Using an LLC formation service may be the easiest way to form an LLC in Texas, but is it worth the extra cost if you can successfully do it on your own?
LLCs are a popular choice of business structure because they offer owners limited liability protection and certain tax advantages. But LLCs are also extremely easy to form, especially in relation to other formal business structures. According to TRUiC, forming an LLC in Texas can be done in 5 basic steps:
Choosing a name for your LLC is the first and most important step of forming an LLC in Texas. It is important that the name of the LCC comply with Texas naming regulations and is easily searched and recognizable among potential customers.
For starters, the name must include the phrase “Limited Liability Company” or one of its abbreviations and cannot include words that can be confused with a government agency. For more LLC naming guidelines, the Texas Secretary of State guideline has a full list of naming rules and regulations for LLCs in Texas.
It is also a good idea to do a name search on the Texas Comptroller of Public Accounts website to ensure that the name has not already been used by another business in the state.
Read:- 10 Steps to Start a Small Business
Appointing a Texas-registered agent is the next step of forming an LLC. It is important that the registered agent chosen meets certain requirements: the registered agent must be a resident with a physical address in Texas, they must also be authorized to conduct business in Texas and be available during business hours.
A registered agent, once appointed, acts as an LLC’s point of contact with the State of Texas, they are responsible for receiving important legal documents, tax forms, notices of lawsuits, and any other government correspondences on behalf of the LLC. The next step of forming an LLC is creating an LLC Operating Agreement.
Registered agents may be chosen from an LLC’s list of members or be appointed through a professional registered agent service.
Read:- How to Start a Construction Company
To officially register an LLC in Texas will require potential business owners to file a Certificate of Formation with the Texas Secretary of State, which can be online, by mail, or in-person for a filing fee of $300.
This document, once processed in 3 days online or 5-7 days by mail, officially forms an LLC as a registered business. In the Certificate of Formation, the name of the LLC, the name and address of its registered agent, the purpose of an LLC, whether an LLC will be a member- or manager-managed, and the date of effectiveness of filing will need to be identified and filled in, accompanied by the filing fee of $300, for it to be processed by the state.
Read:- What do you understand by Corporate Coach?
The next step of forming an LLC is creating an Operating Agreement.
An Operating Agreement is an internal legal document that does not need to be filed with the state in Texas, which is the case in many other US states. While an Operating Agreement is not part of the legal requirements of forming an LLC in Texas, it is a good business practice to create one regardless.
In an Operating Agreement, owners outline the ownership structure of their LLC, stipulate the LLC’s operational procedures, and also determine how the LLC’s profits and dividends will be distributed among members. This comprehensive document ensures that owners are in agreement with regards to the above and minimizes the potential of future conflict among members.
Obtaining an Employer Identification Number (EIN) is the last step to form your LLC in Texas. This can be done either online, by mail, or by fax.
An EIN, which is issued free of charge by the Internal Revenue Service (IRS), is a 9-digit number used to identify a business and keep track of its tax reporting and records. An EIN is also required if an LLC would like to hire employees or open a business bank account.
Concluding remarks
To sum it all up, adhering to these 5 steps will ensure that your Texas LLC is formed in no time. It is not necessary to hire an LLC formation service to make sure everything is in order, instead visit TRUiC’s website.
There you will find more information on how to form an LLC, information on LLC tax requirements, and also information on how to keep an LLC in compliance with the state.
With all the how-to guides and videos TRUiC has to offer, it’s now possible to form an LLC without the assistance of an LLC formation service today!
Whether you are planning to buy a business or sell your own, you’ll want the…
Swing trading is a dynamic approach that appeals to active traders seeking to capitalise on…
In the realm of accounts receivable (AR) management, staying compliant with regulations is paramount. As…
Effective inventory management stands as a cornerstone for business success. It's not just about keeping…
Maintaining a competitive advantage in the constantly shifting environment of social media marketing is very…
The Cash App is one of the best options for small and medium size day…