Starting an LLC in Dallas: What All Entrepreneurs Need to Know
Are you looking to start a limited liability company (LLC) in Dallas3 min read
Are you looking to start a limited liability company (LLC) in Dallas? If so, then you’ll need to understand the regulatory landscape in the Lone Star State. Starting an LLC requires strategic decision-making and an understanding of common business and legal terminology. The entire process demands absolute clarity, from researching the best structure for the business, to filing the necessary documents, contracts, and licensing requirements.
Fortunately, this article covers everything new business owners need to know about starting and running an LLC in Dallas. It provides a step-by-step guide on forming an LLC in a timely manner, discusses the advantages and disadvantages of such a structure, and offers general advice for entrepreneurs. With this guide, the process of starting an LLC should be quick and stress-free.
Step 1: Choosing the Right Business Structure
Before creating an LLC, business owners must determine which company structure best suits their business, needs, and goals. The three most common types of business structures are sole proprietorships, partnerships, and corporations.
LLCs are combinations of partnerships and corporations. Generally, forming an LLC offers limited liability protection, which means that its owners and members are not personally responsible for any debts incurred by the business. This protects the owners’ personal assets from being seized in the event of a business failure. LLCs can also elect to be taxed as a partnership, corporation, or sole proprietorship.
Step 2: Naming the Business
The next step is to name your LLC. Texas LLCs must have the phrase “Limited Liability Company” or the abbreviation “LLC” in their name. Texas LLCs must also include the name of one of the LLC’s owners within the business's name.
Step 3: File the Articles of Incorporation
The first formal step in creating an LLC is to file the Articles of Formation. The Articles of Formation (also known as a Certificate of Formation) is the document that spells out the name, purpose, management, and ownership of the LLC. It must be filed with the Texas Secretary of State.
To file the Articles of Formation, business owners will need to complete and submit a certificate of formation form, along with the appropriate filing fee. The form required can be found on the Texas Secretary of State’s website. Once the documents are received, they will be reviewed and approved.
Step 4: Setting Up Bank Accounts
Once the LLC is established, it's time to open a bank account. Before doing so, LLC owners will need to obtain a Federal Employer Identification Number (EIN). An EIN is a unique nine-digit identification number issued by the Internal Revenue Service (IRS). It is used for tax filing and reporting purposes, and is a required part of setting up a business bank account.
Step 5: Drafting the Operating Agreement
An LLC must have an Operating Agreement that serves as a legal manual for the business. This agreement outlines the rights, duties, and responsibilities of each owner and member. It also covers important information such as how profits and losses will be allocated, how new members will be admitted, and how decisions will be made. Although not required in Texas, having an Operating Agreement in place helps protect business owners from potential legal disputes in the future.
Step 6: Obtain Licenses and Permits
The last step in creating an LLC is to obtain the necessary licenses and permits. In many cases, these will vary from city to city. Each business may also require different permissions from state and local governments. Moreover, some businesses may require professional certificates and other qualifications, such as in the healthcare, engineering, or legal industries.
UpCounsel provides an experienced lawyer community and access to high quality attorneys. Business attorneys have an average of 14 years of experience and profiles contain client ratings and reviews. Whether you need a one-time consultation or an entire freelance legal department, let UpCounsel be your guide.