An LLC is a business entity that offers a corporation's protection of limited liability for its owners, known as members, combined with a partnership or sole proprietor's operating flexibility. To create a Texas LLC, you must file a certificate of formation with the Texas Secretary of State. The secretary of state provides Certificate of Formation form 205, which meets minimum state law requirements.
Decide on a name for your new LLC. Check that the name is available by performing a search of company names registered in Texas. Searches can be made on the website of the Texas Secretary of State. If your chosen name is available, ensure it is not too similar to any other registered company name. Texas state law does not allow names that may cause the public to mistake one company for another. When forming an LLC in Texas, you must include the phrase "Limited Liability Company," "Limited Company," or "LLC" after the business name.
Download a copy of Form 205 from the secretary of state website. Alternatively, contact the secretary of state and ask for a copy of the form. Complete the form, providing the name of the company, the name and address of its registered agent, and indicate whether the company will have managers or be run by its members.
Submit the completed Form 205 to the Texas Secretary of State, along with a filing fee of $300. On receipt of the certificate of formation, which confirms your LLC has been formed, contact the IRS and request an Employee Identification Number (EIN) for the new company. There is no fee to receive an EIN for your LLC.
Keeping separate accounts for your business and personal life makes accounting far easier, especially when the LLC is not operated like a sole proprietorship. You should, therefore, consider opening a separate bank account for your business. You will need to take along a the certificate of formation, the company's EIN and identification for any authorized signatories for the account who are not listed on the certificate of formation, where appropriate.
Texas does not require that an LLC create an operating agreement, but executing one is highly advisable. An operating agreement typically includes information on how the company will be managed, the capital contributions of each member, and how profits and losses will be allocated. The operating agreement does not need to be filed with the secretary of state.
Texas law requires that the company's books and records of account, a list of the names and addresses of all company members; the last six years' federal and state tax information and the certificate of formation be kept at the company's principle place of business. This will usually be its registered office.
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