Forming a Limited Liability Company (LLC) in Texas is popular for entrepreneurs looking to start or grow their businesses. LLCs offer numerous benefits, including limited liability protection for their owners and flexible management structures. One of the critical steps in forming an LLC is filing the Certificate of Formation with the Texas Secretary of State. This article will provide a comprehensive guide on How to File Certificate of Formation in Texas.
Webinarcare Editorial Team will help you understand the necessary steps to file for Certificate of Formation. It would be best if all the factors in this article guided you.
What is Certificate of Formation?
Certificate of Formation is a legal document filed with the Texas Secretary of State to establish a Limited Liability Company (LLC) officially. The Certificate of Formation contains essential information about the LLC, including its name, Registered Agent, and management structure. Once filed and approved by Texas, the LLC becomes a legally recognized business entity, separate from its owners, and benefits from limited liability protection and pass-through taxation.
The Certificate of Formation typically contains the following information:
- Company name
- The effective date of the company
- The headquarters of the company
- The company’s goal
- The period of the company’s operations
- Copy of the name registration certificate for the company
- Registered Agent’s and organizers’ names and addresses
- At least one company employee
Recommended: Filing Certificate of Formation is easy and hassle-free if you hire a professional service. We recommend using –
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How to File Certificate of Formation in Texas?
Aside from hiring a Registered Agent, you should also be aware that a Registered Agent should file Certificate of Formation in your Texas LLC. Here are the steps and guidelines for filing.
Step 1: Choose a Name for Your LLC
The first step in registering an LLC Certificate of Formation is selecting a unique and appropriate name for your company. Your LLC’s name must comply with your state’s naming requirements, which typically include the following:
- The name must be distinguishable from other registered business names in the state.
- The name must include an LLC designator, such as “Limited Liability Company,” “LLC,” or “L.L.C.“
- The name must not include prohibited words or phrases defined by your state’s regulations.
To ensure your chosen name is available through your state’s business name database, Texas Comptroller of Public Accounts Taxable Entity Search, usually available on the Texas Secretary of State’s website.
Step 2: Appoint a Registered Agent
Registered Agent is a person or entity responsible for receiving official correspondence and legal documents on behalf of your Texas LLC. Most states require LLCs to designate a Registered Agent when filing the Certificate of Formation. The Registered Agent must have a physical address in the state and be available during regular business hours.
Choosing a reliable and responsible Registered Agent is essential, as failure to receive and respond to legal documents can seriously affect your business.
You can serve as your own Registered Agent, appoint a friend or family member, or hire a professional Texas Registered Agent Services.
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Step 3: Prepare Your Certificate of Formation
The Certificate of Formation is the legal document that officially establishes your Texas LLC. While the specific requirements in Texas, the document includes the following information:
- The LLC’s name
- The name and address of the Registered Agent
- The principal office address
- The purpose of the LLC
- The management structure (member-managed or manager-managed)
- The names and addresses of the initial members or managers
- The duration of the LLC, if not perpetual
In Texas, additional information may be required, such as an organizer’s signature or specific provisions related to the LLC’s operation.
Consult the Texas guidelines to ensure you include all necessary information.
Step 4: File the Certificate of Formation
Once your LLC Certificate of Formation is prepared, please submit it to the Texas Secretary of State. The submission process may vary depending on the method of choice; Texas allow online submissions and mailing or hand-delivering the documents.
Online Process
To use the online service or download the Certificate of Formation form for your LLC, go to the website of the Texas Secretary of State. You were required to have an LLC name reserved while completing the form. Visit the Texas Business Name Search to see if the business name you want to use is available there. You must include a copy of your name reservation and your completed Certificate of Formation form when submitting.
Mail Process
It is also possible to mail the form if you wish. Please adhere to the guidelines listed below.
- The Certificate of Formation must be downloaded in the Texas Secretary of State
- Complete the necessary details in the form.
- Two copies of the Certificate of Formation must be completed.
- Include the two papers with the Texas LLC name reservation certificate in a self-addressed, stamped envelope.
- Submit all paperwork to Secretary of State, P.O. Box 13697, Austin, TX 78711-3697.
Costs of Filing Certificate of Formation
Along with the filing of Certificate of Formation, you must pay a filing fee. In Texas, the Certificate of Formation fee costs around $300 which you can pay in the Texas Secretary of State. Confirm the correct fee amount and payment method for your state.
However, If you want to know more about the cost of forming an LLC, you can check out Texas LLC Cost.
Step 5: Obtain an Employer Identification Number (EIN)
After your Certificate of Formation has been filed and approved, you should obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The EIN is a unique identification number used for federal tax purposes. It is required for most LLCs, especially those with employees or elect to be taxed as an S-Corporation. You can apply for an EIN for free online through the IRS website.
The application of an EIN in Texas can be through the following:
- Apply Online- The online EIN application is the preferred method for customers to apply for and obtain an EIN.
- Apply by Fax- Taxpayers can fax the completed Form SS-4 application to the appropriate fax number), after ensuring that the Form SS-4 contains all of the required information.
- Apply by Mail- The EIN application Form SS-4 can be filed via mail. The processing time frame to receive the mail is four weeks.
- Apply by Telephone-International Applicants – International applicants may call 267-941-1099 (not a toll-free number) from 6 a.m. to 11 p.m. (Eastern Time) Monday through Friday to obtain their EIN.
Recommended: Professional services have the EIN included in their LLC formation package. We recommend using –
LegalZoom – ($0 + State Fee for LLC formation)
Step 6: Create an Operating Agreement
Although most states do not require an LLC Operating Agreement when registering an LLC, having one is highly recommended. The Operating Agreement in Texas is a legally binding document that outlines the LLC’s ownership structure, management, and operating procedures. It helps prevent member disputes and provides a clear framework for the LLC’s operations.
Step 7: Register for State and Local Taxes and Licenses
In Texas, you may need to register for additional state and local taxes or obtain specific licenses and permits. Common registrations include sales tax, payroll tax, and unemployment insurance tax. As an LLC, your business income will be subject to pass-through taxation, meaning profits and losses will be reported on your tax return. However, you may still be responsible for other state taxes, such as sales tax, payroll tax, or franchise tax which you can pay in Texas Comptroller of Public Accounts.
In terms of franchise tax for your LLC in Texas, there is $400 minimum. Consult your Texas Comptroller of Public Accounts and local government offices to determine which registrations and licenses apply to your LLC.
Step 8: Maintain Ongoing Compliance
Once your LLC is registered and operational, it’s essential to maintain ongoing compliance with state regulations. This typically includes filing Annual Reports in Texas, paying required fees every 1 year, and keeping accurate records of your LLC’s activities. Stay informed about Texas specific requirements to ensure your LLC remains in good standing.
Is the Certificate of Formation necessary to be filed in Texas?
Yes, the Certificate of Formation is necessary to be filed with Texas Secretary of State to legally establish and register a new business entity, such as a corporation or limited liability company (LLC). This document typically includes the company’s name, purpose, Registered Agent, and stock structure. Filing the Certificate of Formation is essential in forming a business and ensuring it operates legally and is recognized by Texas.
What is the best way to file Certificate of Formation? Is it online or by mail?
The best way to file Certificate of Formation depends on your specific situation and the state in which you are incorporating your business. Both online and mail-in options have advantages, and either method can be effective.
Online Filing:
- Faster processing time, as it is usually processed within a few days or even hours.
- Immediate confirmation of submission and payment.
- Lower risk of errors, as the online form may provide guidance and prevent incomplete submissions.
Mail-in Filing:
- Some people prefer the traditional method and feel more comfortable with paper documentation.
- You can include a cover letter or additional documentation if you have specific questions or complex situations.
To determine the best method for your needs, check the Texas Secretary of State or similar department’s website for information on their preferred filing options and processing times. Online filing is more convenient and efficient, but both methods can be used effectively to submit your Certificate of Formation.
FAQs
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Can You Change or Modify Your Texas LLC Certificate of Formation?
The short answer is yes, you can change or modify your Texas LLC Certificate of Formation. The state allows LLCs to make amendments to their formation documents in order to reflect any changes in the company’s structure or operations. There are several reasons why you may need to modify your LLC Certificate of Formation:
One common reason for making changes is if there are any errors or inaccuracies in the original filing. This could include typos, omissions, or incorrect information about the LLC’s members or managers. Correcting these errors is important for ensuring that your business is in compliance with state regulations and that your legal documentation is accurate.
Another reason for modifying your LLC Certificate of Formation is if there are changes in your company’s ownership or management structure. For example, if a new member joins the LLC or an existing member leaves, you will need to update your formation documents to reflect these changes. Similarly, if there are any changes to the LLC’s operating agreement, such as amendments to voting rights or profit distributions, you will need to make corresponding changes to your Certificate of Formation.
In addition, you may also need to modify your LLC Certificate of Formation if there are any changes to the company’s name, registered agent, or principal place of business. These changes can impact your LLC’s legal standing and ability to conduct business in Texas, so it’s important to keep your formation documents up to date.
So how do you go about changing or modifying your Texas LLC Certificate of Formation? The process typically involves filing an amendment with the Texas Secretary of State. This amendment will outline the changes you are making to your formation documents and provide any necessary supporting documentation. Once the amendment is approved, your LLC’s Certificate of Formation will be updated to reflect the modifications.
It’s important to note that while you can make changes to your LLC Certificate of Formation, you should do so carefully and ensure that you are in compliance with state laws and regulations. If you’re unsure about the process or requirements for making amendments, it may be helpful to consult with a legal professional who specializes in business law.
In conclusion, modifying your Texas LLC Certificate of Formation is a common and necessary part of managing your business. By staying informed about the process and requirements for making changes, you can ensure that your LLC remains in good standing with the state and continues to operate smoothly and legally.
Conclusion
Registering an LLC Certificate of Formation is critical in establishing your business as a legally recognized entity. By following this comprehensive guide and researching your state’s specific requirements, you can successfully navigate the registration process and set your LLC up for success. Remember that forming an LLC is just the beginning; ongoing compliance and diligent management are necessary to ensure your business thrives in the long run.