Starting an LLC in Texas is simple if you follow the right steps. You will need to have a unique business name that passes the Secretary of State’s business entity search test. You can reserve a name online for 120 days.
You will also need to file a Certificate of Formation or Articles of Organization. There are a few other things to consider like fees, taxes and your Registered Agent.
Choose a Business Name
Your business name is important. It can help distinguish your company in the mind of customers and potential clients, and it can also be a key factor in determining which type of business structure you choose.
A good LLC name is distinctive and memorable. It should include the words “limited liability company” or “LLC.” You can check if your preferred name is available by performing a business entity search through the Texas Secretary of State’s SOS Direct website.
It’s also important to make sure your company name doesn’t infringe on a trademark. Be sure to read up on the state’s naming guidelines and consider hiring an attorney or accountant who can help you avoid any potential issues. Matt Horwitz is the founder of LLC University, a leading source of information about how to form an LLC. He performs in-depth research and analysis to convert state laws into simple instructions anyone can follow.
File Articles of Organization
An LLC is a popular business structure that allows for personal asset protection and flexible taxation and management policies. This filing ensures that your company is recognized as a legal entity separate from its owners. It also establishes that your company will be governed by an operating agreement.
The name of your company must be included, along with any phrases or abbreviations required by Texas law (e.g., "limited liability company" or "limited company"). It's usually a good idea to include an EIN (Employer Identification Number), which is like a Social Security number for your business, in the name as well.
The state will also want to know if your company will be member-managed or manager-managed. It's best to read about the differences between these two methods of operation before deciding.
File Your Certificate of Formation
During this step you’ll need to enter your LLC name and choose whether it will be member-managed or manager-managed. You will also need to select a registered agent. This is the person who will receive tax and legal documents for your company. They must have a physical address in the state of Texas and be available during business hours to receive service of process.
Your LLC name must comply with the naming guidelines set out by the Secretary of State. If your chosen name is too similar to an existing Texas company, that business may need to provide consent on a Consent to Use of a Similar Name form (Form 509).
Note that if you want to conduct business under an assumed (DBA, trade or fictitious) name in addition to your LLC's official legal name, you must register that name via an Assumed Name Certificate.
Get a Registered Agent
Choosing a registered agent is one of the most important decisions you’ll make when you form your LLC. The person or company you select will be responsible for receiving service of process and notices for your LLC.
A Texas registered agent must have a physical street address in the state and be available during regular business hours to receive documents. It’s also required that your registered agent be a person or business entity authorized to do so by the owners of your LLC.
If you want to avoid penalties and fees, keep your LLC’s name in good standing by continuously maintaining a current Texas registered agent. You can check for this information on the official website of the Secretary of State in Texas by searching your business name.
Open a Business Bank Account
A business bank account allows you to keep track of your company’s expenses. It also helps you separate your personal assets from those of your LLC. You should open a business bank account as soon as possible, especially if you have a Texas EIN and are doing business in the state.
When you open an account, you will need a state-issued ID for each owner and proof of business registration or EIN. You may be required to provide your business licenses as well. Some banks require that you present a registered agent address.
It is important to choose a business name that is available in Texas. Check the Texas Comptroller’s website to see if your preferred name is available. You can also reserve a name for 120 days for a fee.
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