate of Formation is $300.
- Information Required:
- LLC Unique Name
- Business Purpose
- Registered Agent Name and Address
- Management Structure (member-managed or manager-managed)
You can file the form online through the Texas Secretary of State website or submit a hard copy by mail.
Step 3: Appoint a Registered Agent
A registered agent is an individual or company responsible for receiving legal documents on behalf of your LLC. If you’re asking, “Can I be my own registered agent in Texas?”, the answer is yes. However, you must
- Have a physical address in Texas (P.O. boxes are not allowed).
- Be available during regular business hours.
Many business owners choose to hire a professional registered agent service for convenience and privacy, with costs ranging from $50 to $250 annually.
Step 4: Decide on an LLC Management Structure
Texas allows you to choose between two types of LLC management structures:
- Member-Managed LLC: The owners (members) are directly involved in the day-to-day operations of the business. This structure is common for small businesses.
- Manager-Managed LLC: Members appoint one or more managers to handle operations, while the members focus on ownership. This structure is ideal for larger LLCs or businesses with passive investors.
Choose the structure that aligns with your business goals and operating style.
Step 5: Obtain an EIN
An Employer Identification Number (EIN) is a unique number issued by the IRS for tax purposes. You’ll need an EIN to:
- Open a business bank account.
- File federal and state taxes.
- Hire employees.
You can obtain an EIN for free on the IRS website using your own SSN or ITIN, otherwise you will have to fax filled SS-4 form to IRS fax number to get EIN number.
Step 6: Open a Business Bank Account
Opening a separate bank account for your LLC is crucial to maintaining liability protection. This step prevents your personal and business finances from mixing, which is essential for maintaining the LLC’s “corporate veil.”
Step 7: Comply with State and Federal Regulations
After forming your LLC, you’ll need to stay compliant with ongoing requirements:
- File Franchise Taxes: Texas imposes a franchise tax on LLCs, but businesses earning less than $2.47 million in annual revenue are typically exempt.
- File Annual Reports:Ensure your LLC remains in good standing by filing annual reports with the state.
Special Considerations
Series LLC in Texas
If you’re starting a real estate business, consider forming a Series Limited Liability Company (Series LLC) in Texas. This unique structure allows you to create separate “series” within your LLC, each with its own assets, liabilities, and operations.
PLLC in Texas
For licensed professionals (e.g., doctors, lawyers, accountants), Texas requires forming a Professional Limited Liability Company (PLLC). This structure ensures compliance with state regulations governing professional services.
Costs of Starting an LLC in Texas
If you’re asking, “How much does an LLC cost in Texas?”, Here’s a breakdown:
- Certificate of Formation Fee: $308, State official fee with Credit Card Processing fee.
- Register Agent Services: $50-$250 annually (optional if you act as your own agent).
- LLC Attorney fee: If you choose to hire an attorney/ Services to help set up your LLC, you can expect to pay between $100 and $750, depending on the complexity of your business. Hiring an attorney is often the best choice for those looking for personalized legal advice and assistance.
- Franchise Tax: Varies depending on revenue (Threshold > $2.47 Million)
Looking for the cheapest way to start an LLC in Texas? Filing the paperwork yourself and acting as your own registered agent can significantly reduce costs.
Comparing LLCs and Sole Proprietorships
Many new business owners weigh the pros and cons of an LLC versus a sole proprietorship in Texas. While sole proprietorships are simpler and cheaper to set up, they do not provide liability protection. An LLC, on the other hand, separates your personal and business assets, offering greater peace of mind.
FAQs About Starting an LLC in Texas
1. What is a Certificate of Formation?
A Certificate of Formation is the official document that registers your LLC with the state of Texas.
2. Can I form an LLC for a law firm in Texas?
Yes, law firms can operate as PLLCs in Texas, provided they comply with specific professional regulations.
3. How much is an LLC in Texas?
The total cost varies but starts at $308 for the Certificate of Formation. Additional costs depend on registered agent fees, LLC Attorney Service Fees and franchise taxes.
4. What is the best state to register an LLC?
While the best state to register an LLC depends on your needs, Texas stands out for its low taxes, affordability, and business-friendly climate.
Conclusion
Starting an LLC in Texas is a straightforward process that offers numerous benefits, from liability protection to tax savings. Whether you’re a first-time entrepreneur or an experienced business owner looking for the best state to form an LLC, Texas is an excellent choice.
By following the steps outlined in this guide, you’ll have your LLC up and running in no time. Take advantage of Texas’s pro-business environment and lay the foundation for your company’s success in 2025 and beyond.
What is ITIN Number? Complete Beginner’s Guide
What is an ITIN Number? A Complete Guide for Beginners (2025)
Navigating tax regulations can be confusing, especially for individuals who don’t qualify for a Social Security Number (SSN). That’s where the Individual Taxpayer Identification Number (ITIN) comes into play. But what exactly is an ITIN, and why is it necessary?
This complete guide for 2025 will explain everything you need to know about ITINs—from their purpose and application process to their benefits and renewal. Whether you’re an immigrant, a non-resident taxpayer, or someone without an SSN, this guide will simplify the entire concept for you.
Understanding ITIN: What Does ITIN Stand For?
The ITIN, or Individual Taxpayer Identification Number, is a tax processing number issued by the Internal Revenue Service (IRS). It is a nine-digit number that always begins with the number 9 (e.g., 9XX-XX-XXXX).
The IRS issues ITINs to individuals who need to comply with U.S. tax laws but are not eligible to receive a Social Security Number (SSN). Unlike an SSN, which is used for employment and social benefits, ITIN is solely for tax purposes
Why is an ITIN Number Needed?
An ITIN is essential for individuals who must meet federal tax requirements in the U.S. Here’s why you may need an ITIN:
- Tax Filing for Non-Residents: Individuals without an SSN can file IRS federal income taxes returns using an ITIN.
- Tax Refunds: If you overpay on taxes, an ITIN allows you to claim refunds.
- Dependents of Taxpayers: Non-resident dependents also require ITIN number for their tax filing purposes.
- Bank Accounts and Loans: ITIN holders may qualify to open accounts with certain banks.
Without an ITIN, individuals not eligible for an SSN could face tax non-compliance penalties, lose refunds, or miss financial opportunities.
Who Needs an ITIN Number?
Not everyone needs an ITIN—only those without access to an SSN. The following groups of individuals typically require an ITIN:
- Non-Resident Aliens: Foreign nationals with U.S. tax filing requirements.
- Dependents or Spouses of U.S. Citizens/Residents: Foreign Dependents and Spouses of a USA Citizens, if they do not qualify for an SSN.
- Foreign Students and Scholars: ITIN number is must or rewarding (To claim back the tax upon Tuition fee) for foreign students If they need to file tax returns.
- Individuals Doing Business in the U.S.: Foreign business owners who must file their tax return and pay taxes upon their taxable incomes earned from US trade or business (If they don’t have SSN).
Example: Sara, a resident of UK, runs a small business that serves U.S. clients. To comply with tax laws, Sara must applies for an ITIN since she doesn’t qualify for an SSN.
How to Apply for an ITIN Number in 2025
- Applying for an ITIN is straightforward but requires careful attention to details. Here’s a step-by-step guide to applying:
- Complete Form W-7: This is the official application for an ITIN.
- Gather Identification Documents: Prepare your valid passport, birth certificate, or national ID.
- Submit Your Application: Fill your W-7 form correctly and submit to the IRS, along with your completed Tax Return.
- Attach Your Tax Return: Typically, your completed tax return is submitted with the ITIN application.
- Wait for Approval: The IRS will process your application and issue your ITIN within 7-9 weeks (standard time)
Where Can You Apply for an ITIN?
You have several options for applying the ITIN number;
· IRS Direct Submission: Mail your completed W-7 Form, Certified Valid Identification Documents along with Federal Tax Returns to the Official address mentioned on the IRS W7 form.
· Certified Acceptance Agents (CAA): CAAs are IRS-authorized agents who verify your documents and submit ITIN applications to the IRS (Recommended).
· In-Person at IRS Centers: Taxpayer Assistance Centers allow you to apply and have documents verified without mailing originals.
This flexibility ensures that applicants, even from outside the U.S., can apply without major hurdles.
Step-by-Step Guide to Filling Out Form W-7
Form W-7 might seem intimidating, but following Step by step guide will make it easier.
- Personal Information: Enter your full name, date of birth (as per your Identity Document), and Residential address on W7 form.
- Reason for Applying: Specify why you need an ITIN (e.g., dependent tax filing).
- Identification Documents: List your valid ID type and its inside identifying details.
- Attach Tax Return: Submit the completed tax return with Form W-7 and Valid ID document.
Tip: Avoid common mistakes, such as missing signatures or incorrect document details, as these can delay your application.
Required Documents to Apply for an ITIN
When applying for an ITIN, you must provide valid identification documents to verify your identity and foreign status. The IRS accepts the following documents:
Primary Documents
- Passport (most commonly used and sufficient on its own).
- National ID card (with photo).
- Birth certificate (for dependents under 18).
- Foreign driver’s license
Remember, any of the above documents must be current and include a photograph
Alternative Documents
- US. Visa (if applicable).
- Foreign military identification card.
- Civil birth certificate
Documents Authentication
- All documents must be original or certified copies by the issuing agency.
- Notarized copies are not accepted unless authorized by a Certified Acceptance Agent (CAA)
Having the correct documents is crucial to avoid delays in the ITIN approval process
How Long Does It Take to Get an ITIN?
The time it takes to receive an ITIN depends on how you submit your application and the completeness of your documents.
- Average Processing Time: The IRS typically processes ITIN applications within 7-9 weeks.
- Factors That May Cause Delays:
- Missing, incorrect or Uncerified Identification documents.
- Incomplete Form W-7.
- High volume of applications during tax season.
Tips to Speed Up the Process:
- Double-check your W-7 form for accuracy.
- Submit a complete set of valid & Certified identification documents (If applied by yourself).
- Apply for ITIN number through IRS authorized CAA (If applicant is living outside US)
- Apply early, avoiding the peak tax season in April.
If approved, you will receive an official letter with your new ITIN. If there are any issues, the IRS will notify you and guide you on the next steps.
How to Renew an ITIN Number
If your ITIN has expired, you need to renew it to remain compliant with tax laws. An expired ITIN can cause delays in your tax refund or processing.
Signs That Your ITIN Has Expired:
- ITINs not used on a federal tax return in the past 3 consecutive years automatically expire.
- ITINs with middle digits 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, or 81 require renewal.
Steps to Renew Your ITIN
- Complete Form W-7: Complete the W7 form same as for New ITIN application, just Indicate on the form that you are renewing your ITIN.
- Submit Identification Documents: Follow the same requirements as for a new ITIN application.
- Attach Your Latest Tax Return: Even for renewals, you must include a current tax return.
- Mail Your Application to the IRS or visit a Certified Acceptance Agent (CAA).
Renewing your ITIN ahead of time ensures that your tax filings remain smooth and on schedule.
Benefits of Having an ITIN Number
Having an ITIN is beneficial for individuals who need to comply with U.S. tax regulations but are not eligible for an SSN. Here are the key benefits:
- Filing Federal Taxes: ITIN allows individuals, including non-residents and dependents, to file tax returns legally.
- Tax Refund Eligibility: Overpaying taxes? An ITIN ensures you can claim refunds.
- Opening a Bank Account: Some banks accept ITINs for opening accounts, providing access to financial services.
- Business Opportunities: Foreign entrepreneurs conducting business in the U.S. need an ITIN for tax compliance.
- Educational and Financial Benefits: Dependents of taxpayers can use ITINs for educational credits and scholarships.
Having an ITIN doesn’t grant employment rights, but it serves as a critical tool for financial inclusion and legal compliance.
ITIN vs. SSN: Understanding the Differences
Criteria | ITIN | SSN |
Purpose | Tax processing | Employment, taxes, and social benefits |
Eligibility | Non-residents and individuals without SSN | U.S. citizens, residents, and work-eligible individuals |
Issued By | Internal Revenue Service (IRS) | Social Security Administration (SSA) |
Employment Rights | Not valid for employment | Required for employment |
Format | 9 digits starts with 9 (9XX-XX-XXXX) | 9 digits (XXX-XX-XXXX) |
In short, an ITIN is purely for tax-related purposes, while an SSN is broader, covering employment, social security benefits, and tax filings
ITIN Number and Tax Returns
Filing tax returns with an ITIN is straightforward, provided you follow IRS guidelines. Here’s how:
- Complete Your Tax Return Form: Use IRS Form 1040, 1040-NR, or other applicable forms with relevant Schedules.
- Attach Your ITIN Application: If you’re applying for an ITIN for the first time, then include Form W-7 with valid certified Identification documents.
- Submit Before Deadline: Ensure you file your taxes on or before the IRS tax deadline to avoid penalties.
Common Issues During Tax Filing
- Using an expired ITIN.
- Mistakes in personal information, such as misspelled names.
- Missing dependents’ ITINs when claiming tax credits.
Filing taxes with an ITIN ensures compliance with IRS regulations and opens up eligibility for potential refunds and credits.
ITIN FAQs: Common Questions About ITIN Numbers
Here are answers to the most common ITIN-related questions:
- Can an ITIN be used for employment?
No, an ITIN cannot be used for employment purposes. It is strictly for tax reporting. - Can an ITIN lead to permanent residency?
No, having an ITIN does not grant legal residency or a pathway to citizenship. - How long is an ITIN valid?
ITINs remain valid unless they expire due to non-usage for three consecutive years or if middle digits fall in an expired category. - Can I use my ITIN to open a bank account?
Yes, many financial institutions allow individuals to open bank accounts using their ITIN. - Is there a fee to apply for an ITIN?
The IRS does not charge a fee for ITIN applications, but some Certified Acceptance Agents (CAAs) may charge for assistance.
Final Thoughts: Is an ITIN Number Necessary for You?
If you are a non-resident, immigrant, or anyone who doesn’t qualify for a Social Security Number but needs to comply with U.S. tax laws, an ITIN is essential. It simplifies tax filing, enables tax refunds, and allows access to basic financial services.
To stay compliant and avoid any penalties, ensure you apply for or renew your ITIN on time. If you’re unsure how to proceed, seek assistance from a Certified Acceptance Agent (CAA) or an experienced tax professional.
Conclusion
The Individual Taxpayer Identification Number (ITIN) is a crucial tool for individuals who need to file taxes but do not qualify for an SSN. From filing tax returns to enabling refunds and accessing financial services, an ITIN plays a significant role in ensuring tax compliance for non-residents and immigrants in the U.S.
If you need an ITIN, start the application process early, follow IRS guidelines, and gather the required documents. Taking these steps will help you stay on top of your tax obligations without unnecessary delays.