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Forming an LLC for Your Texas Hair Salon: The Complete Filing Guide

The parent guide gives you the short version: file Form 205, pay $300, get on with your salon. This page is the long version. It walks through choosing between an LLC, a sole proprietorship and a corporation in Texas terms, what each filing actually does, and the handful of accounts and dates that keep a Texas salon LLC in good standing year after year.

Researched from Texas state sources. Our guides are free. We may earn a commission when you use a partner service, at no additional cost to you.

LLC, sole proprietorship, or corporation for a Texas salon

The parent guide gives the short version of this choice. Here is the long one. A sole proprietorship is what you are by default if you open a salon in your own name and file nothing: there is no state formation step, and legally there is no business separate from you, which means the salon's debts, lease obligations, and legal claims reach your personal assets. A sole proprietor registers the salon's trade name at the county level, covered below, and that filing creates no shield at all.

A limited liability company creates a separate legal entity between you and the salon. Formed properly and kept separate, it holds the business's debts and claims at the business level instead of following you home. Two limits deserve plain words. The shield covers the business's obligations; it does not protect you from claims about your own work behind the chair, and it weakens if you run the salon's money through your personal accounts, which is why the bank account section below matters. An LLC is also taxed flexibly: by default its income passes through to the owners, and the entity can elect corporate taxation at the federal level if that ever fits better. That election is a federal tax choice, not a different Texas entity.

A corporation is the third route: a separate entity formed with the Secretary of State, owned through stock, and run with more formal machinery, directors, officers, and records, than most single salon operations need. It earns its keep for multi location groups and outside investors. For a first salon, the LLC is the structure Texas owners usually land on, and it is the one the rest of this page walks through. Whichever you choose, remember that the entity is separate from licensing: your TDLR establishment license and your stylists' individual licenses are still required, exactly as the Texas hub lays out.

Filing the Certificate of Formation: Form 205

You form a Texas LLC by filing a Certificate of Formation, Form 205, with the Texas Secretary of State. The filing fee is $300. Work through the pieces in order:

1. Choose the legal name. It must include an LLC designator such as "Limited Liability Company" or "LLC", and it must be distinguishable from names already on file with the state. If the name you want is not ready to file yet, an optional name reservation holds it for 120 days for $40.
2. Name a registered agent. Your LLC needs a registered agent with a Texas street address where legal papers can be delivered. A post office box does not qualify. Pick someone who will actually be there and who has agreed to serve, because a missed lawsuit notice is the worst way to learn the agent moved.
3. File Form 205 and pay the $300 fee. The Secretary of State's own instructions walk through every field of the form, linked in the partner slot below. Filing creates the entity; it does not license the salon, and it does not finish your tax setup.
4. Keep the filing confirmation. Your bank, your landlord, and your payment processor will all ask for proof the LLC exists. Save the stamped confirmation with your lease and licenses.

Two Texas quirks work in your favor, as the parent guide notes. Texas has no general state business license, so there is no extra state level license to buy beyond the TDLR licenses. And Texas LLCs file no annual report with the Secretary of State, which removes a chore most other states impose. Your recurring state filing obligation is the Comptroller's franchise tax report, covered in the taxes section below.

The assumed name certificate: state filing or county filing

If your salon operates under a name different from your LLC's legal name, Texas calls that an assumed name, and you register it with a DBA filing. Where you file depends on your structure, and this is the detail out of state guides routinely get wrong. Filing entities, meaning LLCs and corporations, file the Assumed Name Certificate, Form 503, with the Secretary of State for $25. Sole proprietors and general partnerships file at the county clerk in each county where the business operates, at roughly $15 to $25 per county, so a sole proprietor with chairs in two counties files in both.

A DBA is not a license and does not create your entity. It puts the public on notice of the name you trade under, and it is practical paperwork: your bank will typically want to see it before opening accounts in the salon's name, and a mismatch between your DBA, your lease, and your bank records is a small thing that stalls bigger things, including the loans on our Texas business loans page. If your storefront name is exactly your LLC's legal name, you may not need one at all.

Your EIN from the IRS

Your EIN is the business's federal tax ID, issued by the IRS. You need one to hire employees, to file business taxes, and in practice to open the business bank account, because most banks require it even for a single member LLC. It is free. Apply directly through the IRS and ignore any website that offers to obtain one for a fee; those sites charge for a form the government gives away. Apply early, right after the LLC is formed, so the EIN never becomes the bottleneck when you sign a lease or set up payroll.

Texas tax accounts: sales tax permit and franchise tax

Two Comptroller accounts follow formation. The first is the sales tax permit, which is free from the Comptroller. The Texas rule that matters at your register: beauty services are generally not taxable, while retail product sales are. Take home shampoo, styling products, and similar items are charged sales tax at the 6.25 percent state rate plus up to 2 percent local tax, a combined maximum of 8.25 percent. Itemize services and products separately on every ticket so tax is collected only on the products.

The second is the franchise tax, Texas's entity level tax on the LLC itself. Every Texas LLC files, every year, due May 15. Most salons owe nothing: the no tax due threshold is $2,650,000 in total revenue for 2026, with the same threshold set for 2027, and a salon below it files an information report instead of paying tax, a Public Information Report on Form 05-102 or an Ownership Information Report on Form 05-167. The old No Tax Due Report was discontinued for reports due on or after January 1, 2024, so do not look for it. Above the threshold, the standard rate is 0.75 percent, with a 0.375 percent rate for retail and wholesale businesses and an EZ Computation rate of 0.331 percent for entities up to $20 million in revenue. Below the threshold the filing is free, but it is never skippable, and a lapsed franchise tax filing is the kind of entity hygiene problem that surfaces at the worst moments, like a loan closing.

The business bank account, and keeping the separation real

Open a business bank account in the LLC's name as soon as the EIN arrives, using your formation confirmation, your EIN letter, and your DBA certificate if you filed one. Then run everything through it: card settlements, booth rent, payroll, product purchases, rent. The liability separation you paid $300 for is only as strong as the separation you actually keep. Money that flows back and forth between the salon and your personal account blurs the line the LLC exists to draw, and it makes your bookkeeping, your sales tax returns, and any future loan application harder than they need to be. Pair the account with the insurance decision in our Texas salon insurance guide, and your salon's legal and financial structure is genuinely in place rather than filed and forgotten.

Your Texas LLC annual duties calendar

• May 15, every year: franchise tax report to the Comptroller, or Form 05-102 / Form 05-167 if you are below the no tax due threshold. Due even when you owe nothing.
• Not on your calendar: an annual report to the Secretary of State. Texas LLCs do not file one.
• Every two years: TDLR practitioner and establishment license renewals, on the cycle in the parent guide.
• On the Comptroller's schedule: sales tax returns and remittance for retail product sales, at your assigned filing frequency.
• Within 20 days of each hire: new hire report to the Texas Workforce Commission, with unemployment tax on the first $9,000 of wages per employee if you run payroll.
• As things change: keep your registered agent and address current with the Secretary of State, and your assumed name filings matched to the name on your storefront, lease, and bank account.

That calendar is the whole recurring burden of a Texas salon LLC at the state level, and it is lighter than most states. The expensive mistakes are not missed fees. They are the skipped May 15 filing in a year you owed nothing, and the personal card swiped for salon expenses until the entity and the owner are the same pile of money again.

This page is general information researched from official Texas and federal sources, not legal, tax, or insurance advice. Requirements, fees and forms change; verify the current rules with the agency or regulator linked above before you file, sign or spend.

Frequently asked questions

How much does it cost to form an LLC in Texas?

The state filing fee for the Certificate of Formation, Form 205, is $300, paid to the Texas Secretary of State. That fee is the same whether you file it yourself or pay a formation service to file it for you. An optional name reservation holds your salon's name for 120 days for $40.

Does a Texas LLC file an annual report?

Not with the Secretary of State. Texas LLCs file no annual report with that office. The recurring state filing is the Comptroller's franchise tax report, due May 15 every year. Below the no tax due threshold, you file a Public Information Report on Form 05-102 or an Ownership Information Report on Form 05-167 instead of a tax return.

Where do I file a DBA for a salon in Texas?

It depends on your structure. LLCs and corporations file the Assumed Name Certificate, Form 503, with the Texas Secretary of State for $25. Sole proprietors and general partnerships file at the county clerk in each county where the business operates, at roughly $15 to $25 per county.

What is the Texas franchise tax no tax due threshold?

The threshold is $2,650,000 in total revenue for 2026, and the same threshold is set for 2027. A salon below it owes no franchise tax, but it still has to file the annual information report by May 15. The old No Tax Due Report was discontinued for reports due on or after January 1, 2024.

Do I need an EIN for a single member salon LLC?

In practice, yes. You need an EIN to hire employees, and most banks require one to open the business account in the LLC's name. It is free from the IRS, so there is no reason to wait, and no reason to pay a website that offers to get one for you.