Forming an LLC in Texas: A Beginner’s Guide

Forming an LLC in Texas

The Lone Star State has an understandable draw for entrepreneurs. With its wide open spaces and favorable tax rates, it is no wonder that innovative business owners from all over are flocking to Texas in droves. Whether you are thinking about launching an enterprise in Houston, El Paso, or anywhere in between, Texas can give you the tools to grow a successful operation. One common route that new business owners take is to form a Limited Liability Company (LLC), and in Texas, this is no exception. By understanding what goes into forming an LLC in Texas, you make a more informed decision on what is right for your business.

There are, of course, a number of different ways in which you can choose to structure a business. If you have any experience in the business world–which you surely do–you are most likely familiar with the concept of a corporation, partnership, or sole proprietorship, or you recognize them as terms. A Limited Liability Company is an especially favored mode of legal structure among business owners, and as you read on, you will come to understand why.

What Is a Limited Liability Company?

Limited Liability Companies are popular for entrepreneurs of all stripes because they come with considerable legal and tax benefits. On the tax’s end, LLCs are viewed by the Internal Revenue Service (IRS) as flow-through entities. In this classification, profits that are made by the business are not taxed until they pass through to the members of the LLC, who in turn pay personal income taxes. As you can likely deduce, this can provide a significant financial incentive, as it prevents your business from being taxed “twice”. 

In an LLC, members are also granted the legal concept of “limited liability”. If your business should succumb to bankruptcy, or face burdensome lawsuits, the members of your LLC will not have to worry about losing their homes or savings accounts, as they cannot be found personally liable. Since this removes a significant amount of risk from starting your own business, LLCs have an understandable allure.

LLCs are also flexible in their management structure. You can opt to manage it yourself, or outsource those duties. This comes in contrast to corporations, which can be a bit more rigid in their structure. Additionally, reporting requirements are generally minimal for LLCs, allowing for relative ease of overall operation.

Forming An LLC in Texas

Forming an LLC in Texas

To start your Texas LLC, you will first want to select a unique name. Your business moniker should also include the words “Limited Liability Company”, or a suitable abbreviation. Your name can also not include terms that would confuse it with a government agency.

Next, you will need to file a Certificate of Formation with the Secretary of State’s office. This document will call for some basic information about your LLC’s members as well as the business itself. You will also need to appoint a registered agent to handle all tax, government, and legal correspondence on behalf of your organization. You can submit these forms online by using our easy-to-fill web forms. To learn more, explore the offerings listed on our page for Texas.