Tips to Start an Llc

An LLC provides a number of significant benefits for entrepreneurs in Texas. To maximize these advantages, there are certain steps an entrepreneur must follow.

The first step is establishing the entity's legal purpose LLC in Texas. The state will also ask for a registered agent (an individual or business that is on-site and available to receive service of process or other official legal documents on behalf of the LLC). Additionally, an employer identification number must be obtained.

1. Choose Your Company Name

When you are starting a new business, it is important to have the right company name. This will help you pass the business entity search test on the Secretary of State’s website and avoid confusion with other businesses in your area or industry.

The name should also tell what the company does. This will help customers understand what products and services you offer. It is best to avoid words that suggest a gambling business or the word “lottery.” Also, the name cannot imply that your corporation was created for military veterans or their families. Some prohibited words include veteran, legion, foreign, Spanish, disabled, and war.

You should also check to see if the URL is available for your company’s name. This will save you the hassle of having to change your company name down the road.

2. Register with the Secretary of State

You should also register with your county and city, if necessary. This varies by location and can include local licensing, registration or permits. It’s a good idea to check with your county and city government offices or talk to a small business consultant for more information.

For LLCs, an operating agreement isn’t required in Texas but it’s highly advisable. It lists members and their capital contributions, ownership interest percentages and details how the company will be managed and voting rights. It also addresses how the company will pay taxes, transfer profits and losses and includes buy-out provisions. An operating agreement can help the company secure bank accounts and get loans and investors. It can also protect the personal assets of members. It can also help the company avoid expensive lawsuits.

3. Create an Operating Agreement

An operating agreement outlines how the LLC will run its day-to-day business operations. It is not a legal requirement in Texas, but it helps reinforce that the company is truly its own legal entity.

Typically, the operating agreement will state the company’s name, owners (members and managers) and capital contribution amounts. It will also indicate whether the company is member-managed or manager-managed. It may also state the company’s governing authority and purpose.

If your company will have employees or be taxed as a corporation, it must obtain an employer identification number (EIN). The EIN is like a Social Security number for a business and can be obtained through the IRS. If your business will require licensing, you must also apply for state or local business licenses.

4. Get a Registered Agent

A registered agent must be available at a physical address in Texas during business hours to receive service of process and other important legal documents for your LLC. Using a professional registered agent service can help you stay on top of deadlines and notifications so you can avoid late fees and penalties.

If you have a friend or family member who lives in the state of Texas and is willing to be your registered agent, they can serve this role. However, most business owners choose to use a third-party registered agent service for privacy and peace of mind. A good option is Northwest Registered Agent, which you can use for free with the purchase of any LLC kit from us. They also offer services in all 50 states.

5. File Annual Reports

Once your Texas LLC is established, you’ll need to keep it in good standing by filing annual reports. You can do this online at SOSDirect for faster processing or by mail or fax.

You should also get an employer identification number (EIN) for your business. The EIN is used on tax filings and helps separate your personal assets from those of the company.

It’s also a requirement for certain business activities, including opening a bank account and applying for loans. The EIN can be obtained through the IRS website or by hiring a professional to file for you. You’ll need to provide the name and address of your registered agent, along with the duration and whether the LLC is member-managed or manager-managed. You’ll also need to state the purpose of your company.