As a Texas Business Attorney, I offer many services for small businesses, growing businesses, and entrepreneurs. Among these, if you are looking to start a business, I can help you create your Texas limited liability company (LLC). Contact us today!
Benefits of a Texas LLC:
- Limit Personal Liability: shield your personal assets from business liabilities
- Separate Legal Entity: also protection for LLC assets
- More Flexibility, Less Paperwork: the LLC is the most modern, popular, and flexible business entity
- Asset Protection Planning: one or several LLCs are frequently used in asset protection planning (sometimes in conjunction with other entities
- Ownership Flexibility: because LLCs are heavily contractual in nature, rather than agency-based, the ownership structure can be modified and customized
- Distribution Flexibility: while a corporation is required to pay dividends in lockstep with its ownership percentages, an LLC (depending on drafting and tax treatment) does not necessarily have to follow such strict guidelines
- Tax Flexibility (Maybe): LLCs can often elect to be taxed as other entities
- … and more
When you hire your Texas Business Attorney to prepare your limited liability company (LLC), there are three main sets of documents that must be prepared. While it is possible to prepare some
of these documents yourself, it will likely be necessary to retain a competent Texas Corporate Attorney to prepare a quality set of documents that “covers all the bases.” These three main sets of documents are:
- Certificate of Formation
- Resolutions (of different sorts)
- Operating Agreement or Company Agreement
Below, I will outline a few of the relevant areas that you will need to consider with regard to your LLC. Some of these are questions that your San Antonio Business Attorney will be required to ask you before he or she is able to form your entity; others are simply matters that will behoove you to consider.
The Certificate of Formation
The Certificate of Formation must be filed with the Texas Secretary of State, including any Amendments, etc. The other documents referenced above (and others) need not be filed with the Texas Secretary of State, but do
need to be prepared, executed, and kept in the LLC’s minute book.
The Texas Secretary of State publishes a simple, three-page version of the certificate of formation, accompanied by three pages of detailed instructions. This statutory form is the minimum
required to form an LLC under the applicable legal requirements. The form itself states that
“The attached form is designed to meet minimal statutory filing requirements pursuant to the relevant code provisions. This form and the information provided are not substitutes for the advice and services of an attorney and tax specialist.”
You will need to appoint a registered agent to accept service of process for the LLC. Because LLCs are not physical bodies that can be found
and served with process
like natural persons, every entity, including an LLC, is required to keep on file with the Texas Secretary of State’s office a designation of registered agent – i.e., the person who is designated and authorized to receive process on behalf of the LLC or other entity.
Names and Name Availability Searches
In the State of Texas (and in most other states), two entities cannot have the same name, or a confusingly-similar name. Accordingly, the Texas Secretary of State allows anyone to run a name availability search and reserve a name, each for a nominal fee.
In addition, under Texas law, an LLC must include in its name “LLC” or “limited liability company” etc. This is similar to the requirement that Corporations include in their names “Inc.,” “Corp.,” “Corporation,” “Incorporated,” or similar and the requirement that Limited Partnerships include in their names “Ltd.,” “Partners,” etc.
DBAs (Doing Business As)
Speaking of names, if you would like to do business under a different name than your LLC’s name, you will want to file an assumed name certificate. These are sometimes known as “DBAs” (“doing business as”). They’re simply nicknames – not entities.
An LLC can be managed directly by its members, or it can be managed by managers. A member-managed LLC is simpler and more flexible, while a manager-managed LLC looks somewhat more like a traditional corporation – managers being analogous to directors in the corporate context, and members being analogous to shareholders in the corporate context.
After considering the alternatives, you should inform your Texas Business Attorney which of the two you prefer.
Under Texas law, entities are required to declare their purpose on the certificate of formation. If an LLC attempts to undertake an action that is outside of its declared purpose, the action might be declared null and void, under the doctrine of ultra vires
(literally “beyond the powers”.)
Fortunately, Texas, like many other states, permits general purpose statements – and while the use of general purpose language is likely the most common nowadays, there nonetheless are many reasons why a business owner might want to bind his or her LLC’s hands a little bit with a slightly more restrictive purpose designation in the LLC’s certificate of formation.
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Texas LLC Formation FAQs
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Other Considerations + Conclusion
There are many more considerations that apply to the formation of your Texas LLC that you will want to discuss. As a San Antonio business attorney, I counsel clients and new business owners on such matters on a weekly (sometimes daily) basis. Feel Free to contact me if you have any questions regarding the process of forming your Texas LLC.