LLCs are governed by both the Certificate of Formation and the Company Agreement. The Certificate of Formation is filed with the state, while the Company Agreement is a private/internal document signed by the members (and managers, if applicable).

The initial start-up costs of creating a Texas LLC are the Secretary of State filing fee. The Secretary of State collects a one-time filing fee of $300 (plus $8.10 when filed online or paid via credit card) when the Certificate of Formation is filed. There are some optional start-up costs that you can read more about in our article titled "Costs to Form a Texas LLC."

A "registered agent" is the individual (or entity) designated by the LLC to receive legal documents such as service of process (i.e., lawsuits, liens, subpoenas, etc.) and other correspondence from regulatory agencies. The State of Texas requires all entities, including LLCs, to have a registered agent in Texas. The registered agent’s name and address must be included in the Certificate of Formation.

Any Texas resident can be the registered agent of a Texas LLC, but often we will hire a professional registered agent.

Read more about the benefits of a professional registered agent.

The name of an LLC must include the words “limited liability company” or “limited company” (or an abbreviation of either of these) at the end of the LLC name. An LLC cannot use the words “corporation” or “incorporated” (or an abbreviation of either of these) as those are reserved for a corporation.

The name of the LLC cannot be the same as an existing business entity registered with the Texas Secretary of State (it must be distinguishable). You can see the definitions of “same” and “distinguishable” along with some examples via the Secretary of State’s website.

Certain words are troublesome as well. Some examples of restricted words would be: insurance, olympian, lottery, surety, bank, trust, co-op, college, university, disabled, veteran, etc.

In addition to the above state rules/statutes, you'll need to select an LLC name that does not infringe on someone else's intellectual property rights. You can see our due diligence checklist in an article we wrote titled "How to check if a Texas LLC name is available."

The best state to form an LLC is typically where the owners reside unless the LLC is created to hold real estate in another state or most operations will be located in another state. Before you decide on the state of formation (especially if either of these exceptions to the general rule exists), you should talk to an LLC formation attorney in your home state to discuss in detail.

A Series LLC is a type of LLC that has adopted particular language within the governing documents to authorize the use of "series." A series is like a cell within the LLC that can do almost anything an LLC can do, and a Series LLC can have multiple series within the framework of a single LLC.

A "Professional LLC" or PLLC is a type of LLC that is created to provide a professional service. Generally speaking, a "professional service" is any service that requires a license from the state of Texas. Classic examples of "professional service" providers include architects, attorneys, CPAs, dentists, physicians, and veterinarians.

The state in which you first establish your LLC and begin doing business is considered a "domestic LLC" in that state and a "foreign LLC" in all other states. If, for example, you form a Texas LLC, it would be considered a domestic LLC in Texas and a foreign LLC in all other states.

Read more about Foreign vs Domestic LLCs. 

A "foreign LLC" is the term used by one state to describe an LLC formed in another. As such, we sometimes refer to a foreign LLC as an out-of-state LLC. A Delaware LLC that does business in Texas would be called a foreign LLC here in Texas and would be required to register as a foreign LLC.

Read more about Foreign LLCs. 

A "parent LLC" is an LLC that owns another entity (LLC) and, as such, is sometimes referred to as a holding company. In other words, an LLC that has one or more subsidiaries is called a parent company. For example, Amazon is a parent corporation as it owns many subsidiaries like Whole Foods and Zappos.

A "subsidiary LLC" is an LLC that is owned by another entity and sometimes called a child company. Famous examples of subsidiaries would be Pampers (a subsidiary of Proctor & Gamble) and Milky Way (a subsidiary of Mars, Inc.)

An anonymous LLC is an LLC in which the owner’s identity is not disclosed publicly. Once filed with the state, the LLC formation paperwork (called a Certificate of Formation in Texas) and the information contained therein are visible to the public.

Read more about anonymous LLCs in Texas. 

The term "single-member LLC" describes an LLC with only one owner. The term “member” is synonymous with an owner of an LLC.

Read more about single-member LLCs in Texas. 

A veteran-owned Texas LLC (i.e., an LLC owned 100% by a veteran or veterans) is entitled to a waiver of the LLC state filing fee.

Virtually every LLC will need an EIN (aka federal tax ID). An LLC will need an EIN to open an LLC bank account and/or hire employees.

Unlike almost every other state, there are no annual fees to keep an LLC active in Texas. An annual report must be filed with the Texas Comptroller, but there is no filing fee for the annual report.

Read more about the annual costs for a Texas LLC.

All Texas LLCs must file an annual report with the Texas Comptroller each year by May 15th. There is no filing fee for the annual report, but the LLC may owe a state franchise tax if the annualized total revenue exceeds the threshold set by the State (currently $2.47MM).

An LLC that uses an assumed name (any name that does not equal the LLC name, must file an Assumed Name Certificate. An "assumed name" is often referred to as a DBA which is short for Doing Business As.

Read more about assumed names for an LLC. 

Certain intellectual property (IP) rights will arise from your using IP (i.e., the business's name or its logo). You (or your LLC) can apply for a federal trademark to protect your IP rights further.

We are often asked whether or not an LLC name can be changed after formation. An LLC name can be changed anytime, but it will require some effort. The tasks or steps required depend on the situation, but typically involve, at a minimum, signing an authorizing resolution, filing a Certificate of Amendment with the state, and notifying various third parties.

It is common for an address that a Texas LLC uses to require an update. Changing an address for an LLC requires an authorizing resolution, a state filing, and notices sent to anyone who has the old address.

An owner of an LLC is called a "member," so when the owners of an LLC (or ownership percentages) change after the date of formation, a membership transfer is typically required.

Before an LLC takes action (i.e., buys a property), the activity should be approved by the necessary parties. An LLC that is governed by its owners/members, for example, will typically need at least a simple majority of the members or membership percentages to consent to the action. In some cases, it may be necessary to call a meeting, obtain a quorum, and document a vote (in what would be called "meeting minutes"), but in most cases, the required number of consenting parties will sign a document called a "Consent in Lieu of Meeting."

An LLC can be terminated for several reasons, the most common of which is failure to file the required annual report with the Texas Comptroller. An LLC that has been terminated or forfeited can most likely be reinstated by filing an Application to Reinstate with the Texas Secretary of State.

A Texas LLC is typically perpetual. In other words, the LLC will remain in existence until formally terminated. Suppose the LLC's governing parties decide to terminate an LLC. In that case, there will be a wind-up process followed by filing a Certificate of Termination with the Texas Secretary of State.