Texas has specific state laws for forming an LLC. The business entity must file a Certificate of Formation with the Secretary of State. Information on the Certificate of Formation must cover the LLC’s name, registered agent’s name, if the LLC will be under member of manager ownership, the name and address of the LLC’s governing entity, name and address of the organizer, and the date of the certificate. The certificate can be filed online using the Secretary of State OnLine Access (SOSDirect) web access system (http://www.sos.state.tx.us/corp/sosda/).
Businesses filing for LLC must have a name that ends with “Limited Liability Company”, or “LLC”. Symbols cannot be used. Subscript or superscript letters in the name will not appear in official company documents. “Lottery” cannot be included in the name. It may not be closely similar to an existing LLC or reserved name in the state.
Texas has special requirements for members and managers of LLCS. These include:
• LLCS must have at least one member of manager
• There are no residential requirements for managers and members
• There are no age requirements for managers and members
• Member and manager names as well contact information must be included in the Certificate of Formation
The Texas Articles of Organization must be filed to the Texas Secretary of State. Allow 3-5 business days of turnaround time if you are mailing the documents. The Articles of Organization will include limited liability company records. An operating agreement will be drafted which acts as the governing document for the LLC.
Following full recognition as an LLC, the business must obtain an Employer Identification Number (EIN). This allows LLCs to hire employees and operate bank accounts in the state.
Texas law requires the LLC to have the words “Limited Liability Company”, “Limited Company”, “L.L.C.”, “LLC”, “LC”, “L.C.”, “Ltd.”, “LTD”, or “Co.”. Name availability can be checked through the Texas Secretary of State SOSDirect website.
What is an LLC?
LLC refers to a Limited Liability Company, and it is organized by business owners. They have fewer corporate formalities and can be taxed by the IRS as a sole proprietorship, S corporation, or C corporation.
Each state has different requirements and regulations regarding the formation of an LLC. Business owners should check with state laws when considering forming an LLC.
Owners of LLCs are known as members, they can be individuals, corporations, other LLCs, or foreign entities. There is no limit on the number of members an LLC can have. In most states, “single-member” LLCs are allowed, where there is only one owner involved in managing the LLC.
The IRS will treat the LLC as a corporation, partnership, or included in the LLC owners personal tax return. A domestic LLC with at least two members is classified as a partnership for federal income tax purposes unless they file Form 8832 and elect to be treated as a corporation.
LLCs carry tax advantages over other forms of business such as limited partnerships. The owners of an LLC do not assume personal liability for business debt, and any losses of the LLC can be used as tax deductions against active income.
An LLC can be formed through the state business formation process or consulting with LegalZoom.
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