How to Start A Limited Liability Company in Texas, USA

by Enterslice ITES Pvt. Ltd. Start and Manage Business

Texas is the second largest state in US. It is located in South Central Region. It has led the nation is State export revenue since 2002 & second highest gross state product. It is said to be 10th largest economy in the world. This particular state leads many diverse industries such as agriculture, energy, and computers, aerospace & biomedical sciences. Innovation & Technology are by far the most sort after industries in Texas region.

If you want to start a business entity in Texas, An LLC route is the most preferred way because of its favorable setup i.e. it combines benefits of all sorts of business set-up.

Advantages Of Company Registration In USA /Texas

Easy & Hassle-free set-up.
Low cost of incorporation
Separate legal entity
Can be private or public
Viable business structure
No personal liability to shrug off debts
Legal Tax registered concern

It just takes one single owner to form an LLC. They are not bound by the same rigid rules of corporation. It allows continuous growth & expansion.

STEPS FOR COMPANY FORMATION IN USA

1. Name Application: The first & the most important step in the formation of LLC is Name allotment to be undergone after extensive research for choosing an apt name to define the business venture. It must be however followed by LLC in the name. A name search has to be conducted with the Texas Secretary of State. You can also go for a trademark in the name of the business to reserve the domain name from illicit use by others. It must be reserved by filing Form 501.

2. Appointing Registered Agent: If you are a non-resident forming an LLC in Texas, appointment of a representative or a legal agent in the state is essential for getting the necessary documentation done. However, the registered agent must be a resident of Texas or company registered in Texas. The registered agent has to file his consent for being the legal representative in Form 401-A.

3. Getting a Business Registration Certificate/ Employer Identification No.: In order to get separate face for business, the ensuing entity must apply for EIN / Federal Tax Identification No. with Internal Revenue Service by filing an online application for the same. It is generally for Taxation purposes as US State is very stern when it comes to tax implications. It is also required while opening a Bank Account in the resident state.

4. Execution of an Operating Agreement: It the entity boasts of more than one member then an operating agreement must be executed between the members for transparency. It is required while application to authority in order to get Texas Tax License.

5. Application for Registration Certificate: Well drafted & notarized documents need to be filed with Texas Secretary of State to get the certificate. Documents required are:

Certificate of Formation in Form 205.
Name & address of appointed registered agent.
LLC’s approved name from department
State’s registered office address & its proof
Whether LLC is member managed or manager managed.
Business plan or the purpose for which it is formed
Names & address of members & declaration by them.
Authorized capital declaration

Once the documents are filed successfully with the relevant authority, the Certificate is incorporation is generated & sent with Company tool kit.

6. Application for Business Bank Account: It is very must necessary for business expansion & also for the protection of personal assets. It enables segregation of Company assets with its owner’s property. It is however also easier to get a business credit or limits once you have a resident business or corporate bank account.

7. Registration for State Tax Laws: Following tax registrations must be obtained from Internal Revenue Service depending upon the type of structure of the LLC.

Texas Unemployment Insurance Tax through Texas Workforce Commission; if employees are hired.
Texas Sales Tax registration if the LLC is involved in selling goods & services through Texas Comptroller of Public Accounts.
If business falls in certain specific industry then, additional taxes are imposed upon.
All businesses in Texas needs to pay Franchise Tax to operate.

MAINTENANCE OF LLC:

It is necessary & advisable to make periodical filings in order to avoid State Penalties & be in good books. Every year thousands of LLC’s are fined & dissolved by the State for not filing annual report & taxation returns.

TAXATION:

LLC’s are subject to federal Income Tax classification. Here it will be imposed Texas Franchise Tax.
Initially a Franchise Tax Report along with a Public Information Report with Texas Comptroller & thereafter it has to be submitted annually before the due date of May, 15.
LLC’s with annualized revenue below 1,110,000 $, do not need to pay any tax, have to file ‘NO TAX DUE REPORT’. However, entities surpassing this limit have to pay tax calculated after applying a complex formula.
It charges a penalty of 50$ on failure to file on time. Additionally, also, a late payment fine is applicable which is 5% but increases to 10% after 30 days.
Most multi member LLC’s are treated as Partnership entities by IRS and are therefore required to file return in Form 1065.

FEES:

The Primary Cost of setting up a Texas LLC is 300$ which is non-refundable, however of you want the process of registration to be expedited then additional 25$ is chargeable.