FAQ's
What is a limited liability
company (LLC)?
The LLC is a business entity that offers
limited liability protection and pass-through
taxation. As with corporations, the LLC
legally exists as a separate entity from its owners.
Therefore, the owners cannot typically be held
personally responsible for the debts and liabilities
of the LLC.
The LLC allows for pass-through taxation, as
its income is not taxed at the entity level;
however, a tax return for the LLC must be
completed. Any income or loss of the LLC as
shown on this return is passed through to the
owner(s). The owners, also called members, must then
report the income or loss on their personal tax
returns and pay any necessary tax.
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What paperwork is required to
form a limited liability company (LLC)?
A certificate of organization conforming to Texas
law must be prepared and filed with the state, and
filing fees must be paid.
All you need to do is complete the intake order form
or place an order by phone and we will prepare and
file your certificate of incorporation. It’s
simple, just fill out the intake form or call our
office at 713-524-1920 to get started.
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Who can form a limited
liability company (LLC)?
There are no restrictions as to who can form an
LLC. Anyone who prepares and files the articles
of organization or certificate of organization with
the appropriate state agency is eligible to form an
LLC.
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What should I name my limited
liability company (LLC)?
Choose the name of your LLC carefully. It is
very important that your name portray the image you
want for your new company. Legally, the name you
select must not be "deceptively similar" to any
existing company in Texas.
For example, if an LLC named Flower LLC
exists in your state, you probably would not be
allowed to name your business Flour Limited
Liability Company. It is possible that the name you
select will not be available; therefore, we ask for
a second choice on the LLC order form.
Additionally, Texas requires that the name you
select show you business is an LLC, by
including the words "Limited Liability Company" or
the abbreviation of "LLC."
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How many people are needed to
form a limited liability company (LLC)?
The IRS does allow one member LLCs to qualify
for pass-through tax treatment.
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How is a limited liability
company (LLC) taxed?
A state-registered LLC can be taxed for
federal income tax purposes as a partnership. Under
the check-the-box rules included on IRS Form SS-4,
an LLC can elect partnership status to avoid
taxation at the entity level as an "association
taxed as a corporation." If an LLC is not
taxed as a partnership, it will be taxed at the
entity level similar to a standard or C corporation.
The state income tax treatment of LLC profits
and losses may or may not mirror the IRS tax
treatment depending on the state. For specific
information on your state's rules, visit your
state's website.
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What is the organizational
structure of a limited liability company (LLC)?
An LLC is owned by its members. They are
analogous to partners in a partnership or
shareholders in a corporation, depending on how the
LLC is managed. A member will more closely
resemble shareholders if the LLC utilizes a
manager or managers, because then the members will
not participate in management. If the LLC
does not utilize managers, then the members will
closely resemble partners because they will have a
direct say in the decision making of the company.
A member's ownership of an LLC is represented
by membership interest, just as partners have
interest in a partnership and shareholders have
stock in a corporation.
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How is a limited liability
company (LLC) managed?
An LLC may be managed by its members (owners)
or by selected managers.
If the LLC is to be managed by its members,
it operates much like a partnership. Each member has
an equal say in the decision making process of the
company.
If the members choose, they may elect a manager or
managers to act in a capacity similar to a
corporation's board of directors. These managers are
in charge of the affairs of the LLC.
Member management is the normal default rule of
state law. This means that if managers are not
selected in the articles of organization, the
members will direct the affairs of the LLC.
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Should I choose a limited
liability company (LLC) or an S corporation?
While the S corporation and LLC both have
pass-through taxation, the S corporation lacks the
flexibility of an LLC in allocating income to
the owners.
An LLC may offer several classes of
membership interest while an S corporation may only
have one class of stock.
Any number of individuals or entities may own
interests in an LLC. However, ownership
interest in an S corporation is limited to no more
than 100 shareholders. Also, S corporations cannot
be owned by C corporations, other S corporations,
many trusts, LLCs, partnerships or
nonresident aliens. Finally, LLCs are allowed
to have subsidiaries without restriction.
Contact us at 713-524-1920 for advice regarding
which entity is best for your particular situation.
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How do I get started setting
up a limited liability company (LLC)?
After you decide to form a Texas LLC, your
certificate of organization must be filed with the
state and initial fees must be paid. If you choose
the Baba Law Firm to form your LLC, we will
complete these administrative tasks quickly and
effectively.
After your certificate of organization is filed,
your LLC should have an organizational
meeting where an operating agreement is adopted,
interest certificates are distributed to members and
other preliminary matters are completed.
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What is Rush Filing service?
As the quickest way to form your business, the Baba
Law Firm offers a Rush Filing Service option to gain
state approval of your formation in either the same
day (depending on time of order) to 24-48 hours. We
strive to complete your order the same day in most
situations. This high priority service only costs an
additional $79 to your order. BizFilings' Rush
Filing service allows clients in certain states to
decrease their filing time frame to 24 to 48 hours.
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How soon will I receive my
documents?
It is important to note that the 24 or 48 hour
filing time is for the formation only. It typically
takes longer for the states to produce the filed
documents. Once we receive your documents from the
state, we will ship them to you via FedEx Overnight
delivery. This means you should have your documents
in hand anywhere from just a few days to one week
after filing.
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Why should I include Rush
Filing with my formation service?
Using the Baba Law Firms’ Rush Filing service
secures your name and filed date in as little as 24
hours. This service is particularly valuable when
you need proof of formation to secure a contract or
open a bank account.
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