The great state of Texas became a part of the United States officially in December of 1845. It was around that time that a movement of westward expansion had taken hold across the nation. Many settlers set out for opportunities on the West Coast. Now, it seems that almost 200 years later, there has been a shift in movement across the nation. Texas has become one of the nation’s top locations for companies to relocate. Many top Fortune 500 companies and industry leaders have made their move to Texas. Some of these companies include AT&T, CBRE, and Toyota.
There are so many good reasons to relocate to Texas, but the process of moving a business can come with a little extra footwork and responsibility. Are you relocating your company to the Lone Star State? Texas happens to be one of the most business-friendly states in the union. Read on to learn more about 7 FAQs about transferring an LLC to Texas.
How do I transfer my LLC to Texas? When it comes to relocating an LLC to Texas, there are a few different options to consider. There are pros and cons for each option in addition to different tax implications or startup costs. Consider the following:
You could register your LLC as a foreign entity, but note that this option is advised more for temporary moves or expansions to Texas.
Another way to transfer an LLC is by converting or domesticating your out-of-state LLC to a Texas LLC.
A third way is to form a new entity and dissolve the out-of-state entity.
Finally, you could work to set up a Texas LLC, and then you could make moves to merge your out-of-state business into that.
What kind of taxes can an LLC expect to pay in Texas? Texas is known as a tax-friendly state. LLCs are considered to be partnerships or sole proprietorships; this means that LLCs can take advantage of pass-through taxation. For this, the income and expenses of an LLC pass through the owner’s personal tax returns. LLC owners pay federal income tax on income that comes from the LLC, but they do not pay state income tax. There is a franchise tax on any entity doing business in Texas; this will be based on the profits of your LLC. A few other tax related costs include an unemployment tax as well collecting and paying a sales tax on goods and services sold to Texas customers. Be sure to consult with tax attorneys for professional help with this as well.
What are some of the costs of starting up an LLC in Texas? Whether you are transferring or domesticating an LLC in the state of Texas, your cost will depend on your company’s particular situation. Some of the costs that you will incur will include: registration or conversion fees, permits, licenses, rent, and more.
Does an LLC have to file an annual report with the Texas secretary of state? Only certain types of entities file annual or periodic reports with the secretary of state in Texas. LLCs that are subject to state franchise tax laws should file annually with the Comptroller of Public Accounts. Then, as part of the annual tax franchise reports, the LLC files a Public Information Report (PIR). The PIR lists the names and addresses of people who are officers, directors, and/or managers when the report is filed.
Are there restrictions on who can be an owner, governing person, or officer of a Texas professional entity? There are some restrictions regarding LLC ownership in Texas. This depends on the type of professional entity. An owner or governing person can be a professional individual or a professional organization; however, only a professional individual can be an officer. In this case, a “professional individual” is an individual who is licensed to provide the same professional service that is provided by that professional entity. A “professional organization” refers to a person other than an individual that renders the same professional service as the professional entity only through owners, members, managerial officials, employees, or agents, each of whom is a professional individual or professional organization.
Can I form a non-profit LLC in Texas? In Texas, nonprofit LLCs can operate, however they are not automatically exempt from state or federal taxes. The determination of tax-exempt status for a nonprofit LLC is done by the IRS.
Is there help available for someone wanting to transfer an LLC to Texas? Yes! The Texas Economic Development Connection can provide business owners with accessible, comprehensive information about moving an LLC to Texas. In addition to information about business incentives that are available to Texas companies, the Texas Economic Development Connection can also point you in the right direction as far as where in Texas to establish your LLC. A highly experienced team of corporate relocation consultants can help your company to identify the best opportunities available in Texas.
Are you ready to move your LLC to Texas? Learn more at the Texas Economic Development Connection’s website, or reach out to them by phone at 214-775-0617.