Filing your own Texas LLC online: what you can do yourself and what usually goes wrong

Yes, you can file it yourself, but the filing is the easy part

Yes. Texas does not require an attorney to form an LLC. You can file a certificate of formation with the Texas Secretary of State online, by mail or in person, and the state's Form 205 instructions list the filing fee as $300. For a single owner with a simple business and no licensed profession involved, doing it yourself can be perfectly reasonable.

The risk is not in the certificate. It is in what the certificate does not cover: the company agreement, the records that keep the company separate from you, the tax decisions, and, when there are partners, the terms for money, control and exits. I have practiced business law in Dallas since 2003, and the do-it-yourself formations that cause trouble almost always failed in those gaps, not on the state form. This guide is general information; talk to a licensed Texas attorney about your own situation.

What the certificate of formation actually does

The certificate of formation creates the LLC as a legal entity on the public record. It states the company's name, its registered agent and registered office, whether it is managed by its members or by managers, and the initial members or managers. Once the Secretary of State files it, the company exists.

That is all it does. The Secretary of State says plainly in its formation FAQ that it cannot help you determine the best entity type for your business, and its instructions say the forms are not substitutes for the advice and services of an attorney and tax specialist. The state is a filing office, not an advisor.

Think of the certificate as the birth record of the company. It proves the company exists and tells the public where to send legal papers. It says nothing about how the owners will treat each other, how profits will be shared, what happens if an owner dies, or how the company will be taxed. Those questions are answered elsewhere or, if nobody answers them, by default rules.

The parts most owners can handle on their own

If you are a single owner, not in a licensed profession, and starting something modest, these steps are usually manageable with care and the state's own instructions. Read each instruction page fully before filing, and keep copies of everything.

• Checking that your chosen name is available and distinguishable from existing entities
• Choosing member management or manager management
• Naming a registered agent who has consented to serve
• Filing the certificate through the Secretary of State's online portal
• Obtaining an employer identification number from the IRS
• Opening a separate bank account in the company's name

The registered agent rule people trip over

Every Texas LLC needs a registered agent, the person or company that receives lawsuits and official notices on the company's behalf. According to the Secretary of State's Form 205 instructions, the agent must be a Texas resident individual or an entity registered to do business in Texas, the LLC cannot act as its own registered agent, and the agent must consent to serve. The Secretary of State also cannot serve as your agent.

Owners often list themselves at a home address, which is allowed if they qualify, but it puts that address on the public record and means someone must reliably be there to receive papers. A missed lawsuit because nobody was at the registered office is an avoidable disaster.

If you move, change agents or the agent resigns, the state's records should be updated. Keeping that information current is one of the small tasks owners forget, and it matters a great deal on the one day it is tested.

What goes wrong when owners do it themselves

The mistakes I see from self-filed companies fall into a few patterns. None of them is visible on the day of filing, which is exactly why they happen. They surface when a bank asks for the company agreement, when a partner wants out, when a lawsuit tests the company's liability shield, or when the owner tries to sell.

• No company agreement at all, so the statute's default rules govern management, voting and money
• A downloaded template agreement that nobody read, with blanks or terms no owner would choose knowingly
• Partners who never documented who owns what or who contributed what
• A licensed professional who formed a plain LLC when the licensing rules called for a professional entity
• Personal and company money mixed in one account
• Annual state reports missed because nobody knew they were due

Your first weeks after the state files the certificate

The day the filing comes back is the day the real work starts. Owners who handle these steps promptly avoid most of the problems described above, whether or not a lawyer was involved in the filing. Put each item on a calendar rather than trusting memory, because the company will not remind you.

Keep a simple binder or shared folder for the company's records: the filed certificate, the company agreement, consents, tax documents, and a log of ownership. When a bank, buyer, investor or court asks for documents years from now, that folder is what proves the company was run as a real, separate business.

• Sign a company agreement, even a short one for a single owner
• Record each owner's contribution and percentage in writing
• Adopt an initial written consent approving the bank account and key decisions
• Move all business income and expenses into the company's account
• Sign contracts, leases and invoices in the company's name, with your title
• Note the annual franchise tax and information report deadline on your calendar

Licensed professionals have extra rules

If you will provide professional services, the choice of entity is not entirely yours. The Secretary of State publishes a Guide for Determining Permissible Entity Types for Licensed Professions. In that chart, attorneys are listed for professional corporations and professional LLCs, physicians for professional LLCs and professional associations, and dentists for professional corporations, professional LLCs and professional associations, while some other professions may use an ordinary LLC.

The Secretary of State's FAQ notes that a corporation or LLC performing professional services may be required to form as a professional entity. Professional entities come with ownership and management limits tied to licensing. This is a place where a short consultation can prevent having to restructure later, and where your licensing board's rules matter alongside the state's.

Two or more owners changes the calculation

With partners, the certificate is the least important document you will sign. The company agreement decides who manages, which decisions need everyone, how profits are distributed, how new owners join, and what happens on death, disability, divorce or departure. The Secretary of State does not accept company agreements for filing; it says internal governing documents are kept at the company's principal office. So nobody checks whether you have one until something goes wrong.

Partners also tend to underestimate how quickly circumstances change. One owner marries, another has a child, a third gets an offer to move across the country. Each of those events can affect the company, and an agreement written while everyone is still aligned is far easier to reach than one negotiated after somebody already wants out.

This is why I recommend that partners, at minimum, have an attorney draft or review the company agreement even if they file the certificate themselves. My guide on partners who never wrote down a buyout shows what tends to happen when that step is skipped, and my guide on what forming a Texas LLC with an attorney costs explains how to scope the work so you pay only for what you need.

A middle path that works for many owners

Doing everything yourself and hiring an attorney for everything are not the only choices. Many owners file the certificate themselves and then bring in an attorney for the parts that require judgment. That division can make sense, as long as the owner understands which parts carry the risk.

Whichever route you choose, treat the company as separate from yourself from the first day. Sign contracts in the company's name, keep its money in its own account, and document major decisions. The liability protection people form an LLC to get depends partly on behaving as though the company is real; my guide on whether an LLC really protects your personal assets explains why that protection is narrower than many owners assume.

• File the certificate yourself, then have an attorney draft the company agreement
• Have an attorney review a template agreement before signing it
• Book a one-time consultation on entity choice with your CPA and an attorney together
• Ask an attorney to set up a simple annual checklist of filings and records

When I would tell you to call before filing

Call an attorney before filing if there will be more than one owner, if anyone is contributing something other than cash, if you are in a licensed profession, if investors are involved, if you plan to hold real estate or other significant assets in the company, or if you are converting an existing business with contracts, employees or debts. Each of these adds questions the certificate cannot answer.

When owners in Dallas call me at that stage, the conversation is usually short and practical. I ask who the owners are, what the business will do and whether a CPA is involved, and I tell you which parts you can safely do yourself and which deserve professional drafting. Straight talk counsel means you should leave understanding your own documents well enough to govern the company without creating personal liability. If the answer is that you can file it yourself, I will tell you that too.

Questions people ask me