In Texas, the right business structure provides a framework with your preferred liability protections, degree of control and taxation rules. Each business structure has its own advantages and drawbacks. Some may be more attractive for your venture than others.
A Limited Liability Company, or LLC, is a business structure that combines the taxation of sole proprietorships with the liability protection of corporations. It is one of the more common and preferred types of business in Texas for its flexibility!
If you think that the LLC business structure is for you, you need to secure some requirements to form your business. Below, you’ll find 3 things needed for an LLC.
Certificate of formation
If you want to register an LLC in Texas, you need to fill out and file a certificate of formation with the Texas Secretary of State. You may file through the SOSDirect portal and the certificate serves as your new venture’s permanent public record. A Certificate of Formation performs important functions such as granting your business legal recognition and securing owners’ limited liability protection.
The Certificate of Formation establishes your LLC’s legal existence with Texas. Keep in mind that not every business type needs to file one. In Texas, filing a Certificate of Formation is required for filing entities, which include limited liability companies, corporations, nonprofit organizations, limited partnerships, professional associations and limited liability partnerships. If you select a different business structure, different legal documents will apply.
Business licenses and permits
Depending on the nature of your business and your location, you will need specific business licenses before you can operate. Your local city or county may require zoning or occupancy permits. You may need professional licenses for industries such as real estate and construction.
Before starting your Texas LLC, take a closer look at local, state and federal requirements for licenses and permits. Do not overlook industry-specific permits for your business either!
Employer identification number
Think of an Employer Identification Number as a Social Security Number, but for your business—it’s a unique nine-digit code assigned by the IRS. The EIN allows the IRS to identify your business easily for taxation purposes. The US requires the EIN when your LLC performs essential operations like hiring employees, filing taxes or opening business accounts with banks.
You can obtain an EIN easily. After you register your LLC with Texas, you can apply online through the IRS website and receive it within minutes. You can also apply via fax or mail using form SS-4 too.
Protecting the venture with the right guidance
Knowledge of Texas laws can help you understand LLC requirements. You can avoid legal hiccups during the early stages with proper research before action. Don’t hesitate to reach out to a business law professional to help set up your LLC.