Thanks to Senate Bill 938, veteran-owned LLCs are once again free to form in Texas. In this article, I’ll detail the new law and outline how a new 100% veteran-owned Texas LLC is entitled to a waiver (or refund) of the $300 state filing fee.

Please note, we have a separate article that outlines various benefits, opportunities, and advantages that come with being subsequently certified as a veteran-owned business (51% or more owned by veterans). 

For purposes of the Texas state filing fee waiver and franchise tax exemptions, a new veteran-owned business is one that started in 2022 or later, and is 100% owned by honorably discharged veterans.

The Texas Tax Code 171.0005 (as amended by Senate Bill 938) defines a "new veteran-owned business" as a new (formed in 2022 or later) business in which each owner is a natural person who: (1) served in and was honorably discharged from a branch of the United States armed forces; and (2) provides verification to the comptroller of the person's service and discharge.

A "new business" is a taxable entity that: (1) is chartered or organized or otherwise formed in Texas; and (2) first begins doing business in this state on or after January 1, 2022.

A new veteran-owned business is entitied to a waiver (or refund) of the $300 state filing fee.

In order to form an LLC for free, the veteran-owned business will need to prove that the LLC is 100% owned by honorably discharged veterans.  This is accomplished by showing the Texas Secretary of State two documents (1) a Letter of Verification of Veteran’s Honorable Discharge for each member/owner; and (2) a Certification of New Veteran-Owned Business (Comptroller Form 05-904).

To obtain your Verification Letter, you'll need to send an email to the Texas Veterans Commission <[email protected]> with the following info:

• Full Name (First, Middle, Last Name)
• Mailing Address (include the County)
• Date of Birth
• Phone Number
• Email Address
• Include the following statement "In accordance with the verification provision of Senate Bill 938, I am hereby requesting verification of my status as a Veteran of the United States Military."

You must attach Department of Defense Form 214 (DD214) as well. Black out your Social Security Number (but not your date of birth) before emailing.

You can read more about the Letter of Verification here: https://www.tvc.texas.gov/entrepreneurs/

To be deemed a "new veteran-owned business," your LLC must:

• Be formed in Texas on or after January 1, 2022, and before January 1, 2026, AND
• Be 100% owned by honorably discharged veterans from a branch of the U.S. Armed Services.

A 100% veteran-owned LLC is exempt from paying franchise taxes until either the fifth anniversary of the LLC's existence or the day it fails to qualify as a veteran-owned business - whichever comes first.

Please note that franchise taxes are only applicable to business that exceed the $1.23MM annual revenue threshold AND even if your new veteran-owned business is not subject to state franchise tax for its initial five-year period, you must still file an annual report (including franchise reports) with the Comptroller of Public Accounts.

If you are an honorably discharged veteran looking to form a new Texas LLC for free, follow these steps:

1. Obtain Department of Defense Form 214 (DD214) for use in next step;
2. Obtain a Letter of Verification from Texas Veterans Commission;
3. Fill out and sign a Certificate of New Veteran Owned Business (Form 05-904);
4. Prepare a Certificate of Formation;
5. File the Certificate of Formation, Letter of Verification, and Form 05-904 via SOSUpload.