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Starting your own business is an exciting prospect. But while some owners and entrepreneurs have access to vast amounts of capital or are lucky enough to have investors, this isn’t the case for everyone.

Despite this, forming a limited liability company (LLC) in Texas is a fairly straightforward process that won’t cost you an arm and a leg as long as you know the steps to take. Let’s take a closer look at how to start an LLC in Texas.

We’ll also discuss when to call experienced Waco business formation lawyers like those at The Zimmerman Law Firm, P.C., for help.

What Is a Limited Liability Company?

A limited liability company (LLC) is a common business structure that combines the flexibility and tax benefits of a partnership with the limited liability protection of a corporation. In an LLC, owners are referred to as members, and the company itself is a separate legal entity from its owners.

This separation means that members’ personal assets are generally protected from company debts and liabilities. One of the key advantages of an LLC is its flexibility in management and taxation.

Members can choose to manage the LLC themselves or appoint managers, and they can elect to be taxed as a partnership, corporation, or sole proprietorship, depending on what is most advantageous for their situation.

Forming an LLC in Texas

Forming an LLC in Texas involves several key steps and legal requirements to ensure compliance with state law.

  • Choose a name. Select a unique and distinguishable name for your LLC that complies with Texas naming requirements. The name must include limited liability company or an abbreviation like LLC.
  • Check name availability. Verify that your chosen name is available by searching the Texas Secretary of State’s website. Failure to do so may result in your formation paperwork being rejected or even result in legal issues down the road.
  • Fill out and file a certificate of formation. Prepare and file a Certificate of Formation with the Texas Secretary of State, which includes the LLC’s name, purpose, duration, registered agent information, and organizer details. You will get a Certificate of Filing, which officially establishes your business with the state.
  • Appoint a registered agent. Designate a registered agent in Texas who will receive legal documents and official notices on behalf of the LLC. Establishing a registered agent is required by state law.
  • Create an operating agreement. While not required by law, it’s advisable to create an operating agreement that outlines the management structure, member responsibilities, and ownership interests of the LLC. This can help avoid disputes down the road.
  • Obtain an EIN. Obtain an Employer Identification Number (EIN) from the IRS. This unique nine-digit number is sometimes called the company social security number, as it is used for tax purposes and is necessary for hiring employees and opening a business bank account.
  • File a BOIR. Beginning January 1, 2024, most companies are required to report information to FinCEN about the individuals who ultimately own or control them to help avoid fraud. More information about filing requirements is available at https://www.fincen.gov/boi.
  • Additional requirements. Depending on the nature of your enterprise, you may need to obtain additional licenses or permits at the state or local level. Check with the Texas Comptroller of Public Accounts and local authorities for specific requirements.

If you have further questions about forming an LLC in Texas, seek legal advice from a qualified business formation attorney.

Texas LLC Costs

While it is possible to start an LLC in Texas without spending thousands of dollars, there are still costs required to start and run your enterprise properly. The primary cost is the filing fee for the Certificate of Formation, which is $300 as of 2024.

This fee is payable to the Texas Secretary of State and is required to officially register your LLC. In addition to the initial filing fee, there are ongoing costs associated with maintaining an LLC in Texas.

One of the most common ongoing expenses is the state’s annual franchise tax, which is based on the LLC’s annualized total revenue. Additionally, there may be costs associated with obtaining any necessary business licenses or permits at the state or local level. These are all necessary to properly register and operate your company in the Lone Star State.

Optional Additional Costs

While not required, business owners should still consider possible additional costs when forming a Texas LLC.

  • Legal assistance. Costs for legal advice, drafting operating agreements, or other legal documents may be necessary, depending on your location and the type of business you plan to operate. Some industries are subject to more regulation than others.
  • Professional services. This includes any accounting, bookkeeping, or other professional services to help manage your LLC. Tax management services, for example, may be helpful if you’re just getting started and are unfamiliar with state and federal requirements.
  • Registered agent services. While some companies pick an individual, there are other businesses that you can pay to serve as the LLC’s registered agent for a monthly or annual fee. Choosing a registered agent service can ensure legal compliance, maintain privacy, provide convenience, simplify operations across multiple states, and enhance the LLC’s professional image.

While these may add to your formation costs, seeking out additional services may be the best way for you to run and grow your venture as smoothly as possible.

Tools to Help You Get Started

To help keep costs low, potential business owners can access resources provided by the Texas Secretary of State. These resources include guides on company formation and access to small business resources at both the state and federal levels.

Local governments and nonprofit organizations often provide free or low-cost business advisory services and workshops that cover the basics of starting an LLC, including legal requirements and best practices.

Some localities even provide grants to help entrepreneurs get started. For example, McLennan County’s Small Business Development Center offers technical assistance, mentoring, training, and resources for each stage of your company’s life.

Questions? Call The Zimmerman Law Firm

If you have questions about forming a company in the Waco area, the business formation attorneys at The Zimmerman Law Firm are here to help.

With decades of experience supporting entrepreneurs in Texas, our attorneys can guide you through the formation process and let you focus on growing your company. Give us a call to schedule a free case evaluation, or fill out our online contact form to get started today.

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Michael Zimmerman

Michael nació en Houston, Texas. Estudió en las universidades de Baylor y Texas State, donde se licenció en Ciencias en 1987. Se especializó en Biología y en Química. Terminó su educación legal en Texas Southern University en 1990, obteniendo un Doctorado en Derecho de la Escuela de Derecho Thurgood Marshall. Fue admitido en el Colegio de Abogados del Estado de Texas en 1990.

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