Austin Limited Liability Company Attorney
If you are starting your own business, you need an experienced Austin business formation attorney to help you choose the right corporate structure and set it up to protect your personal assets and your business. The legal team at the Law Office of William Jang, PLLC has experience helping entrepreneurs navigate the business regulations in Texas.
When you’re starting your business, it is crucial to choose the correct structure and follow the regulations closely. This can save you money in taxes and prevent you from getting into trouble later. No matter what type of business you choose, it’s essential that you are compliant with the business regulations in Texas.
The sooner in your business development that you speak with a business development attorney, the easier you will find it is to avoid potential problems. Contact the experienced Austin business formation attorneys of the Law Office of William Jang, PLLC office today at (512) 323-2333 for a confidential consultation with one of our experienced and skilled lawyers.
What Is a Limited Liability Company?
A limited liability company (LLC) is one type of business structure you might consider as you are creating your business. It is a structure that can help protect your personal assets from lawsuits against your company. It’s a popular structure that is flexible and gives you three options for how the business is taxed.
An LLC is a hybrid that has characteristics of a sole proprietorship, partnership, and corporation. An LLC can be formed if you’re a one-man business or if the business has hundreds of employees. It also helps protect your business as it grows and expands without requirements for extensive corporate records or special meetings.
According to the Internal Revenue Service (IRS), each state can use different regulations for starting and regulating an LLC. There are a few types of businesses that do not qualify to be LLCs, such as banks and insurance companies.
When the LLC is being established, you elect how you want the business to be classified for federal tax purposes. You have three choices: an LLC can be taxed as a partnership, a sole proprietorship, or as an S or C corporation.
The owners of an LLC are called members. The LLC does not limit the number of members or what person or entity can become a member. In other words, a member can be a trust, partnership, individual, or other legal or commercial entity.
The liability of each member is limited to the percentage of their investment in the LLC. When the LLC is developed, you choose whether it’s going to be managed by a manager or by its members.
For the most part, the profits and losses of the LLC are passed through to the members. They will then report these on their individual tax returns. In other words, an LLC does not directly pay federal taxes on profit.
Advantages of an LLC
One of the biggest benefits an LLC provides for small business owners is that it protects their personal assets in case of legal issues.
Another benefit is the flexibility in how the IRS taxes business profits. When the LLC is formed, you can elect to have it taxed as a sole proprietorship, partnership, or as an S corporation or C corporation. This choice can also be changed as the business grows and develops.
Using a corporate tax structure means the owners will be paid as company employees and can participate in benefit programs. This can potentially save money for the owner and the business on their taxes.
Businesses also benefit from not being required to have an annual shareholder meeting or to maintain a board of directors. Additionally, unlike most other states, Texas businesses are not required to file an annual report with the Secretary of State.
How Is an LLC Formed?
There are several steps to forming an LLC in Texas. Each step has certain criteria that must be met. Before any paperwork can be filled out or filed, the LLC must have a name that is different from the names of other businesses that are already on file with the Secretary of State.
The Texas Secretary of State maintains a website where you can check the availability of the name you have chosen. If you find the name you want is available, you can reserve it for 120 days with a $40 filing fee. Under Texas law, any LLC company must have one of the following extensions at the end of the name:
- Limited Liability Company
- Limited Company
Every LLC must have a registered agent. This person agrees to accept legal papers on behalf of the business. The agent must have a physical street address and must always be available during business hours. A registered agent can be a business entity or a Texas resident.
Once the proper paperwork has been filled out, you file the Certificate of Formation with the Texas Secretary of State and include the filing fee. This can be done online or by mail. Although an operating agreement is not a requirement, it is highly recommended as it helps establish how you run the business.
Having an operating agreement can help preserve your liability by demonstrating that the business is a separate entity. If your LLC has more than one member, it must have an Employer Identification Number (EIN), even if there are no employees. A one-member LLC can get an EIN if they choose.
If you provide a licensed professional service, you must form a professional LLC (PLLC). For example, a physician, certified public accountant, and architect must form a PLLC. In this case, each member of the PLLC must hold a professional license.
How the Law Office of William Jang, PLLC Can Help
Technically, it is feasible to fill out the paperwork and file the documents on your own. However, any mistakes that are made could significantly damage your company and expose your personal assets to liability. An experienced limited liability company attorney in Austin can make sure the documentation will provide you with the necessary legal protection.