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The name you choose for your Texas LLC has to be different from other Texas business or LLC names. The name can’t contain words or phrases that could give the impression that the LLC has been organized for some purpose other than that specified in its articles, or one that’s not allowed by state law. The LLC name also has to have at the end one of the following terms or its abbreviations: “Limited Liability Company”; “LLC” or “L.L.C.”; “Limited Company”; “LC” or “L.C.” If you plan to organize an LLC but aren’t ready to file yet, you can reserve a name for up to 120 days with the Texas Secretary of State. Also, an LLC who has already reserved a name can transfer that name to another LLC by notifying the state Secretary of State.
Texas law states that you must write up and file articles of organization for your new LLC. The articles of organization must list the LLC’s name and business purpose; how long it’s planned to last (usually perpetual unless otherwise specified); the name of the registered agent and the address of the registered office; the name and addresses of the organizer(s) and their signature(s); whether the LLC will be managed by a manager or managers; the name and address of each manager or initial member; the signature of a manager, organizer, member, trustee, or fiduciary, and the signer’s position; and any other relevant information.
Your LLC is “organized” when an original and one copy of the articles of organization are given to the Texas Secretary of State’s office along with the filing fee, and their office confirms that they comply with state requirements. The Secretary of State endorses both copies, keeps the original, and returns the signed copy. The articles of organization are effective as of the date and time they are filed unless a later date and time are specified.
Texas LLCs must each have a registered agent in Texas—someone designated to receive official correspondence from state administrative or legal agencies. A registered agent for an LLC in Texas can be an individual resident, a Texas LLC or corporation, or an out-of-state (“foreign”) corporation or LLC with an office in Texas.
The LLC must keep a business office at the same address as its registered office, and it must be a street address, not just a post office box or answering service.
Another very important LLC document is its operating agreement, which can be amended or repealed as specified by the agreement or applicable law. This isn’t required by state law, but it’s a critical internal document that officially explains how the LLC will operate. It lists the members, how much they have invested, how profits are divided, and how much weight each member has when votes are taken. It may also list standards for meetings (how much notice, what constitutes a quorum, rules for voting, etc.) and so on, but is not required to do so. Usually, though, the operating agreement includes requirements mandated by the state.
LLCs must have at least one member, and each member must be a natural person (as opposed to a corporate entity). To become a member, an individual usually has to make a contribution, pay money, or transfer property to the LLC, or else assume an obligation to do so or render some kind of service.
A member can resign from an LLC, but only in the way specified in the articles of organization or operating agreement. These documents also usually specify a minimum period of time a member can be a member before being allowed to resign. LLCs have the option of penalizing a resigning member for damages suffered by the LLC due to his resignation.
Texas LLCs are required to keep the following documents at their office or place of business, available for inspection by the Texas Secretary of State:
Also, it’s a good idea for your LLC to keep minutes of the proceedings and committees of the owners or members.
Texas LLCs are required to file an annual report with the Texas Secretary of State including the following:
An LLC is dissolved when any one of the following events occurs:
continues under specifications set out in the operating agreement
An LLC has some tax advantages when compared to a corporation, including the availability of more deductions. However, there is no requirement for an LLC to be a separate tax entity like a corporation. Instead, an LLC can be a “pass-through entity” when it comes to taxes, so that the LLC owner or owners report business losses or profits on their personal tax returns, in the same way that a partnership would.
The IRS treats single-member LLCs as sole proprietorships for tax purposes unless you choose for your LLC to be taxed as a corporation. This means the LLC itself does not pay taxes and does not have to file a tax return. The IRS treats multi-owned LLCs as partnerships for tax purposes, unless you choose for your LLC to be taxed as a corporation. This means that LLC owners each pay taxes on their lawful share of the profits on their personal income tax returns, not the LLC itself.
Your LLC may need to obtain a federal tax identification or employment identification number (EIN). In most cases, you won’t need a separate EIN for your LLC if you are the sole owner and the LLC has no employees. However, if you are not the sole owner of the LLC, or if the LLC has employees, the LLC will need a separate EIN to open a bank account and to meet tax filing requirements.