Starting your own business? Forty percent of new businesses in Texas are organizing as limited liability companies (“LLCs”). Depending upon your particular tax concerns, need to raise capital, and concern with personal liability, an LLC might be advantageous.
What is an LLC?
The LLC is a relatively new business organization that has substantial advantages over other business entities.
What are the advantages of an LLC?
LLCs are advantageous over other business organizations for several reasons. Unlike the Limited Partnership, owners need not trade in control to enjoy limited liability. Unlike S Corporations, LLCs have no restrictions like the number of shareholders that can invest in the corporation or the types of entities that can be shareholders. Unlike C Corporations, LLCs avoid “double taxation.” In short, the LLC can mix and match the better attributes from other business models and morph into whatever the owner desires.
What are the disadvantages of an LLC?
LLCs are subject to the Texas Franchise Tax. Uncle Sam Houston may be entitled to up to 1% of your gross revenues.
Are LLC owners liable for obligations of the LLC?
No. “Members” and “managers” are not liable for the LLC’s obligations except to the extent the company agreement provides otherwise.
Who runs the LLC?
Either its managers or its members run the LLC, depending upon the company agreement. The company agreement may expand or restrict any duties, including fiduciary duties, and related liabilities that a manager, member, officer, or other person has to the company or to a member of the company.
Are membership interests transferable?
Yes.
Can a single individual own an LLC?
Yes.
What are the filing fees?
The State charges $300 for the initial filing fee and $40 to renew each year.
Is there any requirement that the LLC to carry insurance?
No.
