What is an LLC?
An LLC, in simple terms, is a type of business structure in the U.S. that combines features of a partnership and a corporation. Owners aren’t personally liable for the company’s debts or liabilities, and the company can be taxed in 3 different ways.
Why should you have an LLC?
LLCs provide a great deal of protection to your personal assets, and while LLCs aren’t as formal as corporations, they are still more formal than partnerships or sole proprietorships, so take a little more effort setting up, but look much more professional. There are also huge tax advantages.
LLCs play an important role in today’s society in all states because they are a popular choice for small business owners, for a few key reasons: the pass-through taxation, limited liability, flexibility in management and little taxes for foreigners (you’re considered a foreigner in most states if you’re expanding your LLC that you formed in another state).
Setting up the LLC
Setting up an LLC in Texas is actually quite simple – there are 5 basic steps, and the cost is $300.
Making a name
Setting up a Texas in LLC is so easy that making a name is arguably the hardest part. But fortunately, you can find lots of business name generators online to help you with this too. The main difficulty is meeting all the requirements.
Legally your business needs to contain the words limited liability or some sort of abbreviation, not have words like college without approval from the Texas Higher Education Coordinating Board, and other words as such without approval from departmental specialists in Texas or the U.S.
Even names don’t have to be a full commitment as in Texas you can apply for a DBA which allows you to change your name after you’ve formed your business.
Choosing a registered agent
In Texas you’re allowed to be your own registered agent, which can make life easier for you as you won’t have to pay for someone else to do it for you. But if you hire a formation company to make your LLC for you, many offer one year free of registered agent service, which is great. A registered agent does important things for you like receiving Service of Process notices.
Your registered agent has to file for the Texas Certificate of Formation, and then a statement of consent.
File the certificate of formation
This step is simpler and made even simpler with the help of a registered agent service. This just confirms you’re in business and goes over basic business things, and can be sent my mail, faxed or delivered in person or done online.
Creating an operating agreement
In many states having an Operating Agreement is part of forming an LLC. But setting up an LLC in Texas is made all the more easier by not requiring you to have one. Even so, it’s still recommended to have one just to help in the future if arguments arise. It’s helpful if you outline things like each member’s responsibilities and how profits and dividends are distributed, as well as how people can leave or join. You don’t need to file it with the state so that saves you a lot of time and there’s less hassle.
Getting an EIN
Getting an EIN has never been simpler. The easiest way to do it is simply going onto the IRS website and applying – that is literally it. You do need an EIN, as it’s important for filing both federal and state taxes, opening a business bank account and hiring employees.
Setting up an LLC is easy! TRUiC shows this very well with their simple step-by-step process along with handy advice. Visit their site to read more.