Starting your Own Limited Liability Business in Houston, Texas
Houston, Texas has grown to become one of the most favorable locations to start a business. It can be owed to the favorable legislation and Texas’ tax structure. There are a variety of companies that have set camp in Houston, Texas. If you want to join the bandwagon, RunRex highlights the various steps to take for you to set up a Limited Liability Company successfully.
1. Selecting A Business Name That Includes The “Limited Liability Company” Phrase.
The first step in establishing the business is selecting a business name. Given that it is going to be a limited liability business, the phrase “limited liability company” or the initials “L.L.C” have to be part of the business name. The name should be unique as two businesses existing within the same state cannot have the same name. You can find out whether your business name is unique or whether it has been taken by checking the business name with the database of the secretary of state.
2. Obtain The Articles Of Organization From Texas’s Secretary Of State And Completing Them
To begin the process of legalizing your business, you have to obtain the article of organization (Certificate of Formation) from the office of the secretary of state by either having them mail them to you or by visiting the office of the secretary of state in person. The articles come with guidelines on how to fill them. The initial fee for getting this certificate of Formation is $300 which is nonrefundable.
Completing the articles of organizations involves documenting the name of the business and the physical location where the business is to be located. Provide a detailed description of nature of activities your limited liability company is going to undertake. Also, include a date when the business is meant to be dissolved. If the business will have an unlimited existence, then this information has to be included in the article.
The details should include the names and the physical addresses of all members of the partnership. Their signatures should, also, be documented. The names and the physical address of the party to be taxed and handle the legal aspects of the partnership has to be specified when completing the articles.
3. The Drafting Of An Operating Agreement
The purpose of an operating agreement is to help determine and set up the necessary procedures and operating policies that will govern how the business will be operated. Information to be provided includes where member meetings will be taking places and the dates, how the profits generated by the business will be shared among members and the guidelines on how to select new members. The roles of the members of the LLC and the managers have to be specified and included in the draft.
4. Submit The Articles Of Organization By Filing With The Secretary Of State
Once you have a complete draft of the operating agreement and all the articles of organization, have been appropriately completed, have them submitted to the secretary of state. There are two ways of presenting them; one can send the articles online through the secretary of state’s website or they can take them to the office of the secretary of state in person. The filing fees have to accompany the articles as they are being submitted.
The fees that have to be paid through the filing process include $300 for the Certificate of Formation, $15 for the Acceptable of Appointment and Consent if the LLC is a for-profit LLC and $5 if it is a nonprofit LLC and $40 for Name Reservation.
5. Obtain a Federal Tax Identification Number
The next step is to get a federal tax ID number, also known as an Employer Identification Number from the Internal Revenue Service. It can be obtained from the IRS website where one is required to fill a form and provide information about the name of the LLC business being started and its address. A description of the activities the company will engage in is, also, to be provided. The members of the LLC, their addresses, and their Social Security Numbers have to be provided too. Once the online interview is complete, you can proceed to print the confirmation page that contains a new EIN for your Limited Liability Business.
6. Taxes
In Texas, limited Liability companies can be treated as either limited liability partnerships, corporations or single-member LLCs. They are subject to federal income tax. Your federal tax responsibilities will vary depending on the type of taxation your limited liability business opts. For state Taxes, the Texas franchise tax applies and compliance requires that an initial franchise tax report is submitted to the Texas Comptroller together with a public information report. These two reports have to be submitted annually with the annual reports being due on the 15th of May every year.
It is important that you familiarize yourself with the legal obligations of your limited liability business. The process of setting up a limited liability business is pretty straightforward. However, you can traverse through the process seamlessly with the help of a knowledgeable attorney.