Starting a business in Texas involves several key legal and administrative steps. Whether you’re forming an LLC, launching a sole proprietorship, or creating a professional corporation, it’s important to understand the requirements, legal implications, and risks. This guide explains how to legally form a business in Texas, with local considerations for entrepreneurs in El Paso.
Step 1: Choose the Right Business Structure
The first decision you’ll need to make is how to legally structure your business. Common options include:
| Entity Type | Key Features | Common Use Case |
| Sole Proprietorship | Simplest form, no formal filing required | Freelancers, solo service providers |
| Partnership | Shared ownership may require partnership agreement | Small teams or family-run venturesRequires an assume name certificate |
| LLC (Limited Liability Company) | Offers personal liability protection; flexible taxation | Startups, real estate, service businessesRequires an assume name certificate |
| Corporation (C-Corp or S-Corp) | More complex, with stricter formalities | Larger companies, firms seeking outside investmentRequires an assume name certificate |
Add a limited partnership above
Most small businesses in Texas choose an LLC because it combines liability protection with flexible management and pass-through taxation.
Step 2: Name Your Business
In Texas, your business name must be:
- Unique within the state (no duplicates)
- Compliant with state naming rules (e.g., include “LLC” if forming an LLC)
- Available online (you may want to secure a matching domain name)
You can check business name availability through the Texas Secretary of State’s SOSDirect portal.
Step 3: Register with the State of Texas
Depending on your entity type, you’ll need to file formation documents with the Texas Secretary of State:
- LLC: File a Certificate of Formation – Form 205
- Corporation: File a Certificate of Formation – Form 201
- Partnerships may need to file a DBA (Doing Business As) or Assumed Name Certificate
- Limited partnership
You’ll also designate a Registered Agent, an individual or service that accepts legal correspondence on your behalf. Forbes & Forbes can help you designate yourself, someone you trust, or use a professional service.
Step 4: Obtain an EIN (Employer Identification Number)
An EIN is a federal tax ID issued by the IRS. You’ll need it to:
- Open a business bank account
- Hire employees
- File business taxes
You can apply for free at irs.gov.
Local Requirements for El Paso Businesses
In addition to state requirements, El Paso-area businesses may need to:
- Apply for local business licenses or permits
- Register with the El Paso Central Appraisal District if you own commercial property
- Comply with zoning regulations, especially if operating from home or leasing retail space
Forbes & Forbes can help navigate these requirements to ensure you start compliant.
Optional, But Recommended: Operating Agreement or Bylaws
Even if not required by Texas law, every LLC should have an Operating Agreement, and corporations should create Bylaws. These documents:
- Outline how decisions are made
- Define roles and responsibilities
- Help avoid internal disputes
- Show lenders or partners that your business is professionally managed
- Create a buy/sale agreement amongst the owners
We routinely help business owners draft customized, enforceable agreements that reflect their goals and protect their interests.
Frequently Asked Questions
Do I need a lawyer to form an LLC in Texas?
No, but working with a lawyer ensures you’ve selected the right entity, drafted the right documents, and filed everything correctly. Mistakes in formation can lead to tax problems, lawsuits, or disputes down the road.
How much does it cost to start a business in Texas?
Filing fees for an LLC are $300 (state filing only), but additional costs may include name reservation, registered agent service, EIN setup, local licenses, and legal drafting.
Can I form a business in Texas if I live out of state?
Yes, but you must appoint a registered agent with a physical address in Texas. Many out-of-state founders choose to work with a Texas-based attorney for guidance.
Need Help Starting a Business in El Paso?
At Forbes & Forbes, we help El Paso entrepreneurs start strong, with legally sound, efficient business formation services. Whether you’re forming your first LLC or planning your next venture, we can walk you through the process step-by-step.
Call (915) 533-5441 to schedule your business formation consultation.
