Starting a new business is exciting, but you must make sure all of the boxes are checked to meet state law. You can hire a lawyer for help or take on the task yourself.
Matt Horwitz is an LLC in Texas expert who specializes in turning complex state laws into simple instructions anyone can follow. He runs LLC University and is a regular contributor to Forbes.
Taxes
After your LLC’s filing is complete, the Texas Secretary of State will send you a Certificate of Filing and a stamped and approved Certificate of Formation. These are the official documents that confirm your LLC’s existence and can be used to obtain an Employer Identification Number (EIN), business licenses, and a bank account.
You’ll also need to decide whether your LLC will be member-managed or manager-managed. The former gives all owners, or members, the same share of decision-making power and liability. The latter allows you to appoint one or more managers who have full control over your LLC’s operations.
Regardless of which form you choose, all Texas LLCs must file an annual report called the Franchise Tax Questionnaire with the Texas Comptroller’s office. This is based on your LLC’s gross receipts and must be submitted by May 15 every year. You can find the form and instructions here. Also, if you operate under a name other than your legal name, you’ll need to file an assumed name certificate.
Registered Agent
In order to be in compliance with Texas law, all LLCs and foreign LLCs doing business in the state must have a registered agent. This person or company will receive service of process and legal documents if your LLC is sued, or if the state wants to contact you regarding taxes or other business matters.
If you have friends or family that live in Texas, they can be your registered agent. However, they will have to be available during normal business hours and not mind having their address listed in public records. If that is a problem, you can hire a professional registered agent service.
If you want your LLC to be taxed as a separate entity, you will need to get an Employer Identification Number (EIN). This can be done on the IRS website and is usually processed within 24 hours. You may also need to register for local business taxes, such as battery sales tax, crude oil tax, mixed beverages tax, and tobacco tax.
Governing Documents
Once you have completed your Certificate of Formation, it is a good idea to prepare an LLC operating agreement. This will help you spell out how your LLC is managed, how members and managers contribute to the business, and other important information that can help keep your personal and business assets separate.
You should also secure an Employer Identification Number (EIN) for your Texas LLC. This is a nine-digit number that identifies your business with the IRS. You can get an EIN by applying online at the IRS website or by calling the IRS directly.
When applying for an EIN, you will need to provide the name and address of your registered agent in Texas (it cannot be a P.O. box). You will also need to indicate whether your LLC is managed by its members or by appointed managers. If you are purchasing goods for resale, you will need to obtain a Texas resale certificate.
Members
Before you file, ensure that your company name complies with Texas naming requirements and is available. This includes ensuring that the name does not resemble an existing entity doing business in your state or industry (which could raise trademark issues and confusion). You also want to check with the domain registry to make sure it is available.
You also need to decide if you are going to form a member-managed LLC or a manager-managed LLC. Members (owners) control decision-making in a member-managed LLC, while managers are in charge of day-to-day operations in a manager-managed LLC.
Lastly, you need to apply for an Employer Identification Number (EIN) through the IRS website. This nine-digit number is used to identify your LLC for federal tax purposes and functions much like a personal Social Security Number. Your EIN is necessary for completing many of the steps listed above, including getting a bank account and opening an account with a credit union.
