Matt Horwitz is the founder of LLC University, which translates complicated state laws into simple instructions anyone can follow. His work has been cited by Entrepreneur Magazine and Yahoo Finance.
The state will want to know how your LLC will be governed, either by the members/owners (member-managed) or by an appointed manager (manager-managed). It will also ask about your business bank account—it’s best to keep your personal and business accounts separate to avoid commingling.
Choose a Name
A good business name can help people remember your company and make it easy to find online. It can also help people understand what kind of services or products you offer. You should choose a name that is catchy and makes sense for your business.
You will need to register your business name with the Texas Secretary of State. The process to do this varies depending on the legal structure you have chosen. The Secretary of State’s website has details on how to do this for each business type.
Your LLC name must include the words “limited liability company” or the abbreviation “LLC.” It is also important to consider how your name will look on a website and with other business types, such as corporations. Some states have specific requirements for how your company’s name must appear, including spelling, capitalization and punctuation. It is a good idea to consult a lawyer for additional information about choosing a business name and trademark laws.
Designate a Registered Agent
Matt Horwitz has helped tens of thousands of people start LLCs by performing extensive research and analysis to translate state laws into simple instructions. He is a nationally recognized expert, cited by Entrepreneur Magazine and Yahoo Finance, and has been featured on CNBC and InventRight. He founded LLC University to provide clear, concise instruction on how to form an LLC in Texas that others weren’t offering.
Before you file your paperwork, it’s a good idea to check the URL availability and reserve your business name (for a small fee). Also, choose a registered agent who has a physical address in Texas and is available during normal business hours to receive service of process.
Your LLC should have an operating agreement that documents how the company will be run day-to-day. This will avoid confusion among members and reduce conflict down the road. It will set out the rights and responsibilities of members and managers, how profits will be distributed and more.
File a Certificate of Formation
A Certificate of Formation (or Articles of Organization in some states) is the official state document that establishes your LLC. It’s filed with the Secretary of State and includes basic information about your business. Your name and mailing address are public record, so be sure to use a physical address for your business (not your home address).
Also on this form, you must designate a registered agent. This can be a person or a business entity authorized to do business in Texas. Most people choose a commercial registered agent service, such as Northwest.
Next, you need to get an Employer Identification Number (EIN). The EIN, which is also known as an FEIN or Federal Tax ID Number, is an assigned number by the IRS that identifies your Texas LLC. The EIN is required to open a business bank account and to file taxes. It also helps keep your personal and business assets separate and makes it easier to manage your LLC’s finances.
File a Tax Return
Now that you’ve checked all the initial boxes for starting an LLC, it’s time to make sure you continue to file appropriate business forms. These will include filings for state taxes, reporting fees and more. In addition, you should be considering health insurance options for your employees.
Your EIN is the nine-digit number that identifies your company for tax purposes. It’s free to obtain, and you can do so by submitting an online application with the IRS.
It’s best to open a bank account for your LLC as soon as possible. This helps you keep personal and business funds separate, which is important for maintaining your LLC’s personal liability protection.
You may also need to pay franchise taxes and other state taxes. Check with your Texas tax consultant or an accountant for more information. You should also consider preparing an operating agreement. While not required in Texas, this is a useful document for outlining procedures and ownership.