What is a Texas LLC?
A Texas LLC is a limited liability company formed in Texas. The Texas LLC combines the advantages of a partnership’s tax structure and a corporation’s limited liability protections. A Texas LLC has all of the liability protection afforded to a corporation, without the burden of maintenance requirements and the tax structure of a corporation. Instead, the owners (members) are able to make decisions about the company without resolutions or annual shareholder meetings. For these reasons, the LLC is the most popular business entity type in America.
Texas LLC Benefits
As a Texas LLC, you will not be subject to state corporate tax and the LLC itself does not file or pay taxes to the IRS. Instead the Texas LLC’s income passes through to the members of the LLC and then the income is taxed as personal income on the tax returns of its members. The share of these profits should be set out in the operating agreement, and are correlated to each member’s tax burden. For example, if you own/operate a single member LLC, you are entitled to 100% of the profits, and have to pay 100% of the income tax on the profits of your LLC. The only state tax that a Texas LLC is subject to is the state franchise tax, which applies to all businesses in Texas.
- Less Red Tape
Unlike a Texas Corporation, a Texas LLC does not require resolutions to alter company operations, or hold annual meetings. A Texas LLC is also subject to far less record keeping, primarily because they do not issue stock. Essentially, having a Texas LLC allows you to streamline you decision-making process and get to work!
- Protect Your Assets
One of the huge advantages of a Texas LLC is that it legally separates the assets of the LLC from any of its member’s assets. This is done by designating what assets/debts actually belong to the Texas LLC, and what is yours. Responsibly keeping these separate and not muddling funds/assets can enhance the limited liability of your company, and lessen your chances of personal debts or lawsuits.
Why hire us to form your Texas LLC?
When you hire us to start your Texas LLC, we file your formation documents with the State in one business day. We don’t volley your order around a web of offices in Manhattan or the San Fernando Valley. We’re right here in Austin, overlooking the Colorado River. That’s for both of our benefits. The Texas Secretary of State has its own way of processing documents and its own unique rules that you won’t find anywhere else in the US. It helps if your LLC formation service understands the ins-and-outs of Texas business filings.
At Lone Star Registered Agent, we provide:
- Preparation and filing of certificates of formation
- Processing within one business day
- Access to numerous LLC documents including operating agreements
- Texas registered agent service
- Annual LLC compliance reminders
- Expert local customer service support
For $460 total, our Lone Star Texas LLC is the most affordable package available. Other services will try to get you in the door with the promise of lower prices, but midway through checkout you’ll notice that they keep tacking on new fees and charges. Our price is straightforward: $460 total. That’s it. There are no hidden fees, no up-sells, and if you continue with our registered agent service next year, we won’t jack up your fee. It’s $50 per year. Year after year.
How to Start a Texas LLC
Texas LLCs are formed by filing a document called a Certificate of Formation with the Texas Secretary of State. You can file the Certification of Formation online, through the mail, or in person. Filing a Certificate of Formation costs $308.10 if done online, and $300 if you file via mail or in person. If you would like to cut out the time and hassle, you can hire us, and we will complete the filing and provide registered agent services locally in Austin.
1. Fill out your Texas LLC- Certificate of Formation
You can either electronically file or print and send your formation documents to the Texas Secretary of State. E-filing is faster and much more simple. Filing online saves a few days of processing time and postage costs, and the entire process can be carried out at Texas’ SOSDirect web page. However, you will be subject to a 2.7% processing fee applied to your $300 dollar filing fee, bringing your total to $308.10.
Below you can find a brief description for all of the required information needed on your Texas LLC Certification of Formation when filing online:
Name Your Business Limited Liability Company
Do a Business Entity search at the Texas Comptroller of Public Account’s website. This can save you from some grief down the road because your entity name cannot be the same as or deceptively similar to the name of any existing domestic or foreign filing entity registered to do business in Texas.
Registered Agent and Registered Office
A Texas registered agent is a person or business appointed to receive official mail and service of process on behalf of a Texas LLC. Your business must have a registered agent with a Texas address where documents can be physically delivered (not a P.O. box or virtual office). We offer Texas registered agent service for $50 per year.
A Texas LLC is composed of members and/or managers. You can think of a member as an owner, and your Texas LLC can have any amount of owners. A manager is an individual that is active in the day-to-day operations of the LLC but has no ownership stake.
This section of the Certificate of Formation is not mandatory to fill out, but it is essentially asking you to state the nature of your Texas LLC’s business.
The organizer should be listed as the person who is preparing your Texas LLC’s Certificate of Formation.
Effectiveness of Filing
Simply list the date you want your filing to be effective. You can elect for your Texas LLC to technically be formed at a later date after your paperwork is approved, but no more than 90 days.
After all of the information has been accurately entered online, you will then be prompted to pay your e-filing fee of $308.10. Once your payment has been approved, your Texas LLC Certificate of Formation has been submitted! Congratulations!
2. Confirm Your Texas LLC’s Approval
After you submit your Texas LLC Certificate of Formation, you should receive a .zip file with a scan of your approved documents in 1-2 business days. This serves as proof that your Texas LLC has not only been filed for, but has been approved!
3. Obtain a EIN Tax ID For Your Texas LLC
An EIN is essentially your Texas LLC’s social security number. In order pay employees and claim profits on your federal taxes, you will need an EIN number. Getting an EIN tax ID for your Texas LLC can be done at the IRS’ website, or you can hire us to do it for you.
4. Create a Texas LLC Operating Agreement
Texas LLC laws do not require an operating agreement when forming a business entity, but you should consider it a necessity. The operating agreement is a document that outlines the entity’s rules, regulations, and provisions, along with how those encapsulate the business’ financial and functional directions. If your Texas LLC has multiple owners, the operating agreement can be used to govern owners’ disputes down the road. With single member LLCs, the operating agreement is vital to showing how the LLC is actually an organized legal entity. This makes it harder to apply an LLC’s possible liability or debts to an individual.
If you hire Lone Star Registered Agent to form your Texas LLC for you, we include an executed operating agreement specific and customized to your Texas LLC.
Some key points that are customary in an LLC’s operating agreement include the following:
- – Company formation information
- – Registered agent information
- – The duration of the company
- – Procedure if a member dies or has a long absence
- – The LLC’s purpose
- – Members’ names and addresses
- – Outline on how to add more members
- – Initial contributions
- – Outline of how profits and losses will be distributed
- – Outline of the management responsibilities of the members or managers
- – Powers of managers
- – Indemnification outlines
- – The location and method in which company records will be kept
- – Dissolution outline
Who can form a Texas LLC?
You can. I can. Someone who lives in Hawaii can. Someone who lives and has always lived in Tibet can. The only requirement is that you have an appointed registered agent that resides in and can be served at a valid Texas address. A registered agent has to be able to accept legal documents and official notices on your behalf in Texas. Whether you live in Texas or not, we can be there to form your Texas LLC and be your registered agent for only $460 total, including all the state filing fees.
How do I maintain my Texas LLC?
Once you’ve formed your Texas LLC, you will be required to perform annual maintenance, and you will have some hoops that you have to jump through if you wish to change or amend any of the provisions in your Texas LLC formation documents. It is important that you keep up on the following tasks so that your Texas LLC doesn’t run into any hiccups:
- File Your State Franchise Tax
The Texas franchise tax is a “privilege” tax that applies to your entity’s margin in one of four ways, dependent on your entity’s annual revenue. The larger your entity’s revenue, the more complicated the calculation of your franchise tax, but generally there is a 0.5% tax on the revenue of retailers and wholesalers that gross over $1,130,000. If your Texas LLC made less than $1.13 million in revenue for the year, then you will not have to pay any state franchise tax. More tax calculation information can be found at the Texas Comptroller’s website. Your first franchise tax report is due on May 15th of the year after you first formed your Texas LLC.
- Keep Your Registered Agent Service Up to Date
You will need to make sure that you have an active, dependable registered agent. Keep in mind that you cannot form or properly manage a Texas LLC without designating a registered agent. Also, if your registered agent ever changes, quits on you, or changes addresses, you will have to amend your Texas Certificate of Formation to reflect that change.
- Making Changes to Your Texas Certificate of Formation
In order to make a change on any of the provisions that are set forth in your certificate of formation you will need to file a *424-Certificate of Amendment form with the Texas Secretary of State. You will have to do this to make a change to your entity name, your registered agent, or any other stipulations that you would like to be referenced in you formation documents. Pursuant to section 101.356(d) of the Texas Business Organizational Code, any changes to your certificate of formation must be approved by all members of your Texas LLC.
Overview of Texas LLC Costs and Fees
- Texas Secretary of State Filing Fee- $300
If you print and file the Texas LLC Certificate of Formation via mail or in-person, the fee is only $300. It can be paid by check or money order made payable to “Texas Secretary of State.” The fee is non-refundable so if there are any errors or roadblocks on your formation documents, you will be rejected and lose $300.
- Texas Secretary of State Filing Fee, When Filed Online- $308.10
The Secretary of State charges a 2.7% processing fee for debit and credit cards, and plastic happens to be the only method of payment accepted.
- Expedited Processing Fee- $25
If you just can’t wait any longer to get your business of the ground, you can pay an extra $25 to have them move your formation documents to the top of the stack. Paying this fee means that more than likely your formation will be approved that same day. You also get the option of leaving a callback number so that the clerks that approve it can call you and confirm it to you immediately.
- Pre-Clearance Inspection Fee- $50
The Texas Secretary of State also allows you to pay for a pre-clearance inspection fee along with your Texas LLC Certificate of Formation. This means that a clerk will look over your documents and then assess whether your Certificate of Formation is acceptable before filing it. That way if something is illegible or your desired entity name is already taken, your $300 filing fee will be returned to you and you can fix the error before you file it.
- Certificate of Amendment- $150
There is a $150 filing fee for changing the structure or organization of your LLC. If you file it online, it’s 154.05 after the 2.7% processing fees.
- State Franchise Tax- VARIES
Generally, unless your business entity is making more than $1.13 million in revenue a year, you are not subject to the state franchise tax. However if you are making more than that, the factors involved in calculating your taxes for the year get more and more complicated. You can file and pay your taxes on the Texas Comptroller of Public Accounts’ website.
Your LLC is never alone in the Lone Star State!
At Lone Star Registered Agent, not only are we experts in registered agent duties, but we know the in-and-outs of all Texas business filings. Our expert filers in Austin are equipped to file your Texas LLC formation with our $460 Complete Texas LLC Package. That $460 total includes the Texas Secretary of State’s $310 filing fee, drafting your operating agreement for you, and a year of our unparalleled registered agent service.
Even if you file your Texas LLC formation yourself, you still need a registered agent that resides in Texas and is dependable. There are several choices out there if you are looking for a registered agent in Texas, but there are none like Lone Star Registered Agent. Some registered agents charge abhorrent yearly fees just to get your vital legal mail shipped to their section of a stuffy office building’s basement mail room. After that, they forward it to you when they’re good and ready.
At Lone Star Registered Agent, whenever we receive mail on your behalf, we immediately scan it into a secure, private online account that you can access from anywhere. Plus, you’ll get a notification letting you know that we’ve received legal correspondence on your behalf. Clients that purchase our $50/year registered agent service also get business compliance tracking. That means that we keep track of when all your filings are due, and we remind you when they’re coming up, with plenty of lead time. You’ll never miss your state franchise tax due date, because frankly, we won’t let you. You’ll also have instant access to our vast database of Texas business filing forms. The less paperwork our clients have to do, the better.