LLCs are a very important, and fastest growing business structure in America. They’re the ideal for small businesses, because they provide limited liability so no personal things are at risk, as well as pass-through taxation, and help to make your business seem more professional than a sole proprietorship or a partnership, whilst still being relatively simple to maintain and form.
Create a name
This is the very first step in establishing your LLC, and some even say it is the hardest. To have a successful business you need a name that’s catchy, and is legally allowed. In Texas there are some specific things that you need to watch out for:
- Don’t have words like bank or trust company, a similar word or a foreign language word without approval from the state banking commissioner
- Don’t have words like college or university or anything related without approval from the Texas Higher Education Coordinating Board
- Must have the words LLC in some form
- Mustn’t contain words like veteran, legion, foreign or anything like so that implies that the company is made for benefitting war veterans and their families without approval from a veterans organisation
Once you’ve decided a name you need to check it’s available in Texas by checking with the Secretary of State. If it’s available it’s also useful to check if a domain name is available for it too, and buy it just in case you want a website in the future.
Choose a registered agent
A registered agent is responsible for receiving important legal documents like service of process notices and tax forms. In Texas you are allowed to be your own registered agent, which can save you some money but you’ll have to remember a few things: you need normal business hours in the same one place, your personal address will be made public if you work from home, and you have full responsibility over keeping up with deadlines and responding to important messages.
If you are thinking of getting a registered agent, a great idea would be to use an LLC formation service. Most of them also offer registered agent services, and when you form an LLC with them often they give the first year of service for free, and they will list themselves as registered agent on formation documents that they file and prepare for you.
File the Texas LLC Certificate of Formation
You can do this with the help of a service, a lawyer or completely on your own, and it can be done online or by mail, sent to the Texas Secretary of State. Online is slightly faster – with a 3 day processing time, whilst by mail it can take up to 7 days.
Create an Operating Agreement
This step isn’t legally required in Texas, which can save you some time, but it is strongly recommended to be done anyway. An operating agreement is very useful – it’s the only proper way that you and other members can define your roles and lock down the LLC’s management and ownership structure. It will be a great help in case any problems or disputes arise within the company, as it’s something you can look back at to confirm things.
Get an EIN
An EIN (Employer Identification Number) is like a social security number for your business. It’s used by state and federal agencies to track what your business is up to.
The easiest way to get an EIN is by using the online IRS website, but you can also apply by phone, fax or mail. An EIN is useful for things like filing taxes – both federal and state, opening a business bank account and hiring employees.
TRUiC gives you a great deal on all you need to know about LLCs in Texas. Visit their site to see more.