Texas LLC Formation

Real Estate Law For Current or Prospective Property Owners

Call 972-960-1850 Contact Us

Texas LLC Formation

Real Estate Law For Current or Prospective Property Owners

CALL 972-960-1850
CONTACT US
Board Certified Residential Real Estate Law
American Bar Association
State Bar of Texas
Dallas Bar Association
AV Preeminent rated by Martindale-Hubbell

Forming an LLC in Texas

A Limited Liability Company (LLC) is the natural evolution a Sole Proprietorship or a small enterprise may take to protect their assets and maximize tax benefits.  Forming an LLC in Texas has many advantages.

The most distinct advantage of a Limited Liability Company and the most concerning disadvantage of a Sole Proprietorship or General Partnership is personal liability of assets for the owners of the business.

Starting an LLC

If you decide to start an LLC in Texas, it is important to keep in mind what the benefits are compared to starting or staying as a Sole Proprietorship.

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MAIN DIFFERENCE BETWEEN A SOLE PROPRIETOR AND AN LLC

SOLE PROPRIETOR

A sole proprietor may be personally liable for all actions of a company including the debt.  This means the non-homestead personal assets of the owner such as property, homes, personal accounts and anything of value potentially could be responsible for the debts and claims against the business.

These personal assets may potentially be used to recover obligations that are business-related.

LIMITED LIABILITY COMPANY

A Limited Liability Company (LLC) is considered a legal entity that is separate from the business owners and, when properly created and operated, may protect the owner or owners from personal liability for the debts and claims against the business.  The maximum loss a business owner might endure is usually the amount invested in the LLC or the LLC’s assets. 

In other words, an LLC protects personal assets, whereas a Sole Proprietor’s assets may not be protected.

Brown open sign in front of a business.

GOOD TO KNOW ABOUT SETTING UP AN LLC IN TEXAS

  • Forming an LLC in Texas can be inexpensive and relatively simple.
  • There are tax advantages including both the state and federal levels.
  • Unlike a Corporation, regular meetings of the owners are not required.

Note: An LLC can be considered a kind of a hybrid between a Corporation and a Sole Proprietorship.  Simply put, it benefits from the liability protection afforded a Corporation with the tax advantages of a Sole Proprietorship.

FUNDAMENTALS OF A LIMITED LIABILITY COMPANY

  • It is referred to as an artificial being created by the state, a hybrid between a corporation and a sole proprietorship.
  • Once it has been properly created, it will have its own tax identification number, bank accounts, taxes, address, owner(s) and manager(s).
  • It is owned by its member(s) and in most cases, it is managed by a manger, who is usually a member.
  • Unlike a corporation, regular meetings of the owners are not required.
  • It will need to file its own tax return each year.
  • It is very similar to a corporation, but is generally considered easier and less formal to operate.

PRIMARY BENEFITS OF FORMING AN LLC IN TEXAS

  • Asset protection
  • Privacy
  • Estate and tax advantages
  • Flexibility
  • Raising capital
  • Marketability
  • Less formal than a corporation

WHEN SHOULD YOU CONSIDER SETTING UP AN LLC

We highly recommend you set up an LLC before you start a business.

If you are already conducting a business, you can convert your existing business to a Limited Liability Company.  If you do, you will need to make sure you transfer the assets and contracts of your existing business to the new company.  You will also need to set up new bank accounts.

If you are concerned about liability, you might consider forming an LLC to protect your assets from claims made against your business. Setting up an LLC in Texas will not prevent claims, but it may help you if you are sued. However, there are no guarantees.

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Silver fountain pen writing on paper

LLC FOR REAL ESTATE

If you own rental property, it is recommended that the property be owned by a Limited Liability Company.  This may help protect you from personal liability if something bad should happen on the property, although it will not protect you from all claims. You should always have a general liability insurance policy with high limits for all your property and consider using a separate management company or creating a separate LLC to manage the property.

The LLC is formed by filing a document with the State of Texas. The State of Texas issues a Certification of Filing. 

After you receive the Certificate of Filing, you should:

  • Sign documents prepared by your attorney.
  • Obtain a Tax Identification Number for the Internal Revenue Service.
  • Set up bank accounts.
  • Transfer your real estate to your LLC.
Create an LLC
Board Certified Residential Real Estate Law
State Bar of Texas

Experienced Texas Real Estate Lawyer

Do you have questions about forming a Limited Liability Corporation?  Call and speak directly with attorney Scott Steinbach at 972-960-1850. There is no fee for your call. Or email your questions to him at scott@steinbachlaw.com.

The Steinbach Law Firm, P.C. prepares documents for your new LLC.

Our fee to prepare the documents to set up your new LLC is $1300. Our fee includes ALL formation documents, not simply the Certificate of Formation.This fee also includes the Secretary of State’s filing fee.

Scott Steinbach is AV Preeminent rated by Martindale-Hubbell.  Peer rated for Highest Level of Professional Excellence.