Texas LLC Formation
Have Us Create Your Texas LLC Today
- Protect your personal assets from business debts & liabilities
- Protect LLC assets from your personal liabilities
- Use the most popular business entity (LLC)
- Same or next business day Texas LLC formation
About Our Texas LLC Formation Service
Texas LLC Benefits
In addition to liability protection for the owners, an LLC (unlike other entities) protects the LLC’s assets from the owners' personal liabilities (see "Protection of LLC Assets" below).
Unlike a corporation, the LLC protects the LLC’s assets from the owners’ personal liabilities too! For instance, suppose you own 50% of ABC, LLC. If you are personally sued for a personal obligation (i.e. a car wreck or contract you signed personally) and this personal creditor obtains a large judgment against you that you cannot afford to pay, the creditor can seize your personal assets. In Texas, your ownership interest in ABC, LLC cannot be seized by your personal creditor. As such, the assets owned by the LLC are insulated from the owners’ personal liabilities.
The only mechanism the creditor could use against your LLC interest is called a "charging order". A charging order directs the LLC to pay to the creditor any distributions of income or profit that would otherwise be distributed to the LLC member/debtor. Since the creditor cannot control the LLC, the creditor only gets a distribution if the LLC decides to make a distribution. If you have control over the LLC, you can decline to make distributions and the creditor would receive nothing.
Deductions: An unincorporated business could be missing out on valuable tax breaks.
Reduced Self Employment Taxes: An S-Corp LLC can reduce the SE tax burden by paying a salary to owner of the LLC.
Read more about S-Corp LLCs in our LLC Taxation article.
Larger Contribution Limits: Your LLC allows you to set up both retirement funds and life insurance policies with greater contribution limits so you can set aside money for your future and your family.
Disclaimer: We are not CPAs nor tax professionals and nothing in this article or on this site should be considered as tax or legal advice. Every LLC’s tax situation is different, and tax situations change over time as a company grows and becomes more profitable. Be sure to discuss with a tax professional before you make any decisions on the structure of your new LLC or change the structure of your existing LLC.
LLCs do not have their own federal income tax classification. As such, the LLC gets to choose between the existing tax classifications. This is an understated benefit of an LLC. The LLC’s tax classification options are:
- Sole Proprietorship/Partnership;
- S-Corporation; or
- C-corporation.
By default (i.e. unless you file a tax election with the IRS) a single-member LLC will be taxed like a Sole Proprietorship and a multi-member LLC will be taxed like a Partnership, both of which are considered “pass-through” structures which means the owners, not the LLC, will have the income tax burden.
Read more in our LLC Taxation article.
Disclaimer: We are not CPAs nor tax professionals and nothing in this article or on this site should be considered as tax or legal advice. Every LLC’s tax situation is different, and tax situations change over time as a company grows and becomes more profitable. Be sure to discuss with a tax professional before you make any decisions on the structure of your new LLC or change the structure of your existing LLC.
Additionally, unlike corporations, there are few restrictions regarding formal management structures; the LLCs are allowed to be managed in whichever manner the owners of the LLC deem appropriate. Corporations are subject to mandatory boards of directors and officers and there are mandates regarding record-keeping and reporting.
The post-formation requirements are minimal. Each year the LLC must file an annual report (aka Texas franchise tax return) with the Texas comptroller by May 15th of each calendar year. Although the annual report is required for all businesses, franchise taxes are not owed unless the business makes more than $1.13MM in revenue in a calendar year.
As with any business, if you are required to collect and pay Texas sales tax, you will be require to report sales quarterly or annual.
Texas LLC Formation FAQs
An LLC is owned by its members and can be governed by either the members (member-managed LLC) or managers (manager-managed LLC). A manager-managed LLC is very similar in structure to a corporation with a board of directors. A manager-managed structure is most often used when there are passive investors. The investors will be members, but not necessarily decision makers (aka managers).
Member-Managed Example: Four members own an LLC (25% each). When an action requires a simple majority to approve or consent to an action, 3 of the 4 members would need to agree to take the action. If only 2 members agree, a simple majority would not exist.
Manager-Managed Example: Four members own an LLC (25% each). The 4 members elect John to serve as the sole manager. John, as the sole manager, is responsible for making decisions on behalf of the LLC. The other 3 members are essentially passive investors with little control over the direction of the LLC. The Company Agreement can dictate when the manager(s) must get the consent of the members. Typically, major decisions would require the manager(s) to get the consent of the members whether by a simple majority, super-majority, or even unanimous consent (the level of consent would be dictated by the terms of the Company Agreement).
When hiring us to create your LLC, you will have the option to be a member-managed or manager-managed LLC.
Traditional LLC. A traditional LLC is the most common type of LLC. Any LLC that is not a special kind of LLC (i.e. Professional LLC or Series LLC), is referred to as a traditional LLC.
Series LLC. A Series LLC is really just a traditional LLC with special language that unlocks the ability to use "series" or cells within the Series LLC. Each (sub) series is insulated from the liabilities of the Master/Series LLC and the other (sub) series. Read more about Texas Series LLCs or have us create a Texas Series LLC for you.
Professional LLC. A professional LLC ("PLLC") is required only if the business to be conducted by the LLC requires a Texas license. For example, a lawyer must hold a license to practice law, just like a doctor would need a medical license to practice medicine. As such, a law firm or a medical practice would need to be a professional entity like a PLLC. PLLCs can only be owned by licensed professionals (i.e. only licensed doctors can own a medical practice PLLC). To have use create your PLLC, simply use the entity designation "PLLC" in the order form at the end of the business name. Read more about Texas Professional LLCs.
S-Corp LLC. Any kind of LLC can elect to be taxed as an S-Corp. When ordering your LLC, you'll see an option for S-Corp taxation.
C-Corp LLC. Any kind of LLC can elect to be taxed as a C-Corp. When ordering your LLC, you'll see an option for C-Corp taxation.
For more on S-Corp and C-Corp taxation see our article on LLC Taxation.
We charge a $400 flat fee to create a Texas LLC (+ the state filing of $308.10). You can see what is included in our $400 LLC formation package below and see more details on the LLC start up and annual costs.
Texas LLC Pricing
- We will review the database of the Secretary of State to see if the name you desire is already taken.Preliminary Name Check
- If we receive your information by 2:00 pm Central, we will prepare and file your Certificate of Formation on the same day.Expedited Document Preparation
- The Certificate of Formation is the document that is filed with the Texas Secretary of State. The filing of the Certificate of Formation is only the first step to forming a business.Prepare Certificate of Formation
- The Secretary of State charges $308.10 to e-file a Certificate of Formation.File Certificate of Formation with TX SOS
- We will email all documents to you in PDF format as soon as they are ready. Email Delivery of Documents
- At your request, we will hire a professional registered agent to serve as the registered agent for a discounted price of $120/year.Hire a Registered Agent upon request
- Free 15 minute consultation with our business formation attorney.Free 15 Minute Attorney Consultation
- This is a 8 page letter that explains the Texas LLC and provides guidance on staying in compliance.Compliance Instructions
- This is the governing document of an LLC.Customized Operating Agreement
- The organizational meeting is how the business issues ownership interests, elects officers, approves the governing document, etc.Organizational Meeting Minutes
- This is a resolution that authorizes an agent to open a bank account on behalf of the LLC.Resolution for Banking
- This is used to track who owns the LLCCompleted Transfer Ledger
- Generally, businesses need an EIN. An EIN will be required to open bank accounts and lines of credit, hire employees or set up benefit plans.Federal Tax ID# (EIN) Obtainment
- An LLC can be taxed as an S-Corp (or even C-Corp).Prepare Tax Election
- The company book is a high-quality leatherette three ring binder where important business documents are kept. If you request a company book, we will compile the formation documents and other items ordered from us within the book before mailing the finished product to you.Company Book & Seal
Texas LLC
$400
+State Filing Fee
- +$75
- +$75
- +$250
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