Tips To Start an LLC Properly

An LLC is a popular business structure in Texas, offering liability protection and tax advantages. But forming an LLC properly requires making important business decisions and complying with state legal requirements.

First, choose a company name that complies with state naming rules and passes an online search of existing entities. Next, find a registered agent for your company to receive tax and legal documents.

Taxes

A Texas LLC can be a good choice for business owners due to its flexibility, liability protections and tax advantages. An LLC may have one owner or multiple owners, called members. State taxes may apply to your business, depending on its type and location. If your business is a retail sales entity, you will need to collect and file state sales tax returns. Federal taxes may also be applicable, although most LLCs use “pass through” taxation, where profits and losses are passed through to the owners’ personal income tax returns.

After establishing an LLC in Texas, you’ll need to draft an operating agreement to lay out the management structure and policies of your new company. You’ll also need to select a unique name that complies with Texas’ naming requirements. If your chosen name is already in use by another Texas LLC, you’ll need to obtain a consent form from the other company. In addition, you’ll need to get a Federal Employer Identification Number (EIN), commonly known as an EIN or FEIN, for your LLC.

Management

The LLC structure offers excellent liability protection for businesses. To be effective, though, it must be correctly formed. A business attorney can help ensure that all legal requirements are met. This will save time and money in the long run.

Another consideration is how the company will be managed. LLCs have flexibility in this area, as they can be set up with one person managing the business or with multiple members who share management duties. In either case, an operating agreement is recommended to establish financial practices and make dispute resolution easier.

Finally, the LLC must obtain an EIN number from the IRS. This is also known as an employer identification number, FEIN or federal tax ID number. It is similar to a social security number for the business and is used to identify the LLC when filing taxes and opening bank accounts. The IRS website has information on obtaining an EIN for an LLC.

Liability

An LLC is a popular business structure in Texas. It provides owners with liability protection and flexible tax and management policies. However, it’s important to take the time to follow all legal requirements when starting an LLC in order to avoid potential headaches later on.

One of the most important steps is choosing a name that complies with state law. The name must be unique and cannot be identical to another business entity’s name in Texas. It also must include a legally acceptable designation of the type of business, such as “limited liability company,” “limited partnership” or “limited corporation.”

Matt Horwitz is a seasoned entrepreneur and the founder of LLC University, an online business formation resource that converts state laws into simple instructions anyone can understand. He has performed extensive research and analysis to translate complex business laws into practical lessons that small business owners can use to form their businesses. He is a recognized authority on the topic of LLCs and has been cited by Entrepreneur Magazine, Yahoo Finance and CNBC.

Members

Having a solid understanding of the basics of an LLC can help you determine if this business structure is right for your venture. An LLC combines the liability protections of a corporation with easier formation and flexible tax and management policies. It can have a single owner or multiple owners, called members.

Before you add new owners to your LLC, check your state’s rules for adding members. Some states require a formal approval process, while others don’t. It’s also a good idea to create an operating agreement that sets out how your LLC will run.

Matt Horwitz is the founder of LLC University, a company that converts complex state laws into simple instructions anyone can follow to form an LLC. His work has been cited by Entrepreneur Magazine and Yahoo Finance. He performs rigorous research to translate legal jargon into understandable terms, so you can make the best decisions for your business. He is a licensed attorney in Texas and New York.