Incorporating a company is a basic step to develop your business. That is why Hispanic Entrepreneurs will teach you how to open an LLC in Texas so that you can successfully legalize it.
Each state has specific regulations called the Limited Liability Company Act. It has long chapters that detail the operation and processes that companies must carry out in different scenarios.
It should be noted that when an LLC does not have an operating agreement, it is governed by this document. Limited Liability Company (LLC) can be beneficial for foreign entrepreneurs.
Its main advantage is that the owners' assets are fully protected. In addition, they do not pay corporate taxes, their owners are the ones who declare based on their profits.
Why start an LLC in Texas?
The state of Texas provides tax and business incentives making it one of the most favorable for businesses. To enjoy them, LLCs must meet certain requirements.
The Texas Enterprise Zone Program refunds sales and use taxes to businesses that invest in communities and create jobs. If they support the disadvantaged, residents of business areas or veterans.
La LLC is the fastest way to form new small businesses and is ideal for new small and medium businesses. They benefit from advantages and protections enjoyed by the larger ones, but under simpler regulations.
In Texas this type of company is not required to pay income tax, keeping most of the profits. Franchises also have a high income threshold for their tax liability.
As we discussed earlier, it separates and limits commercial liability from personal liability. The process of regulation, management, pressure, administration and presentation are simple. Filing taxes is easy and gives advantages in tax treatment.
How to Open an LLC in Texas
1-Choose a business name
Find an original name that will distinguish your LLC from others. It should not include words like “Olympic”, “Olympiad” or “Citius Altius Fortiu”. Also, “bank”, “bank and trust”, “trust”, “trust company”, “College”, “University”, “Medical School”, “Medical School”.
In addition to “Health Sciences Center”, “Law School”, “Law Center” or “Law School”, as well as “Veteran”, “Legion”, “Foreigner”, “Spanish”, “Disabled”, “War” or “World War”, without prior authorization. It must contain “Limited Liability Company” or its abbreviation.
Once the name is chosen, make sure it is available in the state by searching on the website of the Texas Secretary of State. You can use a different name than the legal name by using a fictitious name. Fill in the form Assumed name certificate.
It also verifies whether the trademark is registered on the secretariat's web portal.
2-Provide an official address for the LLC
Each company must have a postal address, you can also use a virtual mailbox for this address. Here you will receive correspondence from the Texas Secretary of State and the Texas Comptroller's office.
3-Assign a registered agent
The registered agent is the person who will receive the official correspondence and will be responsible for filing the reports with the Secretary of State. Every LLC must have one.
This role can be played by the owner, by appointing another manager or by using the registered agent service. Your obligation is to be present at a physical address during business hours to receive important correspondence on behalf of the company. The appointment is made when you present the Training Certificate.
4- Submit the training certificate to the Secretary of State
After gathering all the requirements to form the LLC, you have to file a form with the Secretary of State. It is necessary to create your Certificate of Formation in Texas and legalize the business.
You must fill out the form that is in this link: https://www.sos.state.tx.us/corp/forms/205_boc.pdf. They typically ask for business name and address, registered agent information, business purpose, duration. Likewise, regulation of internal affairs of the company, name and addresses of the managers or members of the LLC. Also name of the organizer.
Said training certificate can also be sent by mail or brought in person. The filing fee is $300. The process can take a week.
5-Get the employer identification number (EIN)
Apply for the EIN with the Internal Revenue Service (IRS). This is used to file and pay taxes. Also, to send payroll and payment information to employees, to open a business bank account. Apply on the website IRS.
6- Create an operating agreement
Although it is not mandatory to do one in Texas, it is advisable to have it to protect the business against any change. Through this kind of instruction manual, it is explained how the company will be managed. How it is divided among the partners, the method for making decisions and the guidelines to follow when a member leaves the company.
The following is usually specified in the operating agreement:
-Name and principal address of the LLC.
-Duration of the LLC.
-Name and address of the registered agent.
-Information on the Training Certificate.
-Business purpose.
-Members and their contribution.
-The way in which profits and losses will be divided.
-Admission procedure for new members, as well as outgoing members.
-Management of the LLC.
-Indemnity and liability clauses.
7- File a franchise tax and public information report
All LLCs in this state are required to file this report with the Texas Comptroller's Office. These reports are due every May 15. At https://comtroller.texas.gov/ you can download the form.
Other Types of LLCs in Texas
The state also offers the ability to establish a Series LLC. This allows you to manage a variety of LLCs under the protection of the main one. It is an ideal option to avoid registering companies separately for each business you have.
To create it there is no specific form, you just have to use the standard one and give the information in the complementary text area. The filing fee is $300.
At the same time, it offers the professional LLC that allows some types of company to form Professional Limited Liability Companies (PLLC). They require members to be licensed and meet other requirements. Accountants, real estate agents, electricians, cosmetologists, etc. enter this alternative.
If this alternative suits you complete the form and cancels 300 dollars for the procedure. It is subject to public data reporting conditions and state franchise taxes. Its provisions are detailed in the state Business Organizations Code, Chapter 301: BOC §301.
While, the foreign LLC is the one that is formed if you have a company in another state and you want to settle in Texas or vice versa. First you have to request the foreign qualification in the state, it will authorize it by granting a Certificate of authority in Texas.
Then you must do the registration request Foreign Limited Liability Company and pay $750. In some cases they require additional requirements, so it is best to contact the Secretary of State for more information.
It is very important that you know that before starting to do business with your LLC you must obtain state, local and federal business licenses and permits. The type of licenses and permits vary according to the type of business.
Business Permits and Licenses in Texas
Permits from the health department, zoning, home occupation, professional licenses, vendor licenses, among others, are usually required.
On the website of the Texas Department of Licensing and Regulations, they indicate that air conditioning contractors, barber shops, athletic trainers and auctioneers require permits.
As well as cosmetologists, electricians, massage therapists, service contract providers, health workers, transport network companies, etc. In www.tdlr.texas.gov/licenses.htm You will be able to find the appropriate information for the sector in which you will work. Do not forget to take out insurance for the business.
If you are already determined to follow this guide that we have just given you, it is important that you also review Local and state taxes for businesses in the USA
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