An LLC is an excellent option for small businesses because it separates personal assets from business ones. But how do you start one in Texas?
While an operating agreement isn’t required to register your LLC in Texas, it can help resolve disputes and affirm your limited liability status. You’ll also need an EIN and a business bank account.
1. Select a Name
Once you have a list of potential business names that would work for your LLC, conduct a name search with the state to ensure that the name is available for registration. Ideally, you should also check with a domain name registrar to see whether the preferred business name is available as a website address.
Remember, if the LLC’s legal name has already been used by another business entity in the state, that company would need to consent to allow your business to use it on an Assumed Name Certificate (Form 503).
2. File Articles of Organization
The articles of organization (also called the certificate of formation) are the official birth documents for your LLC. You can file them online, via mail or at your Secretary of State’s office in person.
The document outlines the basic information about your company including its name, purpose and owners/managers. You also designate whether it will be a member-managed or manager-managed LLC.
Depending on your state, there may be other questions that you need to answer such as how long the LLC will exist and whether it will have an effective date. Having all this information ready to go will make the process much easier.
3. Designate a Registered Agent
The registered agent must have a physical street address in Texas and be available during normal business hours to receive service of process or legal documents for the LLC. The registered agent can be an individual (listed managers or members) or an organization that has a street address in Texas and consents to act as the registered agent.
You will also need to provide the LLC’s initial mailing address, which can be a post office box or a street address. If you want the address to be private and not a public record, consider using BetterLegal’s $90/year service.
4. Get an EIN
Once your LLC’s initial formation paperwork is filed and approved, it’s time to get an EIN. This will allow you to open a business bank account and secure business permits.
Depending on your type of business, you may also need other state or federal forms and filings. It’s important to consult with a tax professional or business attorney for more information.
You can file an EIN application online through SOSDirect or by mail or fax. Expect a processing time of 10 to 12 business days. An organizer is required to file the EIN application, but they don’t need to be a member of your LLC.
5. Open a Business Bank Account
If you want to keep your business expenses separate from your personal ones, it’s a good idea to open a bank account. The process varies depending on how your LLC is organized, but you’ll need to bring your state-approved articles of organization (also known as Certificates of Formation or similar names).
You’ll also need to provide an initial mailing address and a statement of purpose for the LLC. The latter simply asks how you plan to govern your LLC—you can choose between member-managed and manager-managed. You’ll also need to select a registered agent and list their name and address.
6. Get a Business Insurance Policy
You should get a business insurance policy as soon as you can, regardless of whether your LLC has employees. This will protect your assets and provide peace of mind for you and your members.
The state asks you to indicate whether your LLC will be “member-managed” or “manager-managed.” It also asks for the name and address of the organizer (the person filing the paperwork). This can be an individual Texan, a business that is authorized to do business in the state, or a registered agent service that is authorized to act on behalf of businesses in Texas.
7. Hire a Payroll Professional
Most small business owners choose LLCs as their preferred legal structure because of their flexibility, tax advantages and liability protection. However, forming an LLC requires following some basic steps to ensure you’re meeting all state requirements.
Name – Your LLC must have a unique name that’s distinguishable from existing entities on file with the Secretary of State. You can check name availability on the Secretary of State’s SOSDirect website.
Registered agent and address – You must list your LLC’s registered agent, who must be an individual Texan or a company authorized to do business in Texas. You must also provide your LLC’s physical address in the state.