Are you thinking about forming an LLC in Texas? Good news – you can do it online without hiring an attorney. However, there are some important factors to consider before you dive in. As a San Antonio attorney specializing in business law, I’m here to guide you through the key points you need to know about online LLC formation in Texas.
1. Post-Formation Support
When choosing an online LLC formation service, it’s crucial to consider the level of support you’ll receive after your LLC is formed. Ask yourself:
- Who can you contact if you have questions later?
- What kind of ongoing support is offered?
- How accessible is their customer service team?
Remember, forming your LLC is just the beginning. You may need guidance as your business grows and evolves.
2. Special Types of LLCs
Texas offers some unique LLC structures that may be relevant to your business:
Professional Limited Liability Companies (PLLCs)
If you’re in a professional field like law, medicine, architecture, or engineering, you may need to form a PLLC instead of a standard LLC. Make sure the online service you choose understands the specific requirements for PLLCs in Texas and if you qualify to form one.
Series LLCs
Texas also allows for Series LLCs, which can create multiple “child” organizations under one parent LLC. This structure requires specific language in both the certificate of formation and the operating agreement.
If you’re considering either of these special LLC types, ensure that your chosen online service is familiar with their unique requirements.
3. Management Structure
Before forming your LLC, you need to decide on its management structure. In Texas, you have two options:
- Member-managed: All members participate in the management of the company
- Manager-managed: Designated managers run the company, while Members only act internally
This decision affects how your business operates and how new members can join, so consider it carefully.
4. Operating Agreement Customization
While many online services provide template operating agreements, it’s important to ensure that the agreement is tailored to your specific needs. Consider:
- How personalized is the operating agreement?
- Does the service explain what each section means?
- Can you customize the agreement to fit your business’s unique needs?
Remember, while templates can save you money, understanding and customizing your operating agreement is crucial for your business’s long-term success.
5. Understanding Key Terms and Definitions
Before you start the online formation process, make sure you’re familiar with the key terms and concepts involved in LLC formation. This includes understanding:
- The difference between members and managers
- What a certificate of formation entails
- The purpose and components of an operating agreement
Doing your research beforehand will help you make informed decisions throughout the process.
Post-Formation Compliance for Texas LLCs
Forming your LLC is just the beginning. To maintain your LLC’s good standing in Texas, you need to stay compliant with ongoing requirements. Here are key compliance areas to keep in mind:
1. Annual Reports
Unlike many states, Texas does not require LLCs to file annual reports. However, you must file an annual franchise tax report.
2. Franchise Tax Reports
Texas LLCs must file a franchise tax report each year by May 15th. Even if your LLC owes no tax, you must file a “No Tax Due” report.
3. Registered Agent
Maintain a registered agent with a physical address in Texas at all times. If your registered agent changes, you must file Form 401 with the Secretary of State.
4. Business Licenses and Permits
Depending on your industry and location, you may need to renew various licenses and permits annually.
5. Maintaining Corporate Records
While not filed with the state, you should keep internal records updated, including meeting minutes and major business decisions.
6. Certificate of Formation Updates
If you make significant changes to your LLC, such as changing its name or purpose, you must file a Certificate of Amendment with the Secretary of State.
7. Sales Tax Reports
If your LLC collects sales tax, you must file regular sales tax reports with the Texas Comptroller of Public Accounts.
8. Employment Taxes
If you have employees, ensure you’re up to date with employment tax filings and payments.
Staying compliant can seem overwhelming, but it’s crucial for maintaining your LLC’s legal status and benefits. Consider setting up a compliance calendar to keep track of all deadlines.
Frequently Asked Questions
Texas LLCs must file franchise tax reports annually by May 15th, even if no tax is owed.
Late filings can result in penalties and interest. Your LLC may also lose its good standing status.
While not legally required, holding regular meetings and keeping minutes is a good practice to maintain your LLC’s liability protection.
File Form 401 with the Texas Secretary of State. This can usually be done online or by mail.
While there’s no annual report fee, you may owe franchise taxes. Other fees may apply for amendments or license renewals.
It’s a good practice to review your operating agreement annually or whenever there are significant changes in your business
Keep records of major business decisions, financial statements, tax returns, and any state filings or correspondence.
Yes, neglecting compliance requirements can potentially lead to the “piercing of the corporate veil,” jeopardizing your personal asset protection.
Conclusion
Forming an LLC online in Texas can be a cost-effective and efficient way to start your business. However, it’s important to approach the process with a clear understanding of what’s involved. By considering these five key factors – post-formation support, special LLC types, management structure, operating agreement customization, and key terminology – you’ll be well-prepared to make the right choices for your business.
Ready to form your Texas LLC with confidence?
Our comprehensive online course provides all the information and guidance you need to navigate the process successfully. Sign up today and take the first step towards establishing your business on solid legal ground! Please contact Nathaniel Gilbert for more information.
