Form an LLC in Texas

Legal Registration

June 7, 2022, midnight

Form an LLC in Texas
Are you needing to learn how to form an LLC in Texas? If so, you're in the right spot. LegalRegistration.com specializes in helping clients create LLCs in Texas. Please follow the six steps below to form your limited liability company right away. If you have any questions, you can give our organization a call at any time. Our team's standing by to get your LLC up and running ASAP. Step #1: Select a Name for Your New LLC Put some thought into the name of your new LLC. The name must get distinguished from names of other business entities in Texas. This refers to business names filed through the Texas Secretary of State. Are you unsure if another company is using your proposed name? If so, check out the Texas Secretary of State SOSDirect website. Texas law makes the following LLC rule clear. One of the following LLC names must go inside your official LLC name. They are LLC, L.LC., LC, L.C., Ltd. Co., and Ltd. Company. Also, you can sue “Limited Liability Company” or “Limited Company.” Are you ready to reserve a name? If so, you have 120 days to keep a name on file with the state of Texas. All you've got to do is file Form 501. It is the “Application for Reservation or Renewal of Reservation of an Entity Name.” You can file this form through the Texas Secretary of State. Many people opt to file the reservation online. Say you want to do that. You must access the Texas Secretary of State SOSDirect website. Or, you can file your LLC form by mail. The state of Texas will charge a $40 filing fee.   Keep in mind that you can use a DBA or assumed name as your business name in Texas. That’s right. You do not have to use the official legal name of your LLC. (This refers to registration through your Certificate of Formation.) Many Texas business owners use assumed names. An assumed name also refers to a DBA: doing business as. LLC owners can also use a fictitious business name or trade name. Are you ready to get started using an assumed name? If so, you must fill out Form 503. This is the Assumed Name Certificate. You can file Form 503 through the Texas Secretary of State. Or, through a county clerk in a county where you operate your LLC. Many business owners divide to register online with SOSDirect. Or, you can register online. There is a $25 filing fee. Step #2: Choose Your Registered Agent The next step involved appointing a registered agent. In Texas, each LLC needs to have an agent for service of process. So, what does an agent do? He or she works as either a business entity or an individual. The agent will accept legal documents on behalf of the LLC. This process is crucial if someone sues your company. A registered agent must operate as an official Texas resident. Or, the business entity must have official authorization to conduct business in Texas. Make sure that your registered agent also has a physical street address within Texas. Remember, an LLC cannot function as its own unique registered agent. Please contact us if you need more information about Texas commercial registered agents. Step #3: Submit the Certificate of Formation Have you seen the Certificate of Formation for a Limited Liability Company document? You will need this form to create an LLC in Texas. The other official name of this form is Form 205. You can file the form through the Texas Secretary of State. Your certificate has to include the following information. First, you must list the name of your LLC and include the suffix. Then, write the address and name of the registered agent at your LLC. State whether your LLC will get manager-managed or member-managed. Say that you want your LLC to get member-managed. Include the address and name of each member. Now, let’s say that your LLC will get manager-managed. Feature the address and name of each manager. The LLC certificate will also need a general purpose clause. Plus, you must include the address and name of your LLC’s official organizer. Then, the organizer has to sign the form. Sure, you can file the form by mail. But many people file it online. To do so, go to the Texas Secretary of State SOSDirect website. That is where you can learn about how to pay the $300 filing fee. Step #4: Draft the Operating Agreement The state of Texas does not enforce LLC operating agreements. But that does not mean you should ignore this step. Despite lack of enforcement, most legal experts recommend drafting an agreement. The agreement functions as an internal document. It describes how you intend to run your Texas LLC. Plus, the agreement defines rights and responsibilities. Both relate to the managers and members of an LLC. An operating agreement can help you preserve limited liability status. That’s because an agreement will prove that your LLC functions as a separate business entity. Now, say that you decide not to use an operating agreement. Texas State law must then govern how the LLC operates. Here is information that an operating agreement should include. It has to feature member percentage interests that relate to the LLC. Plus, the document must showcase member voting power, rights, and responsibilities. The operating agreement also has to state how profits and losses become allocated. An agreement also must list the rules for holding votes and having meetings. Also, the document must have information about buy-outs, provisions, and buy-sells. This way, the state will know what happens if a member cannot continue with the LLC. Step #5: Get an EIN Does your LLC in Texas have more than a single member? If so, the LLC must have an EIN: IRS Employer Identification Number. This is the case even if your LLC does not have any employees. Now, let’s say that you form a one-member LLC. You must get an EIN if you intend to have employees. Or, if you decide to have the LLC taxed as a corporation. (Instead of the LLC getting taxed as a sole proprietorship.) So, how do you get an EIN? All you need to do is access the online EIN application through the IRS website. The IRS will not charge an EIN filing fee. What Is an EIN Code? Step #6: LLC Annual Reports Most states enforce LLCs to file annual reports through each Secretary of State. But Texas is not one of those states. But wait. Each Texas LLC has to file an annual franchise tax report. Information about computing this tax is very complicated. Check out the Comptroller of Public Accounts website for more information. Or, search online for Texas LLC Annual Filing Requirements. Contact our organization if you need help with the annual franchise tax report. Why Should I Create an LLC in the State of Texas? There are many reasons why it’s important to form an LLC in the state of Texas. The reasons apply if you're operating as a sole proprietor or starting a business. LLCs will limit the personal liability of owners for lawsuits and business debts. Plus, having an LLC provides so much flexibility. That flexibility applies to business management, taxation, and ownership. Do you want to learn more about the benefits of LLCs? If so, please browse our website. Doing so will help you realize if an LLC features the ideal business structure for you. Point blank: limited liability companies provide a great deal of protection. Should I Draft an Operating Agreement for My LLC in Texas? The state of Texas does not enforce LLCS to use operating agreements. But most legal experts recommend drafting an agreement if you have an LLC. Why? Because an agreement can protect an LLC’s limited liability status. Plus, an agreement can prevent misunderstandings from taking place. Those misunderstandings apply to both manager and financial mishaps. The agreement will also ensure that your LLC has official rules in place. This way, the rules will govern your business instead of Texas state law. Please contact us if you need help drafting an operating agreement for your LLC. Do I Need To Get a Business License in Texas? The Texas State government does not enforce LLCs to use standard business licenses. But some business sectors must use state-wide licenses. Do you need more information about Texas state-wide licenses? If so, go to the Texas Department of Licensing and Regulation website. That is where you can access the Texas Business Licenses & Permits Guide. Almost all Texas counties and cities do not enforce having a local business license. Consider checking your country or city government website. The website will have a list of all local rules and how they relate to operating an LLC. What Is a Sole Proprietorship? A sole proprietorship refers to the most simple and common type of business. Through the proprietorship, one individual engages in his or her business activity. He or she does so without forming an official organization. Say that business takes place through an assumed name. (This refers to a non-surname that the individual uses.) The person must have an official assumed name certificate. The certificate refers to a DBA: doing business as. You can file the certificate through the office of a county clerk. Do so in a county where your business premise gets maintained. Now, say that you do not have any business premise. This means you must file an assumed name certificate more than once. File it in every Texas county where you conduct business through the assumed name. What Is a General Partnership? A general partnership exists when at least two people operate a business for profit. Most partnerships adhere to every official partnership agreement. In Texas, the agreement does not have to get displayed in writing. Plus, a state filing rule does not exist for general partnerships. Say that business related to the partnership takes place through an assumed name. This means that you must file an assumed name certificate (DBA). Do this through the office of the county clerk in the county where you do business. Say that you do not maintain any business premise. The next step is to file an assumed name certificate. Do this in every county where you conduct business using an assumed name. What Is a Corporation in Texas? Texas corporations exist through filing the official certificate of formation. You can file this certificate through the Texas Secretary of State. The Texas Secretary of State will provide a form that relates to state law rules. Texans can use the SOSDirect website to complete online certificate filing. “S” corporation does not refer to state corporate law. Instead, that type of corporation relates to the federal tax election. The IRS can tax for-profit corporations as “S” corporations. All the corporation has to do is file an election through the Internal Revenue Service. Are you interested in getting taxed as an “S” corporation? If so, please contact either competent tax legal counsel or the IRS. The Texas Secretary of State cannot assist you with this matter. So, what is a corporation considered in Texas? It is a legal individual with limited liability and centralization of management. The term “shareholders” refers to owners of each corporation. “Directors” is another common corporation term. It refers to people managing the affairs and business of any Texas corporation. Say that you decide to open a corporation in Texas. You will have to craft an ideal management structure for your corporation. You might need to hire an attorney to help you create the management structure. The Texas Secretary of State cannot help you out with this process. More Information About Forming a Limited Liability Company in Texas Are you trying to form a new LLC in Texas? If so, here is what you must do to create a Texas limited liability company. First, you have to file a certificate of formation through the Texas Secretary of State. Then, the Texas Secretary of State will provide you with a form. The form will feature certain Texas state law rules and regulations. Texans can use the SOSDirect website to complete online filing of the certificate. Keep in mind that a limited liability company never functions as a corporation. Or, as a partnership. Instead, an LLC operates as a unique type of legal entity. It has powers that both a partnership and corporation have. People in Texas can structure each LLC in unique ways. Most business owners create a general partnership with limited liability status. Or, a limited partnership where owners have the power to take paper in management. This way, the owners can maintain complete limited liability. In fact, a limited liability company is not that different from an “S” corporation. The difference is that there is no ownership. Plus, the IRS will not impose complicated tax restrictions. In a legal partnership, the crucial factor is always the individual. That is not the case with a limited liability company. The key factor of an LLC is the entity. Each owner at an LLC refers to a “member.” But a member is not always an individual. It can also function as a trust, partnership, corporation, individual, or legal entity. Oftentimes, member liability gets limited to the investment that each member makes. That’s why a member can experience pass-through tax treatment. This treatment can also go toward partners within a legal partnership. It’s often best to meet with legal counsel before forming an LLC. This way, the LLC can function in the manner that the Texas business owner intends. What Is a Texas Limited Partnership? Texas limited partnerships function as official, legal partnerships recognized by the state. Two or more people can form a partnership. At least one person operates as the general partner. Meanwhile, at least one other person has to operate as a limited partner. Limited partners must adhere to each official partnership agreement. That agreement is either written or oral. An agreement recognizes the business affairs of every specific limited partnership. In Texas, partnership agreements never get filed for public record. But each limited partnership has to file a certificate of formation. This filing takes place through the Texas Secretary of State. Your Secretary of State must provide a form that relates to state law rules. You can use the SOSDirect website to file the certificate of formation. If you need help with this, please call our organization at any time. More Information About Naming Your LLC in Texas Remember to put a lot of thought into your new company name. This is one of the crucial steps of starting an LLC in Texas. The key is to create a name that adheres to all Texas naming requirements. Plus, you want potential clients to have the ability to search for your name with ease. Are you having trouble accessing the Texas government LLC name database? If so, please call our organization and our experts can help you use the database. We’ll help you browse the Texas Comptroller of Public Accounts website. This way, you will know if someone already uses your proposed LLC name. Let Us Know if You Need Helping Designating a Registered Agent Are you planning on forming an LLC in Texas? If so, you have to appoint a registered agent, per the Texas State government. A registered agent functions as either a business entity or individual. The agent has to receive crucial tax documents, legal forms, and lawsuit notices. Each agent operates as the point of contact for an LLC business. Through our organization’s services, we can help you fill out and file a 401-A form. This refers to the official Texas Acceptance of Consent 401-A Form. The Texas government will need this form to process the registered agents of your LLC. Please call us right now if you need help with this (or any other) LLC step. Our mission is to help you form your LLC in Texas right away. We Can Help Your LLC Secure an EIN We're standing by to help you get an EIN for your Texas LLC today. EIN refers to the official Employer Identification Number. It’s a nine digit number that the IRS (Internal Revenue Service) issues. This way, the IRS can recognize each business entity with ease. The purpose is for streamlined business and LLC tax reporting. Think of an EIN as a Social Security number (SSN) for your LLC and company. Without an EIN, you cannot open a business bank account for your new business. Plus, your LLC cannot even hire workers without the number. Please call us right now to get on track toward receiving your EIN. Our LLC filing experts know how to help businesses secure EINs fast. How Long Does It Take To Get an LLC? Do You Need Help Creating an LLC in Texas? Call Us Right Now The LegalRegistration.com team is standing by to help you form your LLC in Texas. We have decades of experience helping businesses get off the ground in Texas. Please call us right now with any questions or concerns that you have. Within minutes, our experts can assess your LLC needs and provide simple solutions. You don't have to worry about starting your business any longer. Our organization can guide you every step of the way.
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