An LLC or limited liability company is the best structure to use when setting up a new business. It provides limited liability protection to an owner which essentially means that the owner is not able to be held personally liable for the company if it goes into debt or bankruptcy. Additionally, the LLC protects the business from debt or bankruptcy on the part of the owner.
Steps To Take Pre-LLC Formation
Texas has certain unique requirements which must be met before being able to register your LLC. The first requirement is that your business name must include the phrase “Limited Liability Company”. It is acceptable to abbreviate this to LLC or several other variations for the sake of convenience. However, some form of the term must appear in your company’s name.
The second requirement is that your LLC cannot share a name with another already existing business. The business name is not allowed to be “deceptively similar” either. This means that you should search your desired business name using the Texas taxable entity search engine which is available here. This will easily be able to tell you if your business name has already been registered but not necessarily if there is a name which is deceptively similar. For clarification on this matter you can email the Secretary of State at corpinfo@sos.state.tx.us to find out if your business name is acceptable. Your application to form an LLC will be rejected if your business name is deceptively similar so it is best to check if you are unsure.
The third requirement is a registered agent. The registered agent cannot be the LLC itself although it can be another Texan business, a business which is registered to do business in Texas, or an individual who resides in Texas. The owner or employees of the LLC may act as the registered agent. The registered agent is required to have a physical address in the state of Texas and a P.O. Box will not be sufficient. A registered agent is the individual or business on whom any, “process, notice, or demand required or permitted by law [is] to be served on the entity”. The entity here refers to the LLC. There are many companies which offer the service of acting as a registered agent for an annual fee which ranges from $100 to $300. It is imperative to ensure that the company which you select, if you decide to take this option, will perform their duties completely.
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The Forms
The form which you will need to complete to establish your LLC in Texas is form 205 or the “Certificate of Formation—Limited Liability Company”. The filing fee for this form is $300 and it is available here. If your Texas LLC is the subsidiary of an LLC which has already been established in another state you will need to file form 304 or the “Application for Registration of a Foreign Limited Liability Company”. The filing fee for this form is $750 dollars and it is available here. If these forms sound intimidating to you there are many companies that will establish your LLC for you and offer registered agent services as well. Four great options for starting an LLC in Texas are outlined on this website for your convenience.
Final Thoughts
Setting up an LLC in Texas is relatively straightforward and it all begins with your business name. Once you have determined that your business name is unique and includes LLC you will need a registered agent. From there all that’s left is to file the necessary paperwork which can be a hassle. Thankfully there are many services available to take care of this for you, some of which have been mentioned in the previous section.
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