Waco, Texas
Waco, TX

You can’t wait to start your business. If only you could skip all the “Legal stuff”.

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Start your LLC in Waco, TX

STEP-BY-STEP GUIDE Matthew Carter Author by Matthew Carter, Esq. Updated: August 30, 2022
STEP 1
Instant
Name your LLC
STEP 2
Instant
Appoint a Registered Agent
STEP 3
5-7 days
File Certificate of Formation
STEP 4
Varies
Draft an Operating Agreement
STEP 5
Instant
Get an EIN (Employer Identification Number)

Why form an LLC in Waco, TX?

Sitting in the heart of Texas between Dallas and Austin, Waco is a small city brimming with opportunities for aspiring business owners. It is, in fact, home of one of Dr. Pepper, one of the most successful soft drinks in the history of the country. As an aspiring business owner in Waco, maybe your idea can be Waco’s next Dr. Pepper!

Before you get there, though, you need to get started. That means forming your company and opening up shop. Texas business owners have long used the limited liability company (LLC) for this purpose because it’s a simple business form that offers practical and tax benefits. If you’re thinking about getting started with an LLC in Waco, we have all the information you need.

In this article, you’ll find all the tips you need, including:

  • How to draft and file the documents you need for your Texas LLC formation
  • Guidelines for staying within state and federal law
  • The actual laws and rules you need to follow

LLC Formation Process in a Nutshell

1. Name your LLC

Why is the name of your LLC important? For the same reason your own name is: it provides a unique identity and a way that people can set your LLC apart from the rest of the world. Texas law controls what words you can use

First, your Texas LLC name must have one of these exact phrases:

  • Limited liability company
  • Limited company
  • An abbreviation of one of the two phrases above, like LLC, LC, or Ltd. Co.

Second, make sure you’re not using words state law forbids. The Texas Secretary of State has a few rules about words your company can’t use because they might confuse the public or cause other problems. For instance, you can’t suggest that your LLC is a government agency. You also can’t call your LLC a “bank” or “college” unless that’s what it is licensed to be.

Third, after you’ve picked a good name, you need to make sure it’s not already taken. The Secretary of State will let you search all business names in the state, but you need an SOSDirect account to start your own search online. You’ll also need to pay a fee every time you search!

There’s a better, cheaper way to get this done. Just visit the Texas Comptroller’s website and use the Taxable Entity Search. You won’t have to pay for each search, and you can try on different kinds of combinations and names to find the perfect one.

Finally, even after your LLC’s legal name is set you might still want to tweak your company’s name a bit. You might have thought of a shorter or more easy-to-remember name, or you’re trying to separate your company from a closely-named competitor. Either way, you can fix the issue with an assumed name or DBA.

In Waco, that means you must apply for a DBA with McLennan county. We’ll discuss the way to do this below.

Instant
Free

2. Appoint a Registered Agent

What’s a registered agent? It’s a person who is the point of contact between your LLC and the world. Anyone who needs to contact you officially (including the state) will use your agent’s address. Your agent also gets service of process for your LLC, which is a legal term for letters or legal papers that must be delivered to your business.

Note that, while some people use the term “resident agent” and others say “registered agent,” the two terms mean the same thing.

Because you can’t ignore service of process, you must get a good agent who can handle it in a timely and professional way at all times.

You might be tempted to do this job yourself to save some money for your LLC. This isn’t always the best choice, though. You’re giving up a lot of privacy and time to do the job, and if you miss a legal detail, you have only yourself to blame.

That means that, for most people, the best way to go is to use a registered agent service. Their address, not yours, is the one that people see. Their sole job is to make sure you don’t miss anything. That way, you can focus on your business.

Instant
$0 - $100

3. File Certificate of Formation

Your LLC’s certificate of formation is like its birth certificate. This is what creates your company; until you file it, the LLC just doesn’t exist.

That might sound like a big job, but the truth is that Texas only requires a few basic items of information. The state also gives you a fill-in-the-blank form to make the process as easy as possible.

When you file, you’ll have to pay a $300 filing fee. (Check the state’s fee schedule for all current fees you might need to pay.) In return, you’ll get an acknowledgment that proves your LLC can now do business.

The normal processing time for filed documents is 5-7 business days, though that shortens to 4-5 business days if you file online using the state’s SOSUpload system. You can also pay an extra $25 for expedited processing, meaning that the state will usually process your document by the end of the next business day.

5-7 days
$300

4. Draft an Operating Agreement

Operating agreements are contracts that have the rules of your LLC. Texas law doesn’t require you to have one, but having one is a good decision. An operating agreement tells you how to admit new business owners, distribute proceeds, and deal with other key events in the life of your company.

If you don’t have your own contract, the law of the state will control what happens to your LLC. You might not like that result, so having an operating agreement is a good way to make sure you have control over your financial future, even when the unexpected happens.

Operating agreements are private contracts, so you don’t have to file them with the state. Once it’s signed, keep the original safe and make plenty of copies. You should be able to use a good operating agreement as a reference while you run your business. Also, if you ever need to make any changes, you can do so without amending or filing any new documents for your LLC.

Varies
Varies

5. Get an EIN (Employer Identification Number)

EINs are numbers assigned by the IRS. They look and function like social security numbers in that they help the IRS keep track of the taxes paid by you and your LLC.

Not every company strictly needs an EIN. You only really need one if your LLC has more than one member, has workers, or is taxed as a C corporation or S corporation. Even if you don’t need one, though, it often makes sense to get an EIN anyway.

Most banks will make your LLC get an EIN to open a bank account. Having an EIN can also make it easier to apply for and get credit for your LLC.

Whatever the reason to get one, you should know it’s not a hard process. The IRS has a detailed website on the topic and allows you to apply online. The entire application will take around five minutes.

You should never pay anyone to do this for you unless it is part of a larger service package.

Instant
Free

Cheapest way to start your LLC

Do it Yourself
Gain personal knowledge
Lower upfront cost
You're losing money when you consider how much time it takes
There's the risk of making a mistake
It's a headache
Potential price
$0
Potential time
5+ days
Formation Service
Very easy to use
Affordable ($39 for an LLC)
Same-day filing
Highly reliable
Not ideal for complex LLCs
Potential price
$39
Potential time
30 min
Attorney
A lawyer can help you manage risk
Offers more customization when you need it
Costs more than any other method
Finding one takes time
Slower compared to formation services
Potential price
> $400
Potential time
5+ days

Licenses and Permits in Waco, TX

Even after you have your legal papers filed with the state and everything is set up just the way you want it, there is still a bit more to be done. Your business will likely need extra permits and licenses to operate in Waco. In this section, we’ll talk about the different things your LLC needs to legally operate.

State

Texas LLCs have an advantage over companies in some other states because there is no statewide business license requirement.

That said, keep in mind that certain businesses (like doctors and lawyers) are still regulated by the state government. To see whether your business has any professional licensing requirements, inquire with the Texas Department of Licensing and Regulation.

Local

Though Waco doesn’t require all businesses to have licenses, certain kinds of businesses must get permits from the city. For example, food trucks and nightclubs both need specialized permits from the city.

If you run any kind of food business that sells alcohol, you will also need a separate permit for that as well. Once you have completed your business plan, use the link above as a checklist to make sure you haven’t forgotten to apply for any permits from the city.

Support for Small Businesses in Waco, TX

Waco enthusiastically supports small businesses and helps them get off the ground. If you need resources or advice to get started, there are a few places you can go for help.

  • The City of Waco: The city has put together some resources on its website that you might find helpful.
  • McClennan County: The County Small Business Development Center offers free appointments with advisors and mentors to help you get started and deal with issues you might have as you grow your business.
  • The Greater Waco Chamber of Commerce: You can also connect with the larger business community and get more resources from the Greater Waco Chamber of Commerce. Membership fees are based on the size of your company. An LLC with 13 or fewer employees can currently join for as little as $475.

Next Steps After you Register your LLC

Of course, there’s more to starting a business in Waco than just filing paperwork and setting things up. You have to run the business, after all. While the details of that are up to you, here are some things you ought to consider getting taken care of first.

  • Register a Matching Domain

    Your LLC can’t afford not to have a presence on the Internet. The first step in creating a website is to get your own domain name. While this might have been expensive in the past, it is now quite affordable.

    We recommend you secure your domain name as soon as possible, even if you don’t have immediate plans for your website to go live.

    For example, a competitor could buy your ideal domain and its variations to block you from using them. Even worse, domain squatters sift through newly registered LLCs and will buy their domains only to relist them with huge markups.

    In general, a domain ending in .com will be more expensive than a .net or .info domain, and some names will likely be taken, meaning you will have to do some searching (and maybe compromising). Think about this early, and get it done early, to save money.

  • File for a DBA (Doing Business As) Name

    Once you have your papers filed and your domain name picked out, you may find that you didn’t quite get the name you wanted. Or maybe you’d like a name that’s shorter or easier for your customers to remember. In either case, you’ll need an assumed name (also known as a DBA or “doing business as” name).

    In Texas, you have to file a DBA form both with the Secretary of State and in the county where you do business. The Secretary of State will charge you $25 to file a DBA certificate. (You can find a form certificate here.)

    As a Waco business owner, you’ll also have to register your DBA with McLennan county. After filling out the form on the county website, you’ll have to pay a fee to the county recorder of $13.50, plus $0.50 for every LLC member beyond the first. This is not a big cost; you just need to make sure you file the correct paperwork.

    A DBA is good for 10 years after you file the certificate. To keep your DBA, you must file a renewal certificate within 6 months before your expiration date!

  • Stay Compliant

    Unlike LLCs in many other states, Texas LLCs do not have to file annual reports.

    What you must do, though, is file annual reports with the comptroller about your Texas franchise tax, which is essentially a tax for the privilege of doing business in the state. It’s based on the “net surplus” of your LLC, a number that can be tricky to calculate. You and your accountant should work with the state comptroller to calculate the tax in an accurate and timely way.

LLC Formation FAQs

What are the benefits of an LLC?

Most importantly, having an LLC will ensure your personal assets are protected if your business cannot pay its debts. Running your business through an LLC can also provide you with better tax treatment. In addition, LLCs have fewer and less complicated reporting requirements compared to other types of businesses, making them particularly suitable for smaller businesses.

Do I have to form an LLC to start a business?

It is not strictly necessary to form an LLC in order to start a business. You can engage in business as a sole proprietorship instead. However, in that case, your personal assets may be at risk if your business takes on too much debt or loses a lawsuit in court.

How much does it generally cost to form an LLC?

It doesn’t cost much to set up an LLC for your business. In most states, you will need to pay less than $150 to register your new LLC with the local state authorities. In some states, you may need to pay some additional costs later on, for example, when filing an annual report or filing for a DBA.

How long does it take to form an LLC?

The time it takes to have your LLC approved can vary wildly depending on the state, the filing method you used and if you opted for expedited filing. In some states, you can have your LLC approved in as little as one day, while in others, it may take weeks or even months.

If you want the fastest possible turnaround time, you should consider using online filing and pay for expedited service, if available.

How will my LLC be taxed?

The IRS and most state tax authorities treat LLCs as “pass-through” entities. This means that your LLC does not pay taxes directly (as corporations do). Instead, the tax burden is passed through to the members of your LLC. The members will then include profits and losses from the LLC’s business on their personal income tax returns.

In what state should I form my LLC?

It is generally best to form your LLC in your home state, where you will actually carry out your business. Some people believe that it is advantageous to form your LLC in Delaware or Nevada. In reality, you would then have to register with the authorities in your home state as a foreign LLC and pay additional fees – without much benefit in return.

Do I need to file for a DBA?

You are not generally required to file for a DBA (“Doing-Business-As”). However, most business owners choose to do so anyway. Getting a DBA will allow you to omit the letters LLC from your customer-facing business name. You can also have multiple names for your LLC if you want to run more than one business through your LLC.

Can I form an LLC if I am not a US citizen or US resident?

Yes, you can form an LLC for your business in any US state. There is no requirement for you to be a US citizen in order to form an LLC, nor do you need the right to reside in the US. If your business is going to own physical property in a given state, you may want to form your LLC in that state.

Do I need to hire an attorney to form an LLC for my business?

No, you don’t need to hire an attorney to form an LLC for you. It is generally much cheaper and straightforward to file the necessary paperwork yourself or to hire an affordable LLC formation service to handle the work on your behalf. However, you may want to consider hiring an attorney if your business is very complex.