Answers to the Most Frequently Asked Questions
- What are the filing fees for a Texas LLC and a Texas Corporation?
- How much will it cost me to form a Texas LLC or Texas Corporation?
- What is the filing fee for an assumed name certificate?
- In what state should I incorporate or file my LLC?
- How long will it take to form a Texas LLC or Texas Corporation?
- Why would the Texas Secretary of State (SOS) reject my Certificate of Formation?
- Are the owners of a business entity protected from the entity’s liabilities and obligations?
- Can I save my responses to the online questionnaire for use at a later time?
- Can I hire your firm to act the entity’s registered agent?
- What is a registered agent?
- What is an EIN?
- How long will it take to get an EIN?
- What is an EIN used for?
- Who needs to have an EIN?
- Does a Sole Proprietorship Need an EIN?
- What happens after I complete the questionnaire?
- Do I have to pay by credit card?
- What is the structure of a Texas LLC?
- Who can be an owner (aka member) of an LLC?
- What are the advantages of a Texas LLC over a Texas corporation?
- What are the benefits of a Texas LLC?
- Do I need an operating agreement?
- Do I need to have an organizational meeting?
- What is an operating agreement?
- What are the naming requirements for a Texas LLC?
- Can I be the only member of a Texas LLC?
- How are the members of a Texas LLC taxed?
- How is a corporation structured?
- Who can be an owner (aka shareholder) of a Corporation?
- Do I need to have bylaws?
- Do I need to have an organizational meeting?
- What are the disadvantages of a Corporation?
- What are the naming requirements for a Texas corporation?
- Can I be the only shareholder of a Texas corporation?
- How are the shareholders of a Texas corporation taxed?
- What is required to become an s-corporation?
What are the filing fees for a Texas LLC and a Texas Corporation?
The Secretary of State charges $300 to file a Texas LLC or Corporation ($308.10 if paid with credit card). The SOS fees will be collected by us upon completion of the online questionnaire. See the Secretary of State’s Complete Fee Schedule.
How much will it cost me to form a Texas LLC or Texas Corporation?
We offer packages starting at $100 (plus the state filing fee described above). Take a look at our Texas LLC fees and Texas incorporation fees. What you see on our price chart is what you will be charged (no taxes, shipping, preparation charges, or other hidden charges).
What is the filing fee for an assumed name certificate?
The Secretary of State charges $25 for an assumed name certificate (aka DBA). You should also record an assumed name certificate in the county of your registered office and principle place of business. The recording fees vary by county, but are typically around $20.
What state should I incorporate or file my LLC?
It’s typically recommended that you form an LLC in your home state, where you conduct most of your business. If you form an LLC out of state, you’ll then have to register and pay fees to do business in your own state, and you may have to hire an out-of-state registered agent to accept legal documents on your behalf.
How long will it take to form a Texas LLC or Texas Corporation?
Our secure online questionnaire should take you 5 to 10 minutes to complete. We have an account with the Texas Secretary of State (SOS) that allows us to file your certificate of formation on the same day that we receive your payment and completed questionnaire. The SOS typically takes 1 business day to certify/acknowledge the filing. If you ordered additional services, such as preparation of an operating agreement and organizational meeting minutes, EIN obtainment, we will finalize these items within 1 business day of receiving the SOS acknowledgment. If you completed your order on a Monday morning, we would very likely complete your order by Tuesday evening.
What if someone already has the name I want?
The SOS will reject a certificate of formation if the chosen name is substantially similar to an existing entity, trademark, reserved or assumed name. To determine if your desired name if already taken, simply call the TX SOS at (512) 463-5555 or e-mail your name inquiry to email@example.com. More on Texas naming issues.
Just because the SOS allows the use of the desired name does not mean you are free to use the name. You should also check the US Patent & Trademark Office (USPTO) to see if your desired name is a registered trademark. Last but not least, Google the desired name to see if anyone may be claiming your desired name.
Are the owners of a Texas LLC or Texas corporation protected from the entity’s liabilities and obligations?
Yes. The owners are protected from the liabilities and creditor’s of the entity as long as the entity is formed properly with the proper documentation and operated properly. For example, if the entity is used to perpetuate a fraud or it’s bank accounts are used by the owners for their personal expenses, the entity’s creditors can ask a court to disregard the entity’s limited liability shield (aka "pierce the veil"). We will ensure that the entity is formed properly and will provide written guidance on how to operate the entity properly so that the entity’s limited liability shield is not lost.
Can I save my responses to the online questionnaire for use at a later time?
Once you submit your responses, they will be saved for future use. We can send you a link via e-mail that will take you to your partially completed form and allow you to complete or update your responses in the future. If would like to submit a partial questionnaire you must let us know (in the comments section) that you intend to revise your responses at a later date.
Can I hire your firm to act the entity’s registered agent?
We no longer provide registered agent services. We can hire a professional registered agent for you (Registered Agent Solutions, Inc or LegalInc Corporate Services, Inc). They have agreed to charge our clients a discounted rate of $120/year.
What is a registered agent?
A registered agent is the person or entity responsible for accepting official legal and tax correspondence on your entity’s behalf. You can act as you own registered agent as long as you have a physical address in Texas and are available during normal business hours. We can hire a professional registered agent (Registered Agent Solutions, Inc or LegalInc Corporate Services, Inc) for you. RASi charges $120/year. Read more.
What is an EIN?
An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number, and is used to identify a business entity. Generally, businesses need an EIN. An EIN will be required to open bank accounts and lines of credit, hire employees or set up benefit plans. You will use this EIN much like you use your Social Security Number. We can obtain an EIN for your business.
How long will it take to get an EIN?
We file your EIN Application online to reduce delays. We typically have your EIN on the same day we receive your information and payment.
What is an EIN used for?
An EIN serves a purpose for a business similar to that of a social security number for an individual. An EIN is used on tax returns, business permits, and any applications or forms that request an IRS number to specifically identify your business.
Who needs to have an EIN?
All employers, no matter how small the business is, with one or more part-time or full-time employees, must have an EIN. If you pay contractors, or anyone for services valued at more than $600 in a calendar year, you may also need to get an EIN. Also, anyone who registers as a limited liability company, corporation, partnership, or joint venture must have an EIN to open a bank account.
Does a Sole Proprietorship Need an EIN?
If you do not have any employees, a sole proprietorship is not required to have an EIN. In fact, the IRS generally prefers you to use your social security number when you own a sole proprietorship; however, if you ever hire any employees, you must have an EIN.
What happens after I complete the online questionnaire?
Assuming you submit your credit card information with the questionnaire, your responses will be sent to our business formation attorney who will use the same to complete and file the entity’s Certificate of Formation with the Texas Secretary of State (SOS). The preparation and filing of the Certificate of Formation usually happens on the same day that we receive your responses and payment. Once we receive confirmation from the SOS, we will notify you via e-mail and then fulfill the remainder of your order.
Do I have to pay by credit card?
No, but if you would like the discount we offer via this website, then we require credit card payment.
What is the structure of a Texas LLC?
The owners of an LLC are called "members." A Texas LLC is managed by either (1) its members or (2) a manager or group of managers. The managers of a manager-managed LLC would be the equivalent to the directors of a corporation. The same person can be a member, manager, and officer. LLCs do not require managers or officers. If officers and/or managers are desired, the members would be responsible for electing the managers and the managers would be responsible for making the major decisions, managing the affairs of the LLC, and appointing officers (i.e. President, Vice-President, Treasurer and Secretary). The officers, if any, would be responsible for running the LLC’s day-to-day operations.
Who can be an owner (aka member) of an LLC?
A member can be an individual, partnership, corporation, trust, and any other legal or commercial entity. Further, there is no requirement that a member be a United States citizen.
What are the advantages of a Texas LLC over a Texas corporation?
As described above, the owners of an LLC and of a corporation will enjoy liability protection from the entity’s obligations. The main advantages of a Texas LLC over a Texas corporation are:
- Protection from other member’s creditors: One of the advantages of forming an LLC in Texas over a corporation is protection against "outside liabilities" or the liabilities of the other members. For example, if a husband and wife own an LLC 50/50 and the husband is sued for a personal obligation, the creditor (assuming they get a judgment and the judgment is not paid by the husband or his insurance) can seize the husband’s non-exempt assets, including the 50% ownership interest in the LLC. If the LLC’s operating agreement is NOT drafted properly, the husband’s creditors would own the LLC with the wife 50/50 and would be entitled to call meetings, vote at meetings, force the sale of LLC assets or the LLC itself. With a properly drafted operating agreement, the husband’s creditor in this situation would only be allowed to take whatever actual cash distributions are authorized by the remaining members of the LLC (which may be zero). The typical corporation does not have this protection from the owner’s creditors.
- Tax Flexibility: An LLC can elect to be taxed as a sole proprietor, partnership, S-corp or corporation.
- Management Flexibility: An LLC can elect to be managed by the members or by a separate manager or managers.
- Minimal Formalities: Although the rules regarding corporate formalities have been relaxed over the years, the LLC was designed to be less formal and requires less formalities. The LLC typically requires less paperwork than a corporation.
See our LLC vs Corporation page for more information.
What are the benefits of a Texas LLC?
The Texas LLC is a very popular entity choice because of its many benefits. The primary reason for forming a business is to obtain the personal liability protection for the owners of the business. The liability protection is a HUGE benefit, but there are many other benefits as well, including: perpetual existence, added credibility & professionalism, tax savings, tax & management flexibility, minimal formalities, and protection from other member’s creditors. Click here for more details on the benefits of a Texas LLC.
Are operating agreements and organizational meetings required?
The operating agreement and organizational meeting are HIGHLY RECOMMENDED. Failure to have these documents will not by itself cause the members to be liable for LLC obligations, but if a creditor attempts to pierce the veil of the LLC, you do not want to have to explain to the court why you operated the LLC without a governing document. At a minimum, having an operating agreement and organizational meeting minutes lends credibility to your LLC’s separate and distinct existence from the members (which is why the members are not liable for LLC obligations).
What is an operating agreement?
The operating agreement (aka Company Agreement or governing document) is agreement between the members of an LLC that spells out how the LLC will conduct business. It outlines such things as privileges of membership, management structure and handling of distributions.
What are the naming requirements for a Texas LLC?
The business name must include LLC or LC (or the words "Limited Liability Company" or "Limited Company") at the end of the name. Additionally, your business name must not be the same as, or deceptively similar to, any other names on file with the Texas Secretary of State. To determine if your desired name if already taken, simply call the TX SOS at (512) 463-5555 or e-mail your name inquiry to firstname.lastname@example.org.
See examples of similar names that would require consent to use.
Can I be the only member of a Texas LLC?
Yes. An LLC can have only one member. Read more about the single member LLC.
How are the members of a Texas LLC taxed?
By default, a Texas LLC is taxed as "pass-through entity" and all of the profits and losses of the LLC "pass through" the LLC to the members, who report the profits and losses on their personal tax returns. Unlike a c-corporation, the LLC itself does not pay federal taxes on its income. More on LLC Taxation.
What is the structure of a Texas corporation?
Corporations have shareholders, directors and officers. The same person can be a shareholder, director, and officer. The shareholders are the owners of the corporation and are responsible for electing the directors. Shareholders also vote on important corporate matters. The directors are mainly responsible for making the major decisions, managing the affairs of the corporation and appointing officers. The officers (i.e. President, Vice-President, Treasurer and Secretary) are responsible for running the corporation’s day-to-day operations.
Who can be an owner (aka shareholder) of a Corporation?
A shareholder can be an individual, partnership, corporation, trust, and any other legal or commercial entity.
With regard to an s-corporation, typically only individuals are shareholders. the Internal Revenue Code provides that only an individual, estate (including a bankruptcy estate), charity, qualified retirement plan and certain types of trusts (grantor trust, qualified subchapter S trust or electing small business trust) are eligible to be S-corporation shareholders. In addition, the IRS has stated that a single-member LLC (or a separate s-corporation) that is completely owned by an eligible S-corporation shareholder (e.g., an individual), can itself be an eligible shareholder of an S-corporation.
Are bylaws and an organizational meetings required?
Yes, unlike the Texas LLC, bylaws and an organizational meeting are required by the Texas Business Organizations Code.
What are the disadvantages of a Corporation?
The main disadvantage of a C-corporation (not applicable to an S-corporation) is that they are subject to double taxation. The corporation is taxed on its income and then its shareholders are taxed on any dividends they receive. This double taxation can be avoided by electing to be taxed as an S-corporation.
What are the naming requirements for a Texas corporation?
The name must include the words "corporation" or "company" or "incorporated" or an abbreviation of one of these terms (most commonly Corp, Co, or Inc) at the end of the name. Additionally, your business name must not be the same as, or deceptively similar to, any other names on file with the Texas Secretary of State. To determine if your desired name if already taken, simply call the TX SOS at (512) 463-5555 or e-mail your name inquiry to email@example.com.
See examples of similar names that would require consent to use.
Can I be the only shareholder of a Texas corporation?
Yes. A corporation can have only one shareholder.
How are the shareholders of a Texas corporation taxed?
It depends on whether the corporation is taxed as a regular corporation (c-corporation) or an s-corporation. For more information on this topic, you can visit our Corporate Taxation page.
What is required to become an s-corporation?
To qualify for s-corporation status, the entity must meet the following requirements:
- Be a domestic corporation or LLC;
- Have only allowable shareholders/members (i.e. individuals, certain trust, and estates NOT partnerships, corporations or non-resident alien shareholders);
- Have no more than 100 shareholders/members;
- Have one class of stock (no preferred stock); and
- Not be an ineligible business (i.e. certain financial institutions, insurance companies, and domestic international sales corporations).
In order to become an s-corporation, the entity must submit Form 2553 Election signed by all the owners within 75 days of forming the business.