Create LLC In Texas: Everything You Need to Know
The first thing you must do when creating your LLC is to give it a name. 4 min read
2. Key Steps after Forming a Business
3. How to Maintain LLC Status
The first thing you must do when creating your LLC is to give it a name. Before you can finalize your decision, you need to do a bit of research to make sure the name is available. In the state of Texas, the name can be whatever you want as long as it contains LLC, L.L.C, or limited liability company. You can't use words like bank, attorney, or university since those kinds of businesses require additional paperwork and licensed employees. You also can't use words that will confuse the LLC with existing businesses or federal entities.
You can conduct a name search on the state of Texas website by making an account. This also grants access to business forms and other application forms you'll need as well as an avenue to make payments to the state. Once you've confirmed your name is available, it's generally a good idea to seize everything you can with that name including trademarks and domain names.
Next, choose a registered agent for your Texas LLC. This is the person who will take care of all the legal requirements of the LLC including any instances when the LLC is sued. The agent must be a resident of Texas or a corporation allowed to operate in Texas. The owner and other employees in the LLC are not prohibited from acting as the registered agent. The only limitation is that it cannot be the LLC itself.
Afterward, it's time to file the Certificate of Formation online, in person, or by mail. You'll also need to decide if the LLC is going to be member managed or manager managed.
- Members of the LLC are actively involved
- Company and members are served equally well
- Each member has a say
- Decisions are made by voting
- Designated managers are recognized as authority
- Can be more efficient and effective
- No need for voting time
After you file for the Certificate of Formation, it's time to create an operating agreement. Texas doesn't actually require it, but it's better to have it anyway. This document details how the LLC is run including operation and ownership.
Get an Employer Identification Number next. This is how a business entity is recognized on all levels. It's like your LLC's social security number. You'll need this number when you file taxes. An EIN is obtained through the IRS online or by mail.
Foreign LLCs Doing Business in Texas
If you operate an LLC registered outside of Texas, you must first register with the Texas State Department to do business in the state. In order to register, you must have a registered agent for the process, who can be an individual living in Texas or a corporation that's cleared to operate in Texas. You'll need Form 304 or the Application for Registration of Foreign Limited Liability Company to register.
Just because your LLC's name was available somewhere else doesn't mean it'll be available in Texas. You must conduct a name search to ensure that your LLC's name is available for use in Texas. If it's not available, you'll have to adopt another name for your Texas operations.
Key Steps after Forming a Business
The first thing you need to do is separate your personal assets from the business. The best way to do this is to open a bank account specifically for your business. It's also a good idea to get a credit card for your business, which makes it easier to track expenses and can build the company's credit.
You'll also need to register for Texas State Tax, Unemployment Insurance Tax and Texas Sales Tax. In Texas, your LLC must pay a Franchise Tax as well simply for being a business in the state. Make sure you obtain all the necessary licenses and permits to operate in your local Texas municipality as well. Your local chamber of commerce should have all the necessary information and forms.
How to Maintain LLC Status
If you want to keep your LLC status in Texas, you'll have to file your reports and taxes on time. In Texas, you'll have to file the Franchise Tax Public Information Report. If your LLC makes less than $1,110,000 a year, you don't have a tax to pay, but you still have to file a no tax due report. Unless you've opted for S-corp or C-corp status, you and other members of your LLC must report income earnings to the IRS with Form 1065.
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