How to Move an LLC to Texas

Texas allows an out-of-state LLC to change its state of organization to Texas through a statutory conversion under the Texas Business Organizations Code. The conversion process preserves the LLC’s legal identity; the company remains the same entity but becomes governed by Texas law. Whether the conversion can proceed also depends on the laws of the state the LLC is leaving. To find out whether your LLC qualifies and what the process involves, request a free analysis of your LLC move.

Some states use the term conversion for a process that changes a business’s entity type: conversion of a corporation to an LLC, for example. Those states often have a similar process, called domestication, that changes an LLC’s domicile. In Texas, the conversion process can change an LLC’s domicile to or from Texas, or it can change an LLC’s entity type. This article covers conversions that change out-of-state LLCs into Texas LLCs.

Texas LLC Conversion Requirements

Texas LLC conversion under Tex. Bus. Orgs. Code Ann. § 10.102(a) is not available for every out-of-state LLC. A company’s ability to convert to Texas depends primarily on its current state’s law and its governing documents.

Eligibility for Texas LLC Conversion

Texas permits both inbound and outbound LLC conversion. To convert an out-of-state LLC to a Texas LLC, the LLC’s current state must also have a legal procedure for an LLC to change its state of organization. The state’s law may call the process conversion or domestication.

Business owners must also review the LLC’s certificate of formation and operating agreement to ensure there are no provisions that prevent conversion or domestication to a new state. If any restrictions are present, the LLC may need to formally amend the documents to allow the procedure.

Texas gives LLCs broad authority to engage in lawful business. A company that provides professional services: services that require a license, can form as a Texas professional limited liability company (or PLLC). Business owners should confirm their LLC’s business is lawful in Texas and determine whether Texas requires licensing for the company’s business activities.

Required Documents for Texas LLC Conversion

The Texas LLC conversion process involves preparing a series of documents and filing certain of those documents with state agencies. The conversion documents must be drafted to comply with both Texas law and the law of the LLC’s current state.

• Plan of Conversion. A Plan of Conversion that is designed to comply with the requirements of both Texas law and the law of the state that the LLC is moving from.
• Texas Certificate of Conversion. The Texas Certificate of Conversion with all information and any related documents needed for filing with the Texas Secretary of State.
• Texas Certificate of Formation. The Texas Certificate of Formation for filing with the Texas Secretary of State.
• Conversion Document for Filing in Prior State. Depending on state law, this document may be called articles of domestication, statement of domestication, articles of conversion, certificate of conversion, statement of conversion, or a similar term.
• Texas Company Agreement. A state-specific Company Agreement to properly structure the LLC as a Texas LLC, provide rules for profit distributions and decision-making, clarify the federal income tax classification, and help provide maximum liability protection.
• Resolution Authorizing Conversion. A resolution approving the transaction and adopting the Texas organizational documents as the LLC’s governing documents.

Cost of Moving an LLC to Texas

The cost of converting an LLC to Texas depends on the scope of work involved. The documents and filings described above require professional preparation to comply with both states’ requirements, and coordinating submissions with two separate state agencies adds further complexity. To find out what your specific conversion will cost, request a free analysis of your LLC move.

In addition to professional service costs, the Texas Secretary of State charges filing fees of $300.00 for the Certificate of Conversion and $300.00 for the Certificate of Formation, both of which are required for an LLC conversion. The total Texas filing fees are $600.00.

The fees paid to Texas are in addition to any filing fees that must be paid to the LLC’s original state. Most states charge a lesser fee for LLCs domesticating out of state than for LLCs moving into the state.

Example: To convert a California LLC to a Texas LLC, the business must pay filing fees totaling $600.00 to Texas, plus a $30 filing fee to the California Secretary of State.

By comparison, an out-of-state LLC operating in Texas must also pay filing fees to Texas. The filing fees for registering to do business in Texas as an out-of-state LLC are $750.00, which is more than the total filing fees for converting the LLC to a Texas LLC. A conversion to Texas makes more legal and financial sense in many cases than registering the business in Texas and complying with both states’ laws.

Processing Time for Texas LLC Conversion Filings

The turnaround time for a Texas LLC conversion depends on several factors and can vary by transaction. The start-to-finish time necessary to convert an out-of-state business into a Texas LLC depends on:

• How long the document preparer takes to draft the necessary paperwork;
• How long members and managers take to review and sign the documents; and
• How long the Texas Secretary of State’s office takes to process the documents.

The total timeline for a Texas LLC conversion depends on document preparation, member review and signatures, and processing time at the Texas Secretary of State’s office. For a detailed breakdown of each phase, see How Long Does the LLC Domestication Process Take?

Registered Agent for Texas LLC Conversion

A Texas LLC must appoint a registered agent: an individual or organization that accepts service of process on the LLC’s behalf. The registered agent can be an individual who lives in Texas or an organization (other than the LLC itself) with authority to do business in Texas. In either case, the agent must have a physical address in Texas where legal papers can be served.

An LLC’s member or manager who lives in Texas can act as the LLC’s registered agent. However, companies often hire commercial registered agents to fill the role. This is because a registered agent’s name and address are public information, and the agent must be available to accept service of process during regular business hours. Hiring a commercial registered agent protects member or manager privacy and provides a consistent method for a business to receive important notices.

Benefits of Converting an LLC to Texas

Texas has one of the highest population growth rates in the nation, and many business owners who move to Texas want to bring their businesses with them. Converting an out-of-state LLC to Texas offers both practical and legal advantages:

• Owner convenience. Having Texas law govern an LLC is convenient if the owners live in Texas. Owners can avoid unnecessary complexity if they only need to focus on one set of laws. Meetings with state agencies, when necessary, are more convenient when an owner lives in the state that governs the business.
• Decreased paperwork. A Texas LLC conversion may help a business reduce the paperwork it needs to file with state offices. A Texas LLC that primarily operates in Texas may avoid having to file documents in multiple states, depending on the business’s contacts with other states.
• Favorable business laws. Texas law is generally considered business-friendly. An out-of-state LLC that converts to a Texas LLC may benefit from laws that complement its business plan or allow more management flexibility.
• Reduced tax burden. Texas is a low-tax state. Texas LLCs are subject to the state’s franchise tax, but there are no personal or corporate income taxes in Texas. The favorable tax structure can save LLC owners money and make recruiting employees easier.
• Professional networking advantages. A business owner who lives in Texas can more easily find local professionals, like attorneys and accountants, familiar with Texas law. An out-of-state LLC owner who lives in Texas may have difficulty finding local professionals with experience in a different state’s law.

The conversion process is designed to limit administrative hassle. The LLC’s identity and EIN remain unchanged, bank accounts are unaffected, business contracts stay intact, and day-to-day operations continue uninterrupted. Dissolution in the original state is unnecessary; the LLC can continue doing business there by registering as a foreign LLC, or it can simply focus on Texas.

Texas LLC Conversion Process

The Texas LLC conversion process consists of two components: document preparation and administrative tasks.

Document Preparation for Texas LLC Conversion

The conversion documents listed above under Required Documents must be drafted to comply with both Texas law and the law of the LLC’s current state. The Plan of Conversion, Certificate of Conversion, and Certificate of Formation are prepared concurrently.

Administrative Tasks for Texas LLC Conversion

An LLC that has prepared and approved the necessary paperwork must next complete several administrative tasks to officially implement the conversion to Texas.

• Conduct preliminary name search. Check the official records of the Texas Secretary of State to determine whether the LLC’s name is available in Texas. (If the name is unavailable, a slight name change may be required to complete the conversion.)
• Obtain signatures on the Certificate of Conversion. The Certificate of Conversion must be signed by the required parties. The Texas Secretary of State allows the Certificate of Conversion to be e-signed.
• Obtain signatures on the Certificate of Formation. The Certificate of Formation must be signed by the required parties. The Texas Secretary of State requires a manual (wet) signature on the Certificate of Formation (no e-signing).
• File the Certificate of Conversion. File the Certificate of Conversion with the Texas Secretary of State. The Certificate of Conversion can be e-filed.
• File the Certificate of Formation. File the Certificate of Formation with the Texas Secretary of State. The Certificate of Formation can be e-filed.
• File conversion documents with prior state. File the conversion documents with the Secretary of State or equivalent agency for the state that the LLC is moving from.

Laws Governing Texas LLC Conversion

Texas LLC conversion requires consideration of two sets of laws: the company’s original state’s law and Texas law. Texas’ legal requirements for converting an out-of-state LLC to a Texas LLC are outlined in the Texas Business Organizations Code (Tex. Bus. Orgs. Code Ann. tit. 1; tit. 3) and guidance published by the Texas Secretary of State. For a detailed explanation of how the conversion process works across all states, see our guide to LLC domestication.

The LLC’s original state’s laws will determine:

• Whether the conversion is possible: the current state must authorize conversion or domestication of an LLC to a new state;
• Contents of the plan of conversion or plan of domestication;
• The standard for approving the plan of conversion or plan of domestication;
• The documents the LLC must file with its original state to complete conversion; and
• Any other requirements for LLCs formed in the original state to convert or domesticate to another state.

Moving an LLC Out of Texas

Texas permits outbound LLC conversion under Tex. Bus. Orgs. Code Ann. § 10.101(a). A Texas LLC can convert to an LLC governed by another state’s law, provided that the destination state also authorizes the conversion.

Texas Outbound Conversion Requirements

A Texas LLC that converts to another state must file a Certificate of Conversion with the Texas Secretary of State. The outbound Certificate of Conversion follows the same general requirements as an inbound conversion filing. The destination state will also require its own formation and conversion documents. Texas does not require a separate certificate of surrender. The filing of the Certificate of Conversion completes the Texas side of the transaction.

Filing Fees for Moving an LLC from Texas

The Texas Secretary of State charges a filing fee of $300.00 for an outbound Certificate of Conversion. The destination state will charge separate filing fees for its formation and conversion documents.

Texas LLC Laws That Apply After the Move

The Texas Business Organizations Code imposes ongoing requirements on all domestic LLCs, including those formed through conversion from another state. An LLC that converts to Texas becomes subject to these obligations immediately upon effectiveness of the conversion.

Texas Annual Compliance Requirements

Texas imposes an annual franchise tax administered by the Texas Comptroller of Public Accounts. LLCs with annualized total revenue at or below the no-tax-due threshold are not required to pay the franchise tax but must still file a Public Information Report (PIR) with the Comptroller each year by May 15. The PIR includes the LLC’s officer and director information, registered agent details, and principal office address. LLCs above the threshold must file a franchise tax report and pay the applicable tax.

Texas LLC Company Agreement Requirements

Texas refers to an LLC’s operating agreement as a “company agreement” under Tex. Bus. Orgs. Code Ann. § 101.001(1). The company agreement governs the LLC’s internal affairs, including the rights and obligations of members and managers, profit distributions, and management structure. Texas law provides broad freedom of contract for LLC company agreements, allowing members to customize most aspects of the LLC’s governance.

Texas LLC Member and Manager Protections

Texas makes the charging order the exclusive remedy available to a judgment creditor seeking to reach a member’s interest in an LLC. This means a creditor cannot force the sale of a member’s interest or compel the LLC to make distributions; the creditor is limited to receiving distributions if and when they are made.

The Texas Business Organizations Code does not codify specific fiduciary duties for LLC members or managers in the same way that some states do. Instead, fiduciary duties are largely governed by the company agreement and by Texas common law. Members can define, expand, or limit fiduciary duties through the company agreement, subject to the implied contractual covenant of good faith and fair dealing.

Alternatives to Texas LLC Conversion

When conversion is not available because the other state’s law does not authorize it, a merger-based reorganization achieves the same result. The reorganization involves forming a new Texas LLC and merging the out-of-state LLC into it, with the Texas LLC as the surviving entity. The surviving LLC succeeds to all property, contracts, and obligations of the original LLC by operation of law. The Texas Secretary of State charges a filing fee of $300.00 for the inbound merger filing, in addition to the formation fees. For a detailed explanation of how the reorganization process works, see our guide to LLC reorganization.

For a state-by-state comparison of LLC domestication and conversion laws across all 50 states, see our guide to LLC domestication and conversion by state.

Legal Effect of Texas LLC Conversion

Texas LLC conversion preserves the original LLC’s existence in the form of the Texas LLC. The company is the same entity before, during, and after conversion and simply exits the conversion as a Texas LLC governed by Texas law.

• Continued existence. The original LLC continues to exist as the Texas LLC without interruption in its existence or form. The company keeps the same Employer Identification Number (EIN) and tax identity.
• Automatic property conversion. Any property owned by the original LLC continues to be owned by the Texas LLC in its new form. There is no need to create deeds or transfer instruments; the property transfer is automatic and uninterrupted.
• Continued liabilities. All of the original LLC’s liabilities and obligations stay with the Texas LLC and are not affected by the conversion. Liens on company property are unchanged.
• Unimpaired contracts. The Texas LLC is still a party to the same contracts and has the same contractual rights and obligations from before the conversion.
• Legal proceedings. A pending proceeding that involves the original LLC, or its owners or members in that capacity, may continue after conversion. The Texas LLC, or its owners or members in that capacity, continues as the party to the proceeding, and there is no need to substitute parties.
• Conversion of equity. Ownership or membership interests in the original LLC are converted into ownership or membership interests in the Texas LLC as provided by the plan of conversion.