How To Form An LLC In Texas

    So you might have decided to finally start your own business and have decided to form an LLC in Texas. Now, what is the process to finalise the company and make it official? Here we will explain the process that you need to take to form your LLC in Texas. 

    It is not a difficult nor lengthy process to begin an LLC in Texas. To start, you simply need to file what’s called the Texas Certificate of Formation to set up the LLC. This is the document that formally starts your Texas LLC and can be filed in numerous ways: online, by mail, or by fax. You are also able to apply in-person by going to the Secretary of State. There is a cost involved, but it is merely $300. 

    What do I do now? 

    It’s time to consider the following requirements and follow the steps to form your LLC. 

    What will you name your business? 

    In order to simplify the process, here is a step-by-step guide on how to get started. The first order of business, as with forming an LLC in any other state, is to choose the name of your company. However, this name does have to comply with Texas naming requirements and it is useful to choose a name which clients can easily search for. 

                In order to prescribe by the naming guidelines for the state of Texas, there are four aspects to consider. Firstly, the name has to include the phrase “limited liability company,” or the abbreviations or words: “LLC, L.L.C., Limited, Ltd., Company or Co.” Secondly, it’s important that your name cannot in any way be confused with words relating to a government agency, e.g. FBI, Treasury, State Department, etc. Another aspect to consider is that, should you choose to use restricted words such as Bank, Attorney, or University in the name of your LLC, then there is the possibility that you might require additional paperwork as well as having a licensed individual, such as a doctor or a lawyer, as a part of your LLC. Be sure to ascertain whether the name that you desire hasn’t already been registered by someone else. You can check your name on the Texas Comptroller of Public Accounts website. Remember to make sure that you also check that your URL is available. You can ascertain if your business name hasn’t already been taken by checking if it is available as a web domain. You might want to consider buying a URL even if you don’t plan to instigate the business website yet. This prevents others from taking it first. 

    Who will be a good fit to handle my legal documentation? 

    The second step that you need to take is to decide on a Registered Agent for your Texas LLC. A registered agent is either a person or a business entity who has the authority to receive important tax forms, legal documents, notice of lawsuits, and official government correspondence in the business’s stead. This agent must be a resident of Texas or a corporation who has the authority to do business in the state of Texas. However, you are permitted to choose someone who is a part of your company, even yourself.

    The registered agent has to agree to Appointment either in writing or by electronic form. The necessary statement has to encompass the name of the LLC, a specific statement that the individual agrees to act as the LLC’s registered agent, the name of the individual acting as the registered agent, the signature of the agent, and the date of execution. Thankfully, this consent document is not required to be filed with the secretary of state. 

    Make sure it’s all legal – file a Certificate of Formation with the State. 

    The third step is to register your LLC in Texas by filing a Certificate of Formation with the Secretary of State. This can be done online, in-person, or by mail. This is a legal document that formally starts your business. There are a list of details that need to be provided: the name of the LLC, the name and address of the registered agent, the aim of the company, the date of the fulfilment of the filing, the name of the LLC’s organizer, and the state filing fee. 

    You will be required to tell the state whether the LLC is member-managed or manager-managed. Should you wish to hire employees and start a business bank account, then you have to acquire an Employer Identification Number (EIN). 

    Create a LLC Operating Agreement:

    The fourth step to follow is to create a Texas LLC Operating Agreement. Although this isn’t officially mandatory in the state of Texas, it remains a good idea to still get one. This is a legal document that defines the ownership of the company and how the LLC will operate. Especially if there are other owners, this document is useful in making sure that all owners know understand the ownership structure and this lessens the chance of future disputes. 

    Get an EIN:

    The fifth and final step is to get an EIN (Employer Identification Number) from the IRS. This number is essential if you want to hire employees, open a business bank account and for Federal and State tax reasons. 

    Form the LLC:

    For more information on how to form an LLC in Texas, especially relating to obtaining official documents, TRUiC provides a simple yet detailed guide on starting an LLC.