In order to form a limited liability company in Texas, you will need to understand the legal procedure.There is a very specific path that must be taken in order to form an limited liability company, requiring a number of forms and tax filings that apply to both in-state and out-of- state entities wishing to do business in Texas.If you know how to form an limited liability company, you can protect your investments and grow your business.
Step 1: Determine the structure of your membership.
It is possible for someone to be a part of the company.A partnership between two or more people, a corporation, or a trust is a legal entity capable of operating a business.If you have legal or business experience, enough capital, and believe you could run the company yourself, then you may want to form a company as an individual.If not, consider forming a partnership with one or more people.
Step 2: You can choose an entity name.
You need to choose a name for the entity once you know who your members are.There are certain guidelines that determine what can and cannot be used as an entity name.The name may not be the same as an existing entity name that has been filed, either domestically or outside the state.The name may not include letters or numbers that can't be typed on a keyboard.Any combination of zero through 9 is acceptable.There are acceptable symbols for use in the name.%'( )# is followed by + and -.The name of the entity may not be deceptive.The registered entity is not permitted to conduct any illegal activity with the name.No name can be used which is deemed to be offensive.The Office of the Secretary of State has final say on all name approvals and denials, and may deem a name to be offensive or otherwise inappropriate.Your entity name must include the words "Limited Liability Company" or an appropriate abbreviation.Every time you list or identify the entity, you must use the limited liability company's name.
Step 3: You have to verify and reserve your name.
You will need to make sure that the name you've chosen isn't already used.You can cross-check your desired name with the Texas Secretary of State's website at http://www.sos.state.tx.us/corp/sda/.You may want to reserve your name until you have completed all of the necessary steps to form and register your company.You can reserve your company's name on the website.You can verify your name by calling the Secretary of State office at (512) 463-5555.Send your inquiry to corpinfo@sos.state.tx.us to verify your name.Online reservations can be made through the website.You can fax your forms to the Secretary of State's office.The period is 120 days.If you need to renew your reservation, you can do it within 30 days.There is no limit to the number of times a reservation can be renewed.A filing fee of $40 is required for each reservation.
Step 4: You can choose a registered agent.
You need to name a registered agent for your company before you can form a limited liability company.Any and all legal documents served to the company must be accepted by the registered agent.The registered agent must be either an individual resident of the State of Texas or an entity that is registered to conduct business in the state.The State of Texas does not have its own registered agent for the limited liability company.The agent has to give written consent to the members.The company's records need the written consent submitted with the certificate of formation.Failure to secure a written or electronic consent of the registered agent will result in the liability and penalties associated with filing a false statement, as the company is deemed to have named that agent without the individual's consent.
Step 5: Designate an office.
You have to designate a company office as well as naming a registered agent.When service of process can be delivered to the registered agent, the office must have a valid, listed address.A mailbox service or telephone answering service may not be designated as the registered office if it is not a physical office location.The agent's primary place of business is not the registered office, but the physical office in which the agent conducts relevant work.If you want to do business in Texas, you need to complete the Application for registration of Firm Office.Before the company can be registered and licensed, it must be completed and submitted for the main office in Texas.You can find Form L0011 online.
Step 6: A certificate of formation is needed.
Form 205 is required of you by the State of Texas.You can find the form on the Secretary of State website.The form requires you to give your name, registered agent and office, and the name and address of any designated managers of your limited liability company.Form L0014: Peer Review Reporting can be found online at http://www.tsbpa.state.Tx.us/.You have to pay a $300 filing fee to the Texas Secretary of State when you file your certificate of formation.Money orders must be made out to the Texas Secretary of State.If you pay with a credit card, your payment will be subject to a convenience fee of 2% of the total fee, unless there are additional fees required.You can submit a duplicate copy of the form by fax, mail, or in person.The fax form must have valid credit card information with it.You can mail the form to P.O.Box 13697 is located in Austin, Texas.If you live in or near Austin, you can deliver the form in person at the James Earl Rudder Office Building.
Step 7: An operating agreement could be drafted.
Even though you don't have to write an operating agreement to form an limited liability company in Texas, some legal experts recommend drafting one anyway to simplify the company's operations.There is no absolute rule for what an operating agreement should include, but it usually lists how the company is managed, how meetings are conducted, and how much capital each member is required to contribute.
Step 8: You need a local license.
You may need to get a basic business license and a tax registration certificate if you want to form an limited liability company.The necessary licenses will be obtained from the city or county where your company is registered.Not every local government requires an entity to have a business license.To find out if you need a local business license, contact your county or city clerk's office.On an annual basis, the local license must be renewed.
Step 9: You can request an IRS Employer Identification Number.
If there are more than one member in the company, or if a single member has any employees hired, you need to request an EIN.You can apply for an employer's number through the IRS website.
Step 10: Determine your tax obligations.
Any business in Texas that has more than one employee is subject to state employment taxes.You will need to inform both the IRS and the State of Texas of any hirings you make.Your company will have to pay the state's franchise tax.You can register your business at the Texas Employer Portal.You will report any employee hires or firings here.The Texas franchise tax requires all limited liability companies to pay either 0.25 percent of the company's annual capital or 4.5 percent, whichever is greater.If the gross receipts from the company's taxable capital and taxable earned surplus are less than $150,000 in a given tax period, they are not subject to the state franchise tax.
Step 11: You can open a business account.
It is still important to separate your business's finances from your own, even if you are the sole member.In order to open a business bank account, you will most likely need your IRS Employer Identification Number, a copy of your filed Certificate of Formation, and some documentation identifying any authorized signers.