Forming a Texas LLC

When forming a Texas LLC, there are certain steps you need to take. Some of these steps will be common across all LLCs, whereas certain requirements are specific to Texas-based LLCs. There are also varying types of LLCs, including domestic, foreign, non-profit, professional, and series LLCs. Here is everything you need to know so that you can plan accordingly. 

Texas-Based Limited Liability 

Based on the Texas Business Organizations Code, also known as "BOC," limited liability companies are a popular choice for business owners in Texas. This code includes laws that apply to Texas-based business organizations. In 2003, this new code replaced previous laws, such as the Texas Limited Liability Company Act. These laws are now included in this comprehensive code. 

Texas-based LLCs are regulated by both:

  • Title 1 — this applies to businesses and organizations formed in Texas.
  • Title 3 — this applies to LLCs specifically.

In addition, Title 7 applies to Texas professional LLCs.

Types of Texas LLCs: Domestic LLCs

For the most part, LLCs formed in Texas are considered to be domestic. This term means that an LLC is formed under Texas law. If an LLC is formed under laws from another state, it can become a domestic LLC by filing all of the required paperwork. If you were interested in this step, you would need to file a certificate of formation. To do so, you will need to submit the required paperwork to the Corporations Section of the Texas Secretary of State

If you require assistance, Texas LLC lawyers will have a user account with the Texas Secretary of State. This means that they can easily file the paperwork on your behalf. The certificate of formation will be required before you create an operating agreement or before you can obtain an EIN. This form is fairly easy and straightforward and can be completed on your own. However, when drafting your operating agreement legal counsel is recommended. This will help protect all members involved. 

Types of Texas LLCs: Foreign LLCs

When you form an LLC in a state outside of Texas, you would be considered a foreign LLC. This means that 'foreign' is not in reference to a formation outside of the country. Instead, it refers to LLC formation that occurs in a state outside of Texas. If this relates to your LLC, know that before you conduct business in Texas, you must first register with the Texas of Secretary of State. 

However, there are some exceptions. For example, registration would not be required if the only activity within Texas is owning real estate. This then leads to questions regarding leasing and selling of property. This can be challenging to answer, as it is based on specific circumstances. You can discuss these types of questions with your attorney. 

If you must register, you will then file an Application for Registration of Foreign Limited Liability Company — Form 304. This can be accomplished online or by mail. The fee to file is $750.

Types of Texas LLCs: Professional LLCs

Also known as a PLLC, a professional LLC is a company that was formed in order to offer professional services. When forming this type of LLC, the name must include "professional limited liability company" or PLLC. When filing the certificate of organization or formation, this document must include the LLC's management structure. 

When forming a Texas-based LLC, you also have the option to form a non-profit LLC and a series LLC. In fact, Texas is one of a handful of states that currently recognizes series LLCs. Regardless of the type your form, there are many reasons to choose an LLC business structure, including:

  • Minimizing personal risk and exposure, while maximizing the protection of assets. 
  • Being able to manage and organize one or more businesses. 
  • The benefits associated with pass-through taxation, avoiding double taxation
  • Being able to achieve a measure of anonymity. 
  • Increased investor credibility in terms of marketing. 

If you have any questions or concerns about forming a Texas LLC, it is best to seek legal counsel. This will ensure that all of your unique concerns are addressed in terms of your LLCs needs and requirements. 

If you need help forming a Texas LLC, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.