Texas Limited Liability Companies, LLCs, provide many advantages of both corporations and partnerships. An LLC is a flexible management structure that limits liability for the managers and members.
Like a corporation, the owners of the LLC do not have to pay for debts of the LLC from their own pockets. Like a partnership, the income of the LLC is protected from double taxation because the LLC is not taxed as a separate entity. The entity owns the assets of the limited liability company. The members of a Texas limited liability company can be individuals, corporations, or other LLCs. Starting an LLC does not require the extensive record-keeping of a corporation.
The filing with the Texas Secretary of State for an LLC requires you to choose a distinguishable name from other Texas business entities. Then you will need to name the original LLC members and the percentage of ownership for each. It would help if you determined whether your members will manage the LLC. You will need to designate a registered agent for service of process for your filing with the secretary of state.
The operating agreement specifies how the LLC is organized and the rights of the members. It is vital to get the advice of an experienced business attorney to draft an operating agreement. A business attorney has seen the effect of specific provisions in operating agreements that many individuals do not anticipate.
An LLC that is managed by its members provides for any member to contractually bind the LLC. The manager-managed structure is more acceptable is many business transactions because of the legal capacity of the members. For example, a lender will sometimes ask an LLC to convert into the manager-managed form of an LLC before extending a loan.
A series LLC allows the organizer to segregate assets and insulate them from liabilities within the same company. Like a traditional LLC, it provides for a liability shield, pass-through taxation, and informal management.
LLC has members instead of shareholders or partners. Usually, the owners of an LLC have classes of members. Class A members are often members who have full voting rights. Class B members have ownership, but no voting rights or distributions. Setting up these two classes of membership can aid in the asset protection of a Texas limited liability company.
Like a shareholder in a corporation, the members of a limited liability company should meet yearly. An organizational meeting is the first meeting that approves the company agreement and the certificate of formation. Subsequent meetings should ratify the decisions made in the last year and elect the managers for the next year. When significant decisions are affecting the LLC, the members should hold a special meeting to approve or reject the decision.
To begin or maintain an LLC, it’s crucial to get the legal advice of an attorney that has seen the typical disputes involving this unique corporate structure. Even if you do not call Dunnam & Dunnam, it’s important to get advice from a lawyer for your business structure. Call an experienced Waco business law attorney at 254-753-6437 for a free consultation involving your Texas LLC.
Hunter Slocum is an associate attorney at Dunnam & Dunnam, L.L.P.
Carolina G. Truesdale graduated from Texas Tech University School of Law, Cum Laude, where she discovered her passion for serving families during difficult times.
Mason Dunnam won his first jury trial the day after becoming licensed to practice law. He became a lawyer to fight for the little guy.
Eleeza Johnson has been a member of Dunnam & Dunnam since 2015 and is currently designated as Of Counsel.
Andrea Michelle Mehta became a lawyer to help people navigate the legal world. She loves her work and the people.
Gerald Ray Villarrial has an important goal – to be remembered as someone who cared about people and changed lives through his skill as an attorney.
Jim Dunnam is a Board Certified Specialist in both Civil Trial Law and Family Law. Jim was born and has spent his entire life in Waco.
Merrilee Harmon is a Family Law specialist, Board Certified by the Texas Board of Legal Specialization since 1985.
Vance Dunnam has 60 years of experience as a lawyer in Waco, Texas, handling all types of cases in both the office and the courtroom.
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