This provides a basic guide to setting up a Texas limited liability company.
1
Complete and file the Certificate of Formation
A Certificate of Formation (the "Certificate") acts like a "birth certificate" for a company in many ways. The Texas Secretary of State (TXSOS) provides a form that can be used to file, either online or via fax or mail, or companies can draft their own Certificate and file with the TXSOS. The information required on Certificates is discussed in the Texas Business Organizations Code (TBOC), and includes items such as the name and address of the company, the name & address of the registered agent in Texas, the purpose of the company, whether the company will be run by managers of the members (i.e., owners). Once completed, the Certificate is submitted to the TXSOS along with the filing fee of $300 (plus any additional fees, e.g., if using a credit card). TXSOS will assign a filing number, and the Texas Comptroller will assign a tax identification number to be used in filing annual franchise/margin taxes.
2
Company Agreement
The Company Agreement for an LLC is similar to corporate "bylaws." This agreement is signed by the members of the LLC and describes how the business is to be run in more detail. This agreement is not filed with the TXSOS, but is kept in the corporate records.
3
Organizational Consent
The Organizational Consent is an agreement signed by the members (or manager(s), if any) and serves as the formal entity act of adopting the Certificate, the Company Agreement, and any other matters related to the formation of the entity (e.g., designation of officers, managers, authorizing bank accounts, etc.). This consent is not filed with the TXSOS, but is kept in the corporate records.
4
Obtain an IRS Tax ID number
The Employer Identification Number (EIN), also called a Tax ID, is obtained from the IRS, not from the TXSOS. While not all LLC's require an EIN, it is required for LLCs with more than one member, or if the LLC will have employees. There are a number of ways to obtain an EIN, but the fastest & simplest is by completing an online SS-4 via the www.irs.gov web site.
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