A limited liability company (LLC) is a type of business that is suitable for many small enterprises. It allows an owner to limit personal liability to the company’s finances. If a company sue, then the owner will not lose all his personal assets. They are financially accountable for their investment in business. Making LLC also gives some flexibility in running the company. In Texas, LLC can be formed easily and cheaply. Federal and state law provide many tax benefits to the LLC. For example, LLC itself does not pay taxes; Rather, the net income of the business is passed through those owners who report it on their personal income forms.
Registering a Name for Your LLC
Choose a name.
The first step in starting the LLC is to choose a legal name for it. Choose the name you like, but keep in mind that there are some restrictions and rules about the name you choose.
Try to make your name unique. The State Secretary will not allow you to copy the name of any other business. Sometimes they will not allow anyone who is similar to another business. The state secretaries will take this decision on a case-by-case basis.
Names can not contain profanity or language that is obscene, such as sexually explicit language It can not contain words that would confuse it with a federal agency, such as the CIA or the IRS.
In Texas, LLCs should include “LLC,” “L.L.C”, or “Limited Liability Company” at the end of their name. Be sure to include it in your name registration. For example, you can name your LLC as “Bagelcorp, LLC”.
Check the name’s availability.
Use the Texas State Secretary’s website to ensure that no one else has already registered an LLC under the name you choose.
To search online for names, you must request an account on Secretary of State Direct Website. Anyone can request an account, and the request should be processed within 15 minutes during normal business hours.
Once your account is activated, you can find the database to ensure that your name has not been taken. Each search costs a dollar.
At the same time also check availability of URL. The website is now a key element of marketing. To check the availability of URLs, you can use one of several domain search tools on the Internet.
Search assumed business names.
Your business’s public or “eclipse” name can not match the legal name of your registered LLC. Make sure there is no duplicate in the name of the business you use.
A “assumed” name is what you will use in day-to-day business functions. For example, you have “BugelCorp, LLC.” But, the shop you want to open can be named “Bob’s Big Bagels”. It is also called “doing business” as the name “DBA”.
More than one business can legally use a single recognized name. However for best results, you should use a basic name that nobody else is using.
If you and any other company use the same name, it can confuse customers. If you agree with the legal name of another company, then it can also cause problems. You can lose a valuable business to a competitor because you have the same name.
For example, there are two different stores named Bob Big Begells, so consumers can find it hard to differentiate them.
Reserve your legal business name.
Enter the name of your legal company on the website of the County Clerk Office, or online Texas State Secretary.
Businesses working in Texas should reserve their legal name with the Secretary of State. This allows the state and other interested persons to find and store information about the business.
To file online or in person, you must provide the names of the company and business owner or owners. You have to describe the type of business (an LLC in this case) and the county in Texas in which you work.
If you have to pay online, you will need to include your fee payment with check or cash or credit card. To enter a name, you will have to pay $ 40.00
Filing a name for registration will prevent you from entering any other business under your chosen name. Your business can not file under a registered name already.
If you plan to do business under a valid name instead of your legal name, you will also need to submit a valid name certificate with SOS Direct. The state secretary charges a $ 25 fee per certificate. The county you live in may also charge fees.
Consider trademarking your name.
If your name is original or constructive, you may consider registering it as a trademark.
A trademark can separate your product or service from those competitors. It can also protect you from violating trademarks by other companies.
For example, a trademark will allow you to keep a domain accordingly. It also protects other intellectual property related to your business.
You can trademark your business name through the U.S. Patent and Trademark Office. Visit their website and fill out a form. The form will require you to provide information about your business. You must also pay a fee between $ 275 and $ 325 to register your trademark.
If the trademark law confuses you, feel free to consult a trademark lawyer who can assure that your application has been accepted while helping you to avoid possible legal liability.
Setting up Your LLC
Determine who your members and board are.
All owners of the LLC are considered to be members. However, an LLC can be run by a single person or a board.
Those individuals, who are authorized to work on behalf of LLC, are said to be “Governing Authority.” They are business managers. Managers do not have to be a member of LLC.
How many people have a governing authority and they rely on you and other members? This is a decision that you have to make before formulating your formation.
Draft an operating agreement.
An operating agreement underlines your company’s policies and procedures. Although Texas law is not required, an operational agreement is helpful in clarifying verbal agreements among members.
Describing the business objective, launching the operational agreement to offer legal services or to sell cosmetics.
Define the strengths and duties of the members. You can outline every member’s day-to-day responsibilities. You must also specify the percentage of ownership to each member.
Delegate accounting responsibilities. Because financial accounting is very important for the success of the business, you should clarify and be representative, who will have the responsibility of check writing, profit distribution and bookkeeping.
The clear process for the return of the member. Members can leave LLC or die. A process should be kept for what happens to the member’s shares. For example, the remaining members may agree to buy shares.
Establish the dissolution procedures. Not every company lives forever. You should specify how and when LLC can be dissolved. For example, you can decide that an LLC can be dissolved by the majority of the board and the profits of the LLC will be divided into disinvestment as per share ownership.
Find a registered agent.
You must give the name of the registered agent for the company on your LLC application. The agent is the person who will be contacted if the case is pending or if the tax is due.
Registered agent can be a resident or other entity registered to do business in Texas. Typically, one of the partners of LLC will act as an agent.
You can also hire an agent. This is useful if the business is not located in Texas. To find a qualified agent, you can contact one of the “Big Four” agents who work at the national level: InCorp Services, Corporation Service Company, CT Corporation or National Registered Agents.
The website “Best Registered Agents” collects fee information and consumer reviews for more than 25 agents working in Texas.
The limited liability company can not function as its registered agent.
Prepare a certificate of formation for an LLC.
Texas State requires you to file this form, which includes articles from the organization. After registering your name, submit this form and pay the fee.
You can get the certificate of application on the website of Texas State Secretary.
You must enter the company name and legal address. You must also fill in business objectives, members’ names and general business structure.
Articles of organization is a document that prepares your LL.C. corporate structure. It specifies who will be the partner and who will sit on the company’s board. This document is also known as the Articles of Incorporation.
You can print the form or use the online system to file it. If you choose to print and send in the form, then you can call it P.O. Box 13697, Austin, Texas 78711-3697. You can also fax it (512) 463-5709. Or, you can distribute it to a person in James Earl Rudder Office Building, 1019 Brazos, Austin, Texas 78701.
Filing fee for formation certificate is $ 300. If you file online, you will be charged an additional fee.
Obtain any required local licenses.
According to the county in Texas the license requirements will be different. To determine if any licenses or permits for your business are required, contact your county clerk’s office.
For example, if you are opening a restaurant, then you must have an applicable license from the health department.
The Chamber of Commerce will also be aware of what type of license you need, how to apply for them and fees.
You can also consult with the Texas Department of Licensing and Regulations for more information. They will also have the application for a license. For example, you can apply online for an electrician’s license or renewal through this department. Simply click on “Business License” and choose your business. Fees can be paid by credit card.
Apply for an employee identification number.
An employee identification number (EIN) is a specified number for the IRS purposes. This is similar to a social security number.
Small business and corporation employees use EIN for tax evasion. When setting up an LLC you should have an EIN.
To apply for EIN, visit the Internal Revenue Service (IRS) website. Click on “Apply Online” in the left corner. Then, read the guidelines and click “Apply now”
To apply for EIN, you will have to fill out an online form and enter several information. You must provide the name and address of your LLC. You must also include the name of the owner or the management member and the social security number. Finally, you have to enter information about the LLC members and the services it provides.
Alternatively, you can print and mail the appropriate form to the IRS.
If you go straight through the IRS, there is no charge for the application.
Pay franchise tax.
To operate Texas, LLC has to pay the franchise tax. You should go to the Texas Controller of Public Accounting website for information on how to pay.
You can register the company online or by printing and completing a PDF.
Tax rates vary, but usually companies pay 1% tax.
Open a bank account for your LLC.
The last step to setting up your LLC is to open a bank account. After doing this, you can start doing business.
You must keep your EIN before opening your account.
Ask the bank if you will need to submit other documents to open the account. Banks in Texas can vary in their requirements. For example, you may need to create your own certificate or business license.
Consult your preferred bank about your account options, which will be most suitable for your business needs. For example, you may need overdraft protection or like keeping a checking account. Or, if you are accumulating a lot of money, you might consider an interest-bearing account.