Are you growing tired of working long hours for someone else’s business? If so, the prospect of entrepreneurship may be an enticing one. While the idea of starting your own business can certainly be cause for excitement, it can also be a daunting challenge. Not all businesses take off, and in order to better position yourself for success, you are going to need to commit to thoughtful preparation. Beyond devising a sound business plan and crunching the numbers, you may find the idea of forming a partnership to be appealing. By working with a partner, be they a professional colleague or a member of your family, you can combine your professional experience in an effort to reduce your overall risk. With this idea in mind, it is not uncommon for entrepreneurs to explore the idea of creating a Limited Liability Partnership (LLP). If you are curious about forming an LLP in Texas, you are going to want to learn a bit about what is required to set one up.
Texas, with its expansive, sprawling prairies and desert, still holds much of its frontier charm. This sense of possibility and opportunity can make Lone Star State especially appealing to new business owners. In fact, you may have even noticed in recent years that a lot of large corporations, such as Amazon and Tesla have decided to set up shop in Texas. As this state has no personal income tax and relatively minimal corporate taxes, there is an understandable allure to enterprising individuals. Read on to learn more about how you can set up your very own LLP in Texas.
Why You Should Consider a Limited Liability Partnership
In your time working in the professional world, you have probably encountered or worked with a Limited Liability Company (LLC) or two. The reason for this is that LLCs are incredibly popular among business owners, and this is largely due to their ease of creation, relatively low maintenance, and considerable tax incentives they afford. A Limited Liability Partnership is a generally similar concept, though there are certain distinctions.
Both an LLC and an LLC establish the concept of limited liability for their partners and members. This means that should your business face bankruptcy or a costly lawsuit, you and your partners can shield your personal assets, such as your homes and retirement accounts. The key difference with an LLP, however, is that it allows a negligent partner to be found liable in the event that they committed some type of professional malfeasance. This sort of targeted accountability structure makes LLPs a logical choice for licensed professionals. You may have noticed that lawyers, doctors, accountants, dentists, and architects, for example, tend to gravitate toward the formation of an LLP. In fact, in a couple of states, such as Nevada and California, licensed professionals can only form LLPs and they are precluded from forming other legal structures.
By forming an LLP in Texas, you can also reap some considerable tax benefits. An LLP is designated as a pass-through entity by the Internal Revenue Service (IRS). This means that money earned by your partnership is not subject to taxation until it “passes through” to the individual partners, who in turn pay taxes on their respective salaries. As you can likely deduce, this can save your business a lot of money. In some types of corporate structures, businesses can find themselves effectively taxed “twice”, so LLCs and LLPs hold a certain advantage for many.
Forming an LLP in Texas: Completing Some Paperwork
In order to formally launch your LLP in Texas, there are a handful of steps to complete. First, you will need to land on a name for your business. In Texas, you are required to include the words “Limited Liability Partnership” or the abbreviation “LLP.” Unlike most other states, Texas does not require that your business’s name be wholly distinguishable from other registered LLPs.
With a name in place, you can then get to work on filing your registration with the Texas Secretary of State’s office. This document will ask you for the name of your LLP, your federal employer identification number (EIN), the number of partners you have, a basic statement of purpose for your business, and your physical address. Texas does not require that you establish a registered agent–the individual in charge of legal correspondence–unlike many other states.
Create Your Partnership Online
You can save yourself a considerable amount of time and energy by creating your Texas LLP using our simplified, easy-to-read web forms. We also utilize a secure, SSL-encrypted web portal, so your personal information will be transferred in a protected manner. We can also assist in forming a corporation or an LLC. Take a moment to explore our website–we are ready to help you process your business documents online in a quick and comprehensive fashion.