Starting an LLC (Limited Liability Company) in Texas can be an exciting opportunity for entrepreneurs who want to realize their business ideas. An LLC offers the liability protection of a corporation and the flexibility and tax advantages of a partnership, making it an attractive option for many business owners. However, if you need more time to start an LLC in the Golden State.
This guide will guide you through each step of the process in simple. So, let’s learn how to start your Texas LLC.
Step 1: Choosing the Name for Your Texas LLC
Your LLC’s name is not just a label; it’s the first impression your business will make on potential customers. In Texas, your LLC name must be unique and include “limited liability company” or “LLC.”, make sure it’s different from other business names in Texas, and avoid names that sound like government agencies.
You can do a quick, free name check online to see if your name is available. If you consider getting a website name that matches your business name, you can find good deals for website domain names on Namecheap. This step ensures your business name doesn’t conflict with existing entities and meets Texas’ naming requirements.
Step 2: Appointing a Registered Agent in Texas
A registered agent is essential for any LLC in Texas. This person or business entity agrees to accept legal documents for your LLC. The registered office is the official business address of your LLC. It can be your home, your office, or even the address of the Resident Agent. It could be yourself or a friend, or you can hire a professional service. Alternatively, you can use a legal service specializing in this area, services to Complete the Formation Process. You can bypass the steps using a third-party service such as Bizee or Northwest Registered Agent.
Check out our blog: ‘Is a Registered Agent Necessary? Your Guide to Finding an Affordable Option‘
Step 3: Filing Your Certificate of Formation
Now, it’s time to complete a special form called the Certificate of Formation. This form is super important for your LLC. Here’s what you need to put in it:
- LLC Name: Write the full legal name of your LLC. Don’t forget to add “LLC” or “Limited Liability Company” at the end.
- Registered Agent: This is the person who will get all the official papers for your LLC. Write down their full name, company name, address, and phone number. Make sure they agree in writing to be your Registered Agent.
- Management Structure: Tell if your LLC will be run by its members (you and any partners) or by the managers you pick. List their names and addresses. Remember, this info will be public, so you can use a P.O. box for addresses.
- Purpose: Write a short description of what your business will do.
- Mailing Address: If you get mail somewhere different from where your business is, put that address here.
- Extra Stuff: If you want to add other rules or operating agreements, put it here. Most people leave it blank if their lawyer tells them to add something.
- Duration: Usually, an LLC lasts forever, but if yours has a set end date, put it here.
- LLC Organizer: This person or company fills out and sends in your LLC’s paperwork. They’re really important for setting up your LLC right.
- Formation Date: When will your LLC officially start? It can be right when you file this form or choose a date (up to 90 days later).
Signing: After you double-check everything, sign and date the form. Make sure your Registered Agent has agreed to their role.
Once you send this in, you’ll get a stamped Certificate of Formation from Texas. It usually takes 10 to 12 business days if you do it online.
Filling Out Your Form
- Form 205: This is the Certificate of Formation form you need for businesses seeking to form an LLC in the State of Texas. You can download it here or fill it out online at SOSDirect. It costs $300.
- Form 304: If your LLC was first set up outside Texas but you want to operate it in Texas now, you can use this form. You can download it here. It costs $750.
How to Send Your Form
- Online: The easiest way is to file online at SOSDirect.
- Mail: Send your form in the mail to P.O. Box 13697, Austin, Texas 78711-3697.
- SOSUpload System: You can upload some documents online using this system. First, make a SOSDirect Account.
- Fax: You can fax your form to (512) 463-5709.
- Courier: If you want to hand-deliver your form, take it to James Earl Rudder Office Building, 1019 Brazos, Austin, Texas 78701.
Need It Fast?
If you’re in a hurry, ask for Expedited Service. This means your form gets processed first. It costs $25 for each business document and $10 for certified copies or certificates. When you send your form, include a cover letter with your email and phone number and say you want expedited processing.
Step 4: Getting Your EIN from the IRS
Your business needs a number called an EIN from the IRS. It’s like an ID number for your business. This number will help you as an identification number when getting bank accounts, credit accounts, filing taxes, and hiring employees.
It’s free, and you can get it from the IRS website at https://www.irs.gov/businesses/small
Step 5: Making an Operating Agreement for Your Business
Let’s discuss setting up some ground rules for your business. This is where an Operating Agreement comes in. Think of it as a handbook that explains how your business runs. It’s important because it helps everyone understand their role and what’s expected in your LLC.
Here’s what an Operating Agreement usually includes:
- Ownership: This part talks about who owns what percentage of the business.
- Member’s Rights and Responsibilities: Here, you’ll write down what each person in the LLC can and cannot do and what they’re responsible for. It’s like a job description for each member.
- Joining & Leaving: This section covers how new people can enter your business and what happens if someone decides to leave. It’s good to have this figured out so there are no surprises later.
- Dissolution: This might sound a bit gloomy, but it’s practical. It’s about how to close down the LLC if you ever need to. It includes the steps to take and how to handle everything when wrapping up the business.
New 2024 Reporting Requirements (BOI)
Effective from January 1, 2024
Big news! Starting January 1, 2024, there are new reporting requirements for both domestic and foreign reporting companies. This includes LLCs, corporations, and other entities. Here’s what you need to know:
First Report Deadlines:
- Existing Entities: If your LLC was already around before 2024, you’ve got until January 1, 2025, to submit your first report.
- New Entities: If you’re forming your LLC in 2024, you must file your report within 90 days of your company’s creation.
Who Needs to Report:
- Domestic Reporting Companies: This includes LLCs and similar entities within the U.S.
- Foreign Reporting Companies: Entities registered foreign entities must also adhere to these new rules.
Exceptions to Reporting:
- For specific exceptions, you’ll want to refer to the Beneficial Ownership Information Reporting Regulations at 31 CFR § 1010.380(c)(2) and the Small Entity Compliance Guide.
What Must Be Reported
What you need to report is all about transparency. The exact details can be found in the compliance guide, but it generally involves information about your LLC’s ownership and control.
When Must Reporting File Reports
Timing is key! Remember, if you’re an existing entity, your deadline is January 1, 2025. For new LLCs formed in 2024, it’s within 90 days of creation.
Filing Reports & Noncompliance Penalties
Starting January 1, 2024, all BOI reports must be filed electronically. Here are some critical points:
- Filing Before the Date: You must file on January 1, 2024.
- Accuracy: Filer certification of accuracy is mandatory – you need to double-check that everything you report is correct and accurate.
Penalties for Noncompliance:
- False Information: Providing false information or failing to report accurately is a big no-no.
- Penalties: If you slip up here, you could face a fine of up to $10,000 or even imprisonment for up to 2 years.
- FinCEN’s Approach: The Financial Crimes Enforcement Network (FinCEN) focuses on education and outreach to ensure compliance. They’re not trying to trip you up; they want to help you get it right.
- Safe Harbor Rule: Did you make a mistake? If you discover inaccuracies in your initial report, you have a 90-day grace period to submit a corrected report.
If you need more information or specific guidance, please visit the FinCEN website for all the details.
What to Do After You’ve Started an LLC
- Open a Separate Business Bank Account: Keeping your personal and business money apart is super important. Mixing them up can cause significant problems, like losing the protection of having an LLC. This mix-up is sometimes called “piercing the corporate veil,” it can put your stuff, like your car or house, at risk if your business runs into trouble. To open a business bank account, you’ll need the following:
- Your LLC’s Articles of Organization.
- Your Operating Agreement.
- Your Employer Identification Number (EIN).
When picking a bank for your business, consider the fees, minimum deposits, and benefits (like earning interest) they offer. Look for features that help your business, like using a debit card to pay for things.
Get a Business Credit Card
A business credit card is an excellent tool for handling business purchases and can help build your company’s credit history. Just like with personal credit, a good business credit score can make it easier to get loans and may qualify you for better terms. Visit our website to see our favorite business cards review.
Check out our blog: Novo Review: The Best Business Banking Account in 2024.
- Set Up Your Finances Right: Use good habits to track your money. This means not mixing your cash with your business’s. Good record-keeping makes tax time less stressful and helps avoid problems with the rules. You should use a program like QuickBooks to track your money, inventory, payroll, and sales. Talking to professionals like accountants or business lawyers is also intelligent, especially when understanding your LLC state’s tax rules. Find experts who know a lot about the area where your business is.
- Create a Professional Website: Having a website makes your business look legit. WordPress is a great tool for building your site. For web hosting, you can check out SiteGround or Hostinger. They’re both good options for getting your site up and running.
- Announce Your Business with a Press Release: A press release is a fantastic way to promote your new business and attract customers.
Starting your Texas LLC can be exciting and overwhelming, but it’s doable! Just follow these steps, and you’ll be on your way. If you need help, services like Bizee or Northwest Registered Agent exist. They can handle any legal details your LLC requires, like getting your EIN and sorting out your operating agreement. We recommend checking out their gold package. It’s more than the free option; it covers your needs and saves time. This way, you can focus more on growing your business.
Bizee Overview
Bizee LLC handles the paperwork and legal stuff needed to get your business. Think of it as having a personal assistant for your business setup, ensuring you don’t trip over any legal hurdles or paperwork nightmares.
Why Choose Bizee?
Now, you might wonder, “Why go with Bizee?” First off, they save you a ton of time. We all know how precious time is, especially when you’re trying to get your business rolling. Bizee takes care of the tedious and complex stuff, like filing documents with the state, so you can focus on the fun parts of running your business.
Another big plus is how they help you avoid mistakes. Let’s be honest: filling out government forms can be confusing, and one small error can set you back big time. Bizee knows their way around these forms like the back of their hand, ensuring everything is done right the first time.
Bizee Core Services
- Business Formation: They’ll help you officially start your business by filing it with the state. This includes setting up LLCs, corporations, and more.
- Compliance: Bizee ensures your business stays in good standing with the state by managing annual reports and other legal requirements.
These services are the backbone of Bizee, ensuring your business is set up correctly and remains compliant with state laws.
Bizee Additional Services
- Registered Agent Service: This is a must-have for keeping your business legit. Bizee will be your official contact for legal documents, ensuring you get all the necessary info.
- EIN Acquisition: Think of an EIN as a social security number for your business. Bizee can get this number for you, which you’ll need to open bank accounts and hire employees.
Starting a business is exciting, but the paperwork and legal stuff can drag. That’s where Bizee LLC takes the hassle out of the equation. We recommend getting the gold/platinum plan for 99% of business owners.
