Have you ever thought about starting your own business in Texas? It’s easier than you think! We are here to guide you through it step by step in starting an LLC in Texas. Let’s get into it!
Step 1: Choosing the Name for Your Texas LLC
First things first, your business needs a name. Here’s what to remember:
– It should have “LLC” or something similar in it.
– Make sure it’s different from other business names in Texas.
– Avoid names that sound like government agencies.
You can do a quick, free name check online to see if your chosen name is available. If you think about getting a website name that matches your business name. You can find good deals for your website domain names on Namecheap.
Step 2: Appointing a Registered Agent in Texas
Your business needs a Registered Agent in Texas. This is a person or company that will handle important paperwork for you. It can be you, your employee, or a registered agent. Make sure they have an address in Texas and are available during work hours. If picking one sounds hard, you can use a service to do this for you.
If you want to skip the hassle, check out Bizee (which used to be called IncFile). They can do all this for you. The gold package is the best – it has everything you need to make the LLC.
Step 3: Filing Your Certificate of Formation
Now, it’s time to fill out 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 who will get all the official papers for your LLC. Write down their full name or 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 if you want.
- 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 any other rules or operating agreements, put it here. Most people leave it blank unless 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 a date you choose (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 about 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 with 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
Alright, let’s talk about setting up some ground rules for your business. This is where an Operating Agreement comes in. Think of it like a handbook that explains how your business runs. It’s really 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 is all about how new people can join 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.
Creating an Operating Agreement is a smart move. It keeps things clear and organized, so everyone knows what to expect. It can save you a lot of headaches down the road!
Understanding the New Federal LLC Rules in Texas
- What’s New in 2024?
Starting in 2024, there are updated federal regulations that apply to all LLCs, including those in the great state of Texas. These rules are all about providing clarity on who owns and controls these businesses.
- Key Dates and Details
Effective Date: These rules kick in from January 1, 2024.
Reporting Deadline for Existing Entities: If your LLC was already up and running before 2024, you need to file your first report by January 1, 2025.
- Reporting Deadline for New Entities: If you’re setting up your LLC in 2024, your reporting deadline is within 90 days of your company’s formation.
Who Needs to Report:
- Domestic Reporting Companies: This includes all types of LLCs and corporations within the U.S.
- Foreign Reporting Companies: If you’re a foreign entity registered in Texas, these rules apply to you too.
- Exceptions: There are some exceptions to these reporting requirements. For detailed information, check the Beneficial Ownership Information Reporting Regulations at 31 CFR § 1010.380(c)(2).
What Information Do You Need to Report?
- When it comes to what you should report, think about the nuts and bolts of your LLC – who owns it, who’s in charge, and so on. The specifics are outlined in the compliance guide, but the gist is to provide clear ownership information.
Filing Reports and Handling Noncompliance
- How to File
Starting January 1, 2024, all BOI reports need to be submitted electronically – so get ready to do this online. Filing before January 1, 2024, is not allowed, so no need to rush. Accuracy is key. You must certify that the information you’re providing is correct.
Consequences of Noncompliance
- The Risks: Providing false information or failing to report accurately can land you in hot water.
- The Penalties: We’re talking about a potential fine of up to $10,000 and even imprisonment for up to 2 years.
- Support from FinCEN: The Financial Crimes Enforcement Network is focusing on helping businesses comply, so they’re more about education than punishment.
- The Safe Harbor Rule: Made an error? You’ve got a 90-day window to correct your report without facing penalties.
- Wrapping Up
Keeping up with these new federal LLC requirements is crucial for your business. It’s all about transparency and making sure everyone knows who’s who in the business world. And remember, while it might seem a bit daunting, these rules are here to protect and support the integrity of businesses like yours.
Need more info or have specific questions? Check out the FinCEN website for detailed guidance.
What to Do After You’ve Started an LLC in
- Open a Separate Business Bank Account: It’s super important to keep your personal money and business money apart. Mixing them up can cause big problems, like losing the protection that comes with having an LLC. This mix-up is sometimes called “piercing the corporate veil,” and it can put your personal stuff like your car or house at risk if your business runs into trouble. To open a business bank account, you’ll need:
- Your LLC’s Articles of Organization.
- Your Operating Agreement.
- Your Employer Identification Number (EIN).
When picking a bank for your business, think about the fees, minimum deposits, and the benefits (like earning interest) they offer. Look for features that help your business, like using a debit card to pay for things.
- Set Up Your Finances Right: Start with good habits for keeping track of your money. This means not mixing your personal cash with your business’s. Good record-keeping makes tax time less stressful and helps avoid problems with the rules. You might want to use a program like QuickBooks for tracking your money, inventory, payroll, and sales. It’s also smart to talk to professionals like accountants or business lawyers, especially to understand Texas’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 to build your site. For hosting your website, you can check out SiteGround (https://bit.ly/sitegroundtrial) or Hostinger (https://www.hostinger.com/charliechang). They’re both good options to get your site up and running.
- Announce Your Business with a Press Release: Let the world know about your new business with a press release. It’s a cool way to get the word out and attract customers.
Starting a business in Texas can be fun and not too hard. Remember, you can take it step by step. And if you need help, Bizee is there for you to set up your Texas LLC. Recommend the gold package for 99% of you guys out there! Don’t go cheap and get the free one because you’ll still need your EIN number, operating agreement, and so much more that they can do for you. This will save you a ton of time as an entrepreneur so that you can focus on other things that will move the needle forward in your business.