Texas LLC Guide | A Comprehensive Write-up For Beginners

Filed in Business by on April 12, 2020 0 Comments

When it comes to business it’s better to have a clear knowledge of the one you really would like to venture into. Every business is a step by step process, it not something that you will just sit down at your home and decide what to do and it will come to pass without hard work and stress.

Every successful business you see today started somewhere and truly, some of the business owners now can really boast that their business has gone far and wide. So, you too can be like them, if you really want to make a positive change in your business.

Do you know that forming an LLC is the simplest way of structuring your business to protect your personal assets in case your business is sued?

Now, you have an idea of why you should start an LLC in Texas.

Texas LLC Guide

A limited liability company (LLC) is a business entity that offers certain legal protections and rights to its owners. An LLC is either a corporation or a sole proprietorship/partnership.

1. Texas LLC Information

Limited liability companies (LLCs) in Texas are affordable and easy to form. And as with other states, the state of Texas has some specific requirements.

The specifications required of a Texas LLC are:

  • Registration

People who want to start an LLC in Texas must file a Certificate of Formation (Form 205) with the Secretary of State. The form must include pertinent information such as the name and address of the LLC, the name and address of the resident agent, a statement identifying the type of management and by whom (i.e. member-managed or manager-managed), the name and address of the organizers, the purpose for which it was formed and the dissolution date, if applicable. Do not forget to include the filing fee. You may register online, by mail or by fax.

  • Forms And Fees

All LLCs are required to submit a completed Certificate of Formation, Form 205, with the Texas Secretary of State, along with the filing fee. Payment may be made by personal check, money order, LegalEase debit card or by credit card (American Express, Discover, MasterCard or Visa.) All credit card payments are subject to a convenience fee of 2.7% of the total fees charged.

  • Timeline

All forms and documents submitted for processing and filing are usually done within three to five business days upon receipt of the documents. Expedited processing services are available for an additional per-document or form fee and must be accompanied by a written request for expedited processing services.

  • Naming Requirements

The usual LLC naming requirements exist in Texas, such as making sure the LLC’s name is distinguishable from other LLCs in the state. The LLC name must be approved by state agencies and must include certain words in order to qualify and be approved by the Texas Secretary of State. You may opt to have a preferred name checked for availability by calling the Secretary of State at (512) 463-5555 and dialing 7-1-1, or by emailing your queries to corpinfo@sos.state.tx.us.

  • Formation Requirements

An LLC with more than one member is also strongly advised to have a limited liability operating agreement among its members.

In order to serve as a registered agent, the individual or company must complete acceptance of consent, Form 401-A, which must be signed by the registered agent and then filed with the Secretary of State.

2. Cost to Form an LLC in Texas

A new LLC that is being formed in Texas needs to file a Certificate of Formation – Limited Liability Company (Form 205) with the Texas Secretary of State, and pay a $300 filing fee.

If you need a certified copy of the Certificate of Formation, there is a $30 fee. If you need a Certificate of Status, there is a $5 fee. If you wish to reserve a name for your LLC for a period of 120 days before registering, you may file an Application for Reservation or Renewal of Reservation of an Entity Name (Form 501), and pay a $40 fee.

3. How To Start LLC In Texas

Knowing the basic registration process and cost of fees before starting your LLC in Texas is mandatory so that you won’t regret your actions.

One good thing about LLCs is that there is no maximum number of members. It’s also known as a “hybrid” business structure in the sense that it brings together elements of a corporation and limited liability partnerships.

RECOMMENDED: Michigan LLC Guide | A Comprehensive Write-up for Beginners

Here are some tips to help you put together what you need to begin the registration process with the Texas Secretary of State:

  • Choose A Suitable Name For Your Business

You can choose any name as long as it ends with “Limited Liability Company” or any variant of its abbreviation – LLC or L.L.C. The name must also be approved by certain state agencies and departments.

A name may be reserved by filing Form 501. This is usually done online or by mail and has a nonrefundable filing fee. You must include the requested entity name, entity type, name and address for whom the reservation is made and the signature of the applicant’s lawyer or agent.

  • Assign An Agent For Service Of Process (Also Referred To As The Resident Agent)

You must submit an acceptance of appointment and consent, Form 401-A, to serve as a registered agent with the Secretary of State. The form must include the name of the LLC, a statement by the person designated to be registered agent consenting to serve as such, the name and signature of the registered agent and the date the agreement was executed. There is a small fee for processing that must accompany your form upon submission.

  • Get An Employer Identification Number (EIN) From The IRS

If there are two or more members in your LLC, your company will need to obtain an EIN from the IRS for tax purposes.

  • Create An Operating Agreement

If your LLC has more than one member, make sure you have a limited liability company operating agreement. Although this document is not included in the filing agreements with the Texas Secretary of State, the LLC operating agreement must be submitted when filing for your Texas tax license.

  • Familiarize Yourself With The LLC’s Continuing Legal Obligations

LLCs are subject to the Texas franchise tax. The Texas Comptroller requires that LLCs submit an initial franchise report with a public information report in their first year, and then an annual franchise tax report with a public information report every year thereafter. All reports must be signed either by an LLC member or manager. The filing of annual reports must be done before May 15.

4. Texas LLC Annual Fee

It’s better to know the annual fee of how Florida LLC is being charged. This alone will make you budget for everything at a time which will help reduce the stress of thinking much.

The fee for a mail filing is $300 and the fee for an online filing is $308. The filing fee is a one-time fee. You don’t have to pay any monthly (or annual) fees to maintain your Texas LLC.

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