Lesson: Terms to know before starting an LLC

Limited Liability Company

An LLC is a type of business structure that combines the features of a partnership (low taxations) and a corporation (limited liability). It will provide many more benefits apart from these. One small business owner can easily form a Texas LLC and complete the proceedings. LLC formations Texas are becoming popular as there is a lot of flexibilities in the operation of the companies. Some of the benefits include the protection of private assets of all the members in every situation and the equality of power in multi-member LLC. 

Distinguishing name

The name is the identity of your organization. But you should not set a name that resembles any other pre-existing names in your region. As there are countless numbers of LLCs in Texas, you should check for the business directory from the State’s official website. If your name does not resemble any of the listings, it is a distinguishable name, and you can proceed with that. 

Articles of organization

You should send all the details like, the name and address of your company to the secretary of the State to officially form an LLC. You should include the details of all the members in relation to the company. This set of articles describing the company is known as articles of organization, and the State should approve them to allow your LLC to operate legally. 

Registered agent

Every LLC formation will include the transfer of paperwork between the LLC and the State office. There should be a person who is responsible for getting all the notices and summons from the State office and delivering it to the company. Anyone can become a registered agent of the company if he is above 18 years of age. There will be some commercial companies offering this as a service. You would have to pay a small fee for this service, but the output will be clear and satisfying. 

Operating agreement

An operating agreement is the documentation of all the processes and procedures happening inside the company. It will include the details of the powers assigned to all the members, along with the percentage of shares they will get from the profits of the LLC. Every LLC will keep a copy of this operating agreement to tackle any issues with the members in the future. 

Professional Liability Company

If you are a doctor or an attorney looking to practice as an LLC, you cannot apply for the State office as other companies. There will be a set of requirements and permissions to get approval from the State office to become an LLC for a specific profession. Once the articles are approved, you can form an LLC for your profession. 

Member-managed LLC

Most of the LLCs will be consisting of more than one member. In these companies, the power will be distributed among all the members, along with the profits of the company. Every member will be acting in the decision-making processes and other vital actions of the LLC.