My LLC was the little engine that could, growing from a grassroots project into a successful small business. But taxes and rent, regulations and workforce issues managed to make me take a second look at where to operate my LLC. I decided to move my LLC to Texas for so many reasons. My family was thrilled with the opportunity to move to a thriving community, live in a bigger home, and have access to schools, sports, arts, and culture in Texas. As a business owner, I was happy with all of the opportunities that moving my LLC to Texas afforded me. However, I did have some questions when it came to bringing my business to the Lone Star State. Read on to learn the answers to 11 questions I had when I decided to move my LLC to Texas.
1. What are Texas business taxes like? It’s no secret that Texas is a business-friendly state. In Texas, there’s an annual franchise tax that is assessed on all businesses. This franchise tax is based on the LLC’s assets and revenue. If an LLC sells taxable goods or services, it must collect and pay sales tax to the state. For income tax, LLCs that are sole proprietorships or partnerships don’t have to pay income tax, but members or owners of the LLC must pay income tax on profits. If an LLC has employees, it must pay employer taxes like Social Security and Medicare taxes. Work with a good tax accountant to learn more about taxes and costs in Texas.
2. What do I have to file to set up my LLC in Texas? To get your LLC going in Texas, file a Certificate of Formation; you may want to draft an Operating Agreement as well to outline the ownership and management structure of your LLC (though this is not required). The cost to form an LLC in Texas is around $300, and there is no annual registration cost. You’ll need to name your LLC in Texas, and file formation documents online.
3. What are some other costs I’ll need to take care of to set up my LLC? The cost of setting up shop in Texas will depend on whether you are transferring your LLC or domesticating your LLC in the state of Texas. Some items to budget for include: registration or conversion fees, permits, licenses, and rent.
4. Will my business need a new name in Texas? You’ll need to choose a name for your Texas LLC, and it must not be the same as any other business entity in the state. The Texas Secretary of State website has a place to search for available business names.
5. What about legal notices for my LLC? You’ll need to appoint a registered agent—person or business entity—that will receive legal notices on behalf of your LLC in Texas. The physical address of the registered agent must be in Texas.
6. How do I get an official tax number in Texas? It’s essential to get an Employer Identification Number (EIN) from the IRS. EINs are 9-digit numbers that identify your LLC for tax purposes, and you can get one by applying online or by mail. If you already have an EIN, work with the IRS to let them know about your relocation to Texas.
7. Will there be a good pool of potential employees in my new location? Texas is a wealth of resources, and a strong workforce is one of them. Setting up my LLC in a town near a larger university has meant that there is a constant flow of highly educated people entering the workforce each year. There are so many schools throughout Texas and so many business opportunities throughout the state; the pool of employees is skilled and strong.
8. What kind of protection do LLCs have in Texas? In Texas, LLCs have limited liability protection. The state helps to protect LLC owners from personal liability for most kinds of business debts or lawsuits.
9. Will I have to run annual meetings with minutes for my LLC? There’s no requirement for LLCs to hold annual meetings with detailed minutes like corporations often have to do. There are also no restrictions on how many members an LLC can have.
10. Do I need to file an annual report for my LLC in Texas? Only certain entities file annual reports with the Secretary of State in Texas. LLCs that are subject to franchise tax laws need to file annually with the Comptroller of Public Accounts. As part of the annual tax franchise reports, the LLC files a public information report.
11. What resources are available to help me get started with an LLC in Texas? If you were relocating anywhere other than Texas, you might have to figure out many business details by doing research on your own. The Texas Economic Development Connection offers comprehensive information on moving a business to Texas.
One phone call to the Texas Economic Development Connection can help you to gather details you need to get started with moving your LLC to Texas. Reach out by calling 214-775-0617.