A Texas LLC is the best way to protect your personal assets and legitimize your business. This guide will walk you through all the steps to form an LLC in Texas, including registering your business name and getting an EIN.
You’ll also want to create an operating agreement, which will clarify how profits and losses are distributed. This will help courts affirm your limited liability status and make conflict resolution easier in case of a dispute.
Forming a Limited Liability Company
If you want to run a business in the state of Texas, it’s important that you take the time to make sure your company structure is correct. Failure to comply with any legal requirements could potentially expose your personal assets to litigation, and it is worth the effort to make sure you have the right structure in place.
The first step is to choose a name for your company. This should be a unique name that passes the business entity search test on the Secretary of State’s website. It should also not be similar to any other existing names in the state; this could cause confusion for customers and lead to trademark issues.
You’ll also need to appoint a registered agent. This person or company is responsible for receiving service of process and other official legal documents for the LLC. They must have a physical address in the state of Texas and be on-site during regular business hours.
Filing a Certificate of Formation
A Certificate of Formation is a state filing that establishes your LLC as a legal business entity. It also indicates that your LLC has a registered agent and address (which must be in Texas). If either of these changes, you must file a new Certificate of Formation.
While not required in Texas, your LLC should create an operating agreement that outlines how the company will be run on a day-to-day basis. It will help prevent confusion and disagreements among members. It will also set out financial practices and establish procedures for voting on important company matters.
You must also get an EIN (Employer Identification Number) for your LLC, which is used to identify it with the IRS for tax purposes. You will need it to open a bank account, register for state taxes, and obtain business licenses, if necessary. You can obtain an EIN online or use a service that handles the entire registration process for you.
Getting a Registered Agent
There are many reasons why entrepreneurs choose to form an LLC, especially in the state of Texas. In this guide, we cover everything you need to know about naming your LLC, getting a registered agent, and other important details like annual reporting, fees, and business taxes.
The state of Texas requires all LLCs to have a registered agent that is physically located in the state and available during normal business hours. A registered agent is the person or company that the LLC designates to receive service of process, official legal documents, and compliance information from regulatory agencies.
It’s also a good idea to create an LLC operating agreement, which sets out how the LLC will be managed and owned. Without an operating agreement, the state law will determine how your LLC will be run, which could lead to conflicts in the future. You’ll need your operating agreement to get an EIN, obtain business licenses, and open a bank account.
Getting an EIN
An EIN, or Employer Identification Number, is like a social security number for your business. It lets you pay federal taxes, hire employees, open a bank account, and apply for business licenses and permits. You can get an EIN for free online or by filling out a paper application.
The IRS’s EIN application asks for your LLC’s name, its address (no PO box), and its management structure (ownership, manager, etc.). It’s best to decide if your LLC will be member-managed or manager-managed and have an operating agreement in place before filing for an EIN, as this will help you establish how profits are divided, how the company is managed, and so on.
You may also need a state tax ID, depending on your business’s activities. Texas’s state tax ID requirements vary by business type. You may also need to file a public information report, or PIR, each year with the state. See the state’s website for details.