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How to Start an LLC in Texas

6/1/2018

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STEP 1: Pick a name. This is the fun part. Think of it like you are naming your baby, because you are. Your new business is your baby, and you want to help it grow into a success. This is your business, and you can pick any name you want. Think about your future customers. Your name conveys who you are as a business to your potential customer base. Does the name you chose tell them what you do? Does it project the image you want? Is it good for future branding? Does it set you apart from the competition? Is the a URL available? Even if you don't plan to make a website today, you can purchase the rights to the domain name, so nobody else can take it. Here are some legal considerations for naming your business:
  1. Follow the naming guidelines: Your entity name must contain the words Limited Liability Company or the abbreviation L.L.C. or LLC. Restricted words(e.g. Bank, Attorney, University) require additional paperwork and may require a licensed individual, such as a doctor or lawyer, to be part of the LLC. Prohibited words are those that would confuse the name of your LLC with a federal or state agency (e.g. FBI, Secret Service, Treasury etc.). For more information, check out the guidelines set by the Secretary of State.
  2. Is the name available in Texas? Make sure the name isn't already taken by registering for a free account with Texas Secretary of State and doing a name search. Making an account on the Texas SOS website will also grant you access to File any business forms online and make any payments to the State. 
STEP 2: Designate a Registered Agent. Texas law requires that you designate a registered agent to send and receive legal papers on behalf of your business, i.e., process service (in the event you are sued). A registered agent can be anyone, so long as it is a Texas resident or a company authorized to do business in Texas.  If you want to serve as your own registered agent, you may do so; however, an LLC cannot serve as its own registered agent, i.e., you as an individual can be the resident agent for your business. 
For a small annual fee, WC Kubik Law, PLLC will serve as a resident agent on your business’s behalf.  Click here to see more about the role of the registered agent, and why you may be interested in our registered agent services.
STEP 3: Decide whether your LLC will be member managed or manager managed.  Basically, this means whether the business is operated democratically by all members or whether a specific person or persons (a manager) will handled the day to day business. To learn more about member vs. manager managed LLCs, see our article here.
STEP 4: File your Certificate of Formation with the Secretary of State (and pay the filing fee). Complete the Certificate of Formation – Limited Liability Company (SOS Form 205).  File it with the Secretary of State and pay the $300 filing fee.
STEP 5: Draft an operating agreement. An operating agreement is not required in Texas, but it is better to have one, especially when there is more than one member. An operating agreement is pretty much what it sounds like. It is a legal document that outlines the ownership and operating procedures of the business. If there is more than one member, then an operating agreement is a must to prevent disagreements down the road. As Ben Franklin said, an ounce of preparation is worth a pound of cure. Who can argue with Ben Franklin? To learn more about operating agreements, read our article here.
STEP 6: Obtain an EIN. An Employer Identification Number (EIN) or Federal Tax Identification Number is your business’s social security number. You will be required to provide your EIN on everything from tax returns, banking, and more. You can get your EIN quickly and for free through the IRS after you have legally formed your business through the IRS, either online or by snail mail. 
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    Whitney is a Houston area attorney, who loves and respects the Constitution and demands that the government share that respect. She also has a passion for helping business owners succeed.

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