The following information is provided for educational purposes only and in no way constitutes
legal, tax, or financial advice.
For legal, tax, or financial advice specific to your business needs, we encourage you to
consult with a licensed attorney and/or CPA in your state.
The following information is copyright protected.
No part of this lesson may be redistributed, copied, modified or adapted without prior
written consent of the author.
A Limited Liability Company is a hybrid between a corporation and a partnership.
An LLC protect your assets in the event of a lawsuit.
In order to form your LLC, you must file LLC Formation Documents with the Secretary of
State.
Once your documents are approved and sent back to you, your LLC is now in existence
and authorized to do business in the State.
We have spent considerable time to make the details of this video simple and easy to understand.
However, we cover a lot of ground and you are going to hear a lot of new terminology.
We do recommend that after you watch this video, you watch it a 2nd time in order to
fully comprehend all the information provided.
Please make sure you have watched the 1st lesson on researching your LLC's name.
Your desired LLC name must be available for use before you proceed with filing your LLC
Formation Documents.
Your LLC is required to list a Registered Office and a Registered Agent within your
LLC Formation Documents.
The Registered Office is a physical address (it cannot be a PO Box that is located in
the State where your LLC is formed).
A Registered Agent is a person or a company who agrees to accept legal mail and important
documents on behalf of your LLC.
The Registered Agent is located at the Registered Office and is generally accessible during
normal business hours.
As we mentioned, a Registered Agent can be a person or a company who has an address in
the state where your LLC is formed.
You, as an individual, can be your LLC's Registered Agent.
However, your LLC cannot be its own Registered Agent.
For individuals who have an address in the State, it is most common that they serve as
the LLC's Registered Agent.
Having said that, the individual person you choose as a Registered Agent does not need
to be a member of the LLC.
It can be a friend, a family member, or, frankly, anyone you know who agrees to accept Service
of Process on behalf of your LLC.
Service of Process.
"Service of Process" is the delivery of legal mail and important documents sent from the
State or law firm to your LLC.
Correspondence from the State can include items such as Annual Report notices, late
notices, and copies of Formation Documents.
Legal documents can include items such as subpoenas and/or complaints for legal action.
Again, the purpose of designating a Registered Agent is to authorize someone to accept Service
of Process on behalf of your LLC.
Consent to serve as Registered Agent.
Whoever agrees to be a Registered Agent must sign a consent form called "Consent to Serve
as Registered Agent".
You can find this form in the "Downloads" Section below this video.
The "Consent to Serve as Registered Agent" form does not need to be mailed in with your
LLC Formation Documents.
In fact you don't need to mail this document anywhere.
The "Consent to Serve as Registered Agent" form is an "internal document", meaning that
you will just keep it with your business records.
Takeaways: the purpose of a Registered Agent and its Registered office is to be a point
of contact for the State and to accept Service of Process for your LLC.
You or (someone you know) can be your LLC's Registered Agent, so long as they have a physical
address located in the State.
If you don't have an address in the State that you can use, you can hire a Commercial
Registered Agent.
Commercial Registered Agents.
A Commercial Registered Agent is a company that specializes in receiving service of process
on behalf of businesses nationwide.
They typically charge between $100-250 per year.
If you need a Commercial Registered Agent, we have a few recommendations that can be
found below this video with their names, phone numbers, and links to their websites.
Now, let's discuss your LLC Formation Documents.
The name of the LLC Formation Document for the State of Texas is called the Certificate
of Formation.
This document is not complicated and contains basic information, including listing your
Registered office and Registered Agent.
It will also require you to list your LLC's name, and the name and address of the LLC
member or members.
No need to stress,out, we will walk you through the details of the Certificate of Formation
in just a couple minutes and we'll make sure that you get it filled out correctly.
If you need a Commercial Registered Agent, you will first need to hire them, and then
obtain their address before finalizing and mailing your Certificate of Formation.
Submitting your Certificate of Formation.
You will find a filing fee amount, accepted forms of payment, and the address where to
send your Certificate of Formation to below this video.
You will need to mail 2 copies of your Certificate of Formation, along with your filing fee to
the State.
There are no additional cost or filing fees to form your LLC.
Once you mail the filing fee along with 2 completed copies of the Certificate of Formation,
you can expect 2 things: first, within 5-7 business days, the State will send you back
a copy of the Certificate of Formation with a stamp of approval.
Your LLC is now a legally formed business in the State of Texas.
Until you have confirmation your LLC has been officially approved, do not order your EIN
(your Federal Tax ID Number or start to use your LLC for any business purposes.
Second, in approximately 2 months, you will get a letter from the Texas State Comptroller
(the division responsible for tax-related items).
This letter will instruct you on filing your Annual Franchise Tax Report, which all LLCs
in Texas are required to file.
Annual Reporting and Taxes.
Regarding the Annual Reporting requirements, your LLC is required to file 2 documents on
a yearly basis.
The first is the Franchise Tax Report which is filed with the Texas State Comptroller,
not the Corporation Section.
The Corporation Section is the office in which you mail your LLC Formation Documents.
Remember, the Texas State Comptroller is a division that handles tax related-items.
The second is a Public Information Report (or PIR) that must also be submitted with
your Franchise Tax Report.
These reports are not easy to complete yourself.
They are tax documents, and we recommend you get help from your accountant or tax professional
because you will need to decipher gross receipts, dividends, interest, losses gains, and other
financial details.
Even if your LLC does not generate revenue or have business activity within a given tax
year, you will still be required to file this annual paperwork with the State.
We highly recommend that you hire a tax professional when dealing with taxes for your LLC.
In fact, it's a good idea to start looking for a tax professional once your LLC is formed.
So you can find someone who you are comfortable with and will help you grow your business.
We are now ready to fill out the Certificate of Formation.
You can download this document below this video.
Let's get started.
Here we are inside the Certificate of Formation.
This is a 6-page PDF document.
Pages 1-3 have commentary and instructions and details.
Feel free to read through if you'd like, but we have covered all this information in this
video.
I'm going to go down to page 4.
I'm going to begin filling out the Certificate of Formation.
Do note that I have a professional version of Adobe Acrobat.
You may have just a simple version of Adobe Reader, and you may not be able to have as
much functionality to edit and manipulate the document on the computer.
If you can, feel free to fill this document out on the computer, or you can print it out
and then fill it out by hand.
If you do fill it out by hand, make sure that you use a blue or black ink.
Another thing to make an important note of is the top.
you'll see that it says "Submit in duplicate to Secretary of State" with the address and
the filing fee.
What they mean by "Submit in duplicate" is that, basically, you need to fill this document
out twice, so you can either fill the entire document out, make a copy of it in a copy
machine, and then mail that along with the filing fee, or, if you don't have a copy machine,
you're just going to basically print this document out and fill it out twice.
Also, below our video, we have the mailing address for the Texas Secretary of State and
the filing fee.
Right now, the time of this recording, this P.O Box that you see in the video is the address.
However, you might be watching this video in the future so please go ahead and look
below this video and make sure that the address or, rather, look below this video and use
the address that we mentioned there as that's the most up-to-date mailing address.
All right, let's get started.
Under Article 1, I'm going to go ahead and list my LLC's name.
Remember to include the designator "LLC" or "L.L.C".
Also, in this example, I've used a comma.
The comma is not required so it's a personal preference.
You can use one if you'd like, or you can leave it out if you prefer.
Let's go down to Article 2 where we're going to list our Registered Agent and the Registered
Office.
You're first going to select "A" or "B", and then put an address in Section C. You're going
to select Section A if you used a Commercial Registered Agent.
If you, or someone you know is going to be the Registered Agent, you're going to list
their name in Section B. Then you list their address in Section C. I'm just going to go
through both examples real quick.
So let's say that you or someone you know is going to be the Registered Agent for the
LLC.
I'm going to go ahead and check off or put an X in the box next to "B", and I'm going
to go ahead and list myself.
I'm going to be the Registered Agent for this LLC in this example.
"John Doe", and then I'm going to go ahead and fill my address in Section C.
This is what Article 2 will look like if you or someone you know is going to be Registered
Agent: you're going to have checked off "B", list their name, and then their mailing address.
Let's see what this Section would look like if you used a Commercial Registered Agent.
Let's say that I've hired Northwest Registered Agent as a Registered Agent for my LLC.
I'm going to go ahead and check off "A", and I'm going to list their name on this field
here.
And now I'm going to list their address in Section C. Don't worry that they don't actually
have a street address.
Because they're an authorized Registered Agent with the State, this is their actual street
address.
Now, 1 thing: you're not going to have Section A and Section B checked off together.
Again, it's "A" if you're using a Commercial Registered Agent, or "B" if you or someone
you know is going to the Registered Agent for the LLC, and in Section C, you list the
address.
Let's go down to Article 3 ("Governing Authority").
In this Section.
you're going to check off Box B to denote that your LLC will be run by its own members.
You can see here "the limited liability company will not have managers".
These are external people that run your company and instead, the company will be governed
by its members and their names and addresses are below.
You basically have 3 boxes in Article 3 for the names and addresses of the LLC's members.
If you're a Single-Member LLC (which in this example I am), you're just going to list your
name and address in this box.
If you have multiple members, again you're going to list their names and their addresses
in "Governing Person 2" and the box for "Governing Person 3".
I'm going to go ahead and fill out "Governing Person 1" right now.
All right, I now have Article 3 complete.
Again, remember, if you're a single member, just going to have someone in "Governing Person
1", or if you're Multi-member, you're going to list out all those members in the boxes.
All right, Article 4 "Purpose".
"The purpose for which this company is formed is for the transaction of any and all lawful
purposes for which a limited liability company may be organized under the Texas Business
Organizations Code".
And in this case, because you have no supplemental provisions or information, Article 4 you can
just leave blank.
All right, let's go down to the next section of this document.
We're now on the final page of the PDF, and at the top I'm going to list the Organizer
(which is myself), the person forming the LLC, and I'm going to include my name and
address.
This will most likely be your own personal information.
Once that is complete, I'm going to go down to the "Effectiveness of Filing".
You're going to check off Box A (this document becomes effective when filed with the secretary
of state).
Now, I'm going to scroll down to the Execution Section.
This section is quite simple.
You're basically going to list the date on the left, you're going to sign on the 1st
line, and then write your name on the line below.
Regarding the date, you can type the date out, or write the date out, you know, such
as February 15th, and then the year, or you can write "2/15/the year".
Either 1 is acceptable.
Now, if you're forming your LLC in December and you don't actually need to be doing business
this month, it's best to go ahead and date the document in January of the following year,
because if you form your LLC and it's approved in December, you actually have to file a tax
return for that year and it's a little bit more of a headache in terms of paperwork so,
if you can wait a couple more weeks, we recommend going ahead and filing in January if it's
December the time you're watching this video.
Also a lot of people do ask about the date (if it needs to be the exact date that they
drop the documents in the mail).
It doesn't need to be the exact date, but you cannot back-date or forward-date this
document (I would say more than a couple days).
1 other thing to make note of here, is that this document does not need to be notarized.
Again, you'll simply fill it out on the computer, and print it out (or print it out and fill
it out by hand), and then simply send this along with your filing fee to the State.
And that wraps up the Certificate of Formation.
Again, down in "Execution" you date, sign, and list your name.
Remember to include 2 copies of the Certificate of Formation and your filing fee, and make
sure check the address and the filing fee amount below this video, send those 2 documents
and your filing fee to the State, and within 5-7 business days you're going to receive
back these documents with a stamp of approval.
And that concludes this lesson.