How To Start an LLC in Texas

One of the best things about forming an LLC is you limit your legal liability, and that includes all members of the organization. Unlike a corporation, you need not hold regular meetings with your shareholders or board of directors. This benefit may reduce complications and the paperwork you must file.

If you form an S-corporation, you cannot have over 100 stockholders. All stockholders must be U.S. citizens or residents. LLCs may have as many stockholders as they wish. Another difference between LLCs and S-corporations is LLC members may place their interests in a living trust while S-corporation members cannot.

LLCs are not without their disadvantages. For instance, LLC employees who receive benefits like medical reimbursement and group insurance must treat them as taxable income. LLCs do not qualify for double taxation, which means all members must include company profits as part of their income.

No. Most LLCs operate under their legal company name, using it for all aspects of their business. However, if you want to conduct your business under a name that is different from your limited liability corporation name, you can register your DBA name.

Business owners do not need a business license to form an LLC in Texas. However, some industries require a statewide license. Most counties and cities do not require local business licenses, but it’s a good idea to check county and city government sites for the latest requirements.

If you collect sales tax or sell goods, you may want to register with the Texas Comptroller of Public Accounts. Depending on the tax, you may register by mail, online or in-person at a Comptroller field office. The state also mandates a yearly franchise tax on most LLCs.

Once you form an LLC, it’s a good idea to separate company assets from personal assets. By mixing the two, you risk your home, car and other assets if someone takes legal action against your business. Other than protecting your personal assets, another good reason to divide company and personal assets is to make filing taxes and accounting simpler.

You could also open a business credit card account after forming your LLC. Business credit cards further separate personal and commercial assets and build your commercial credit. Business owners need great business credit to secure commercial loans and other capital.

Think about hiring a business accountant once you form an LLC. Financial professionals ensure you do not pay too much in business taxes and help you sidestep unnecessary penalties and fines. While you may navigate business accounting on your own with software, leaving the task to a business accountant makes the job easier and may help ease anxiety. While the accountant takes care of the books, you’re free to invest more time and attention in your business.

Forming an LLC helps you limit your liabilities, but you can go one step further. Business insurance further limits your risk. General liability insurance shields your company from lawsuits. If you provide professional services, such as accounting or consulting, professional liability coverage protects you from business error and malpractice claims. If you have employees, workers’ compensation insurance covers them for job-related injuries and illnesses.

Consider setting up a website for your business. Having an online base makes your company more credible to consumers and other professionals you may want to work with. Plenty of options let you easily create your site yourself, or you may hire a professional web developer.