For a long time, Silicon Valley in the United States has been considered the number one Tech hub spot for technological innovation and progress. This has, however, begun to change. Potential reasons for this could be high-housing costs, high tax rates, and strict regulations, making a living, working, and conducting business in the area challenging.
More and more companies are moving their business operations to Texas and other states with lower living costs and advantageous tax laws. For example, Oracle and Hewlett-Packard are among the tech giants who announced that they would be moving their headquarters to Texas, with many following their example.
Many people need to learn that in the United States, you do not have to reside in the state where you decide to form a Limited Liability Corporation. This is great because you can decide which state would be the most advantageous to you and the formation of your new business.
Each state offers strengths such as startup costs, privacy, asset protection, annual fees, and income taxes. Texas could be a great place to set up an LLC tech business. This guide will provide valuable insights into the steps needed to start an LLC in Texas.
Setting Up an LLC in Texas
So you’ve taken the time to consider the advantages and disadvantages of setting up an LLC. in Texas and are finally ready to start registering your business as an LLC and getting it off the ground. Do you have no idea where to start? This guide will walk you through the steps on how to form a Limited Liability Company (LLC) in the state of Texas.
Create a name for your L.L.C. business.
First and foremost, ensure that your business name complies with Texa’s naming requirements:
- Your business name must include Limited Liability Company, LLC, or L.L.C.
- The term cannot be the same as an existing business in Texas. You can search the Secretary of State’s website to determine name availability.
- Note that the business name cannot contain words used to name a government agency (State Department, C.I.A., F.B.I., Treasury, etc.)
- Certain restricted words (bank, lawyer, attorney, credit union, etc.) may require additional documentation and licensure paperwork.
- Buy a domain name if you have a web page; even if you do not, you may want one in the future, so make sure the URL is available.
- Reserve your name for a small fee to protect against the chance that it may be taken by another business. In Texas, business names can be reserved for up to 120 days by paying the fee and submitting the correct form to the state authority.
2. Choose a registered agent
Texas requires that all business owners appoint a registered agent for their LLC. A registered agent can be a person (including yourself or an employee of the LLC) or an entity that offers a registered agent service.
3. Prepare and file articles about your organization
The next step is to prepare all relevant documents that pertain to your organization so that you can obtain a Certificate of Formation (commonly called Articles of Organization in other states). This document officially establishes your LLC by laying out basic information about it. This can include your LLC name, registered agent details, date of articles filing, business address, and more.
4. Receive a certificate from the state
Once your LLC has been approved, the state will send you an email that should include an acceptance letter, stamped and approved articles of organization, and a certificate of organization verifying that your LLC has been approved as a legitimate business.
5. Create an operating agreement
The next step is to create an operating agreement which is a document that outlines the business plan and methods for conducting a business.
6. Get an employment indentation number
The Employer Identification Number (E.I.N.) is a nine-digit number given by the Internal Revenue Service(ITRS) and is used to allocate your LLC’s taxes. In addition, this number is also used to file, manage your taxes at a federal level, open a bank account, and hire employees.
7. File an L.L.C. Franchise Tax and Public Information Report
In Texas, LLCs are required to file a Franchise Tax and Public Information Report with the Texas Comptroller’s Office. Every year, your LLC’s Texas franchise tax and public information reports are due by May 15, although your first report would not be due until one year after your LLC. has been formed. Forming an LLC in Texas could be one of the most profitable decisions you make for your business.
Are you ready to get started?
In addition to being a low-cost way to protect personal and business finances from personal liability, Texas LLCs provide tax benefits, including tax savings through pass-through income taxation, payroll tax reduction, and entity classification options. If this sounds interesting to you, click here to kick-start the setup of your LLC.
