LLC in Texas – How to Start your Limited Liability Company in Texas
If you have plans to start a , then you may have started to look into what it will take to get your established and going.
In this step-by-step guide we are going to cover all the steps needed to successfully setup your and get your going!
Some of them are free + state fee while others cost a little more and take care of all of your legal paperwork and annual filings so you don’t have to miss a deadline.
|ZenBusiness||$39 + State fee|
They charge one of the lowest rates and are an overall best value. Their formation packages are loaded with features for a great price!
|IncFile||$0 + State fee|
For those on a strict budget, this is your cheapest LLC service. You can add on features as needed.
Let’s get started on our step-by-step guide.
How to Start an ) in Texas: (
Choose a name for your New
Choosing a name in Texas is a quick three step process:
1.) Every state has their own requirements for choosing a name, but in general, they follow these guidelines:
- Name must include “ corporation.”” “L.L.C.” or the phrase “
- The name cannot include words that could interfere or be confused with a government agency such as FBI, CIA, Treasury, etc.
- Certain words such as “bank” or “attorney” may require approval and additional paperwork.
For a complete list of naming rules for the State of Texas, visit their Texas Secretary of State’s guidelines page here.
Texas does not require you to reserve a name before starting your , but if you are afraid someone else might use the name, then you may want to consider paying the $40 fee.
The $40 fee gives you name exclusivity for 120 days.
3.) This is not required but recommended – check to see if your businesses name domain is available. Most businesses have a website and it is best to have your website URL match your You can do this here. name so that customers and clients can easily find you on a google search.
If you are having a hard time coming up with a name for your , by using an online name generator.
A is a person or (other than yourself or your own ) that sends and receives legal documents on your behalf.
The does not have to be anyone at your company or anyone employed by you, and does not have to be a member of the .
In fact, there is a whole industry of companies that you can hire to handle this on behalf of your company.
Majority of the states require that an has a and the agent must be a resident in the state in which you are doing .
Texas requires that your be a resident of Texas or a Texas corporation.
If you use a formation service to form your many of them can act as your , (more on this later).
If you choose to be your own , your address and other information will be made public.
Using a other than yourself can protect some of your personal information.
A needs to file a written or electronic form with the following information:
- Your ‘s name
- An express statement that the person designated consents to serve as the ‘s
- The name of the person designated as
- The signature of the
- The date of execution
File yourof Formation
Now that we have covered the prerequisites, you will need to register your with the State of Texas.
The formation document is most often referred to as the “articles of organization” but in Texas they call it the of Formation.
This document along with the payment of your state are what officially create your .
Once created, the documents can be sent in via mail or online.
Along with the certificates, you will need to provide the following information:
- Full names, addresses, and contact information for all founding members of the .
- Address of the – if your has multiple addresses, you will need to choose. one that will be your official mailing address.
- Length of time the company has been in or has existed.
- Information about the – mission statement and explanation of purpose.
- State whether your is member-managed or manager-managed.
In the State of Texas, the Certificate of Formation fee is $300 for online and paper applications.
You only register your once, so this is not a fee that you will have to pay annually.
You will receive a stating that you are allowed to do in the state and are a registered .
Setting Up a Management Structure
As mentioned above, ‘s give you the ability to choose your own management structure.
The can be member-managed which means the members are involved in the day to day operations of the .
You can also choose to have the company be manager-managed which means members are not involved in the managerial matters but rather hire managers to take care of the day-to-day functions.
Texas does not require an but we highly recommend creating one.
An is a legal document that outlines the ownership structure and member roles of your .
Get an EIN for your
An EIN, or Employer Identification Number (federal id number), acts like a Social Security number for your . You will need an EIN to hire employees and open bank accounts.
You can get an EIN for free from the IRS website, or via fax or mail
Again, if you use a formation service, they will do this step for you!
If you’ve already formed your in another state and are now expanding to Texas, then you will be completing an “Application to Register” rather than a Certificate of Formation.
This will register you as a .
This requires a $750 payment which isn’t cheap!
Thankfully, this is only a that you have to pay once.
This is more involved and may require the help of a formation service or lawyer.
Once your is formed, there are annual deadlines that need to be met.
Make sure you familiarize yourself with these deadlines and add them to your calendar so that they are not missed.
Many people choose to setup their as an because of the benefits and to the owners.
Should I use an Formation Service?
As you can see, there are several steps required to make sure that your is formed correctly.
Hopefully this article helped you better understand what it takes to form an
If this all still seems overwhelming, then this is where using a formation service comes in handy.
An formation service will make sure everything gets filed properly and expediently and they will make sure that all of your annual maintenance deadlines are not missed.
formation services specialize in just that, forming businesses.
They streamline the process for you and are there to answer questions, fix mistakes, and help with legal advice and needs.
Many of them even take care of your yearly maintenance and filings for you and offer as well.
You can add on services such as a agreement, or board member fiduciary duties documents.,
They do it all so you don’t have to.
Here are three popular formation service options to give you an idea of what they offer:
$39 + State Fee
ZenBusiness is one of the most affordable options and a great value.
They are a little smaller and newer than the other two mentioned below, but have excellent customer reviews and overall features.
$225 + State Fee
Northwest also included a year of with any formation package. They also offer premium customer support that is unmatched to their competitors.
If you anticipate questions or more complex formation, they are the top choice. You definitely get what you pay for and more with Northwest.
Northwest is our best overall value option.
$0 + State Fee
IncFile will form your for free and include a full year of with any formation package.
IncFile is at the top of our list of the best formation services, year after year.
If you decide to go the DIY route and form your own but need help with the Annual Reporting, checkout the following services:
For $49, MyCompanyWorks will make sure you don’t miss a deadline. They are the most affordable annual report service out there and they offer a 100% satisfaction guarantee.
Their price varies depending on the service package that you choose, but their fully-managed services take care of everything so you don’t have to.
And if you want it all done for you, formation and Annual Reporintg, then you may want to look into MyCorporation:
For $99 MyCorporation will form your and also include a full year of their managed annual report service.
Benefits of Starting an
- to – as mentioned above, your personal assets are protected should your go bankrupt or be sued.
- benefits: Pass-through taxation benefits
- Simple to set up and maintain – no annual meetings, formal officers, or complicated records.
- Flexible – single member , multi-member , and so on.‘s have very little restrictions regarding the company’s structure. You decide if you want your to be a
- ‘s are a widely recognized structure and bring credibility to your organization.
- Access to financing – Once your is formed, you can start to build a credit history which opens the door to loans and financing to grow your .
- Flexible profit sharing – ‘s can choose how they want to do their profit sharing, they are not required to be equally distributed among members.
An structure protects you, as the , from being personally liable for the company’s debts or other liabilities.
Furthermore, ‘s can be owned by more than one person known as an .
If the doesn’t do as well as planned or you have a rough year, you as the are personally protected under an .
For example, if your declares bankruptcy or is sued, your personal assets such as your vehicle, personal bank accounts, and house are safe.
An provides some great personal .
A Single-member is a pass-through which means that profits and losses from the are “passed through” to you and taxed as personal income.
This benefits you as a small because you are not hit with double taxation and are not required to pay both corporate and personal taxes on your earnings.
Multi-member ‘s are taxed as partnerships and are also pass-through entities.
This means each owner pays personal income taxes on their portion of the profit.
As you can see there are so many reasons by choosing an structure for your is smart.
Hopefully this guide helped you learn more about ‘s and gave you the tools you need to get your setup.
Here are a few more resources we think you would be interested in:
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