Forming An LLC In Texas

Starting An LLC In Texas

Deciding which formal entity is right for your company when you are starting a business is not always easy. Many entrepreneurs choose LLCs as business entities because they offer a number of protections of a traditional corporation and are also as flexible as partnerships. For example, an LLC can protect your personal assets and bank accounts when your business is facing a lawsuit or is in debt. Another advantage of LLCs is that they do not require complex filing and reporting like normal corporations. Consider consulting an attorney before you choose the right entity for your business.

How An Attorney Can Help You

There is no law requiring you to hire an attorney when you are forming an LLC, but an attorney can help you ensure that you comply with the law when you are filing certain paperwork in order to establish an LLC. In Texas, you are required by law to file certain paperwork with the Texas Secretary of State if you want to create an LLC. A business lawyer can also help you:

  • Complete the certificate of formation that you need to file with the SOS
  • Select your designated registered agent 
  • Help you determine whether a business name is available
  • Register the final business name 

You have to select the right designated registered agent because this agent is the party who will accept SOS communications, service of process, and other important documents on behalf of the business. A registered agent should be an individual that is a Texas resident or a business entity that is authorized to do business in Texas. The registered agent is required to have a physical street address in Texas.

Establishing An Operating Agreement When Forming An LLC

Forming An LLC In TexasYou must establish an operating agreement when forming an LLC in Texas. An LLC’s operating agreement is a document that outlines how your LLC will be organized and defines the responsibly members of the LLC will have toward each other and the business or company. The key elements that should be in your LLC operating agreement include:

  • The purpose of the business
  • Formation details of the company
  • Name and Texas address of the registered agent
  • Process for admitting members
  • Names of all members and managers
  • Location of the company or business

Without this agreement an LLC can lose its status and expose the personal assets of the owners and members to lawsuits against the company.

Why Should You Consider Starting An LLC?

An LLC comes with a number of benefits that are not available to regular corporations, sole proprietorships or partnerships. Some of the benefits of starting an LLC include:

  • An LLC creates a legal distinction between you and your business which means that your personal assets or property will not be at risk if someone sues your business
  • The number of formal requirements for forming and maintaining an LLC are fewer than those for forming entities such as corporations
  • Forming an LLC gives you the option whether to use pay-through taxes or elect to pay taxes as a corporation
  • The restrictions for forming an LLC are fewer and easier to meet compared to restrictions for forming corporations

You may also be interested in…

  1. Reviewing A Contract
  2. How to Check LLC Name Availability In Texas
  3. Are Verbal Agreements Binding in Texas?