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Formation of Companies- Houston Law Firm

Formation of Companies- Houston Law Firm 

Company formation entails the official registration of a business enterprise as a limited company. Registration or company formation makes your company a distinct legal entity in that it is recognized as an individual by the law. This makes it separate from its owner’s terms and conditions of contract agreements, liabilities, finances and asset and property ownership. Company formation is majorly encouraged given that it protects the company owner from undesirable financial responsibility which is referred to as “limited liability” since their personal finances and assets are protected beyond the limit of their liabilities; which could be in shares or guarantees.

Company formation is achievable via a number of different business structures depending on the most beneficial business structure to the business owner. The existing structures include;

Which protects the owner from personal liability and enhances the company’s tax structure. 

Meant to distribute profits and losses among partners and limit the number of risks the said partners are likely to face. 

Which enables the business owner to personally own all the business assets and keep the business simple. 

Which entails a team of; managers to operate the business, board of directors to oversee operations and shareholders to own part of the business. 

Whichever structure you go for your business, you will need to register it through a company formation process. Which is why this article has taken the liberty to enlighten you on the company formation process in Houston Texas courtesy of RunRex.com (a Houston law firm).

Name your Company

The name you select for your company must be unique from any other company names already filed with the Texas Secretary of State. You can check to confirm your company name’s uniqueness at the Texas Secretary of State SOSDirect website. 

The name you choose must be accompanied by Limited Liability Company or Limited Company, which can be abbreviated as; L.L.C, LLC, L.C, LC, and LTD or Ltd. for Limited and Co. for Company in accordance to Texas law. 

By filing a Form 501 with the Texas Secretary of State, which is an Application for Reservation or Renewal of Reservation of an Entity Name form, you may reserve your company’s name for 120 days. The reservation may be filed online through the SOSDirect website at a cost of $40.

File Certificate of Formation 

The certificate of formation, which is Form 205 for a Texas LLC entails basic information about your company that is to be relayed to the Texas Secretary of State to create the LLC, making this stage quite essential. 

Form 205 is expected to include; the LLC’s name, name and address of LLC’s registered agent, name and address of person(s) that govern the LLC, type of LLC’s management structure (member or manager managed), name and address of the LLC’s organizer and the effective certificate date. This form can be filed online through the Texas Secretary of State SOSDirect website or via mail at a fee of $300. 

Appoint a Registered Agent 

A registered agent is an individual or business entity that accepts legal documents on behalf of the LLC in the event that it is sued. Every LLC within the State of Texas is expected to have a registered agent for service of process within the State. The registered agent can be a Texas resident or have authorization to conduct business in Texas and must have a physical street address within Texas. An LLC is not authorized to become its own registered agent in the State of Texas. 

Preparation of an Operating Agreement

If you create an operating agreement, you are to file it with the certificate of formation submitted to the Texas Secretary of State. It is, however, not a requirement to prepare an operating agreement but it has its merits thus is advisable to do so. 

Comply with Tax and Regulatory Requirements

The following are additional tax and regulatory requirements that may apply to your LLC depending on your business structure, operation and organization; 

Apart from the usual benefit of protecting the owner’s finances and assets, Company formation also, creates a professional corporate ‘image’ that gives the impression of a reliable business structure. It helps businesses owners handle their finances in a more manageable and tax efficient manner. It also happens to be more appealing to suppliers, clients, lenders and investors making it an effective and affordable way to improve your business. To achieve company formation success there is the need for a legal foundation. And RunRex.com is the best Houston law firm to give your company this firm foundation. 

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