Small Business Owners, Entrepreneurs, and Start Ups face many important questions. One critical question concerns the structure and governance of their business. A Limited Liability Company is an available business structure under Texas law–what is a limited liability company?
Here are questions for your consideration: Does a Limited Liability Company (LLC) fit your needs as a business or investment structure? Does an LLC structure serve your estate planning goals?
A properly structured Limited Liability Company (LLC) provides you with many benefits. An LLC structure usually limits your financial liability to the amount of your investment. The LLC structure presents choices for tax considerations. You may choose to be taxed as a “pass-through” entity meaning all income is subject to personal income tax. The other choice is tax treatment as a C-Corporation. This means income is subject to corporate taxes initially.
Ownership and management are flexible with an LLC. An LLC may have multiple owners, whose shares are determined by their membership interests. A single member LLC is allowed under Texas law. An LLC may be managed by members or managers including a non-member manager. The LLC’s document for structure and governance is called an Operating Agreement or Company Agreement. You must register an LLC with the Secretary of State’s Office by filing a Certificate of Formation. In the Certificate of Formation, you identify the LLC’s name, form, purpose, location for the initial Registered Office and Registered Agent, and the initial manager. The LLC may have a limited or perpetual existence.
The LLC structure is relatively new under state law. The structure and provides members with flexible ownership and management without many organizational formalities required by law for other structures, such as partnerships and corporations. Also, an LLC can serve a vital complimentary role in your estate planning allowing a smooth succession plan for your business.
Contact Glavy Law for an appointment and learn more about the LLC’s structure and governance as well as the formation steps and associated fees.
