Texas has passed the Business Organizations Code to govern limited liability companies (“LLCs”) formed within the state. A LLC is a corporate formation type that is selected by the LLC’s founders (who are called “members”). LLC’s offer the tax advantages of a partnership combined with the liability protections of a corporation.
There is much required of an LLC and its members. For example, a LLC must have at least one member. It can have more – many more – but it must have at least one. A well-run LLC will also have an “operating agreement” that clearly outlines the rights and responsibilities of each member.
There can be considerable paperwork associated with a LLC. A LLC may need to file paper work with Texas for any of the following:
- terminations and withdrawals,
- mergers and conversions,
- reinstatements, and
- appointment of agent(s).
You may want to contact a LLC lawyer to ensure that the appropriate paperwork has been filed with Texas. Failure to do so can lead to your company losing its LLC status.
As with most states, under Texas law an LLC is granted certain liability protections and certain tax advantages. Members of an LLC are generally not exposed to personal liability for the debts of their LCC. Furthermore, income of a LLC is taxed at the personal level of the LLC’s members, not at the corporate level. Therefore, the income of the LLC avoids double taxation.
LLCs are governed by strict laws in Texas. For example, LLCs are limited in their ability name and market. Texas does not allow LLCs to be named in a “deceptively similar” manner. LLCs must be cautious not use words or abbreviations, spacing, periods, or other symbols that could lead someone to mistake the LLC for something that it is not. For example, a LLC would probably not be allowed to call itself “The Texas Department of Oil and Gas, LLC” as this gives the impression that the LLC is associated with the government of Texas.
If you need help forming your LLC, then contact a local Texas business lawyer today to discuss the needs of your LLC.