A Limited Liability Company is an entity that individuals or businesses can form in Texas that provides structure and management of a business or investment operation. The LLC, as the name implies, is often chosen for the liability protection for the personal assets of the Members or Managers of the LLC from the debts or liabilities of the LLC itself.
Limited Liability Companies are a popular entity choice for small business owners in Texas for a variety of reasons. Chief among those reasons, is that they can be fairly simple to operate: there are very little requirements of the LLC operating agreement, and most internal functions of the LLC can be left to the statutes set out by the Texas legislature. With a straightforward operating agreement, you can operate your business as efficiently as possible while still keeping in compliance with that contract.
A typical LLC is made up of the following components:
- An Operating Agreement, that tells how the company operates
- One or more Members or Managers, that own, operate, and decide how the business will function
- >A “Purpose” spelled out in the operating agreement, stating what kind of business, investment, or holding the company will undertake
- Books and Records: All of the required books and records to be kept in accordance with the LLC Operating Agreement
Additionally, LLCs are a popular entity for the liability protection that they offer. As the name in implies, the liability that is passed through the entity to the individual members or managers is “limited” in that the entity acts a shield to those liabilities. A common misconception, however, is that there are no requirements of the members or managers of the LLC in order to receive this liability protection. In fact, the ongoing maintenance and operations of the LLC are absolutely vital to creating the liability shield, and if proper business protocols and procedures are not followed, the members are left exposed to liability from the debts of the business. For more on liability protections of an LLC, Click Here.
In essence, an LLC can be a great choice for Texas small business owners looking to start or reincorporate businesses. With the right structure and Operating Agreement, you can look into the future of your operation and plan accordingly. Texas Small Business Attorney Nathaniel Gilbert helps businesses and individuals with LLC Formation and Management, among other business concerns. For more information on LLCs, Business Entities, and Management, Click Here. To Contact Nate directly, Click Here.