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Types of LLC in Texas That You Should Know (2024)

Max Smith

Reading Time: 6 minutes

Do you know the different types of LLC in Texas? You should know about LLC types to create a new LLC in Texas. It will help you to decide which type of LLC is the best for you and your business.

An LLC may be a perfect business model if you are dealing with small businesses or startups. However, what kind of facility or benefits do you think it’s essential to realize? Every type of LLC has its own features or benefits to offer. 

Without further ado, let’s go deep down to understand LLC types in Texas. 

Here are the 8 types of LLCs that are available in Texas to create and run.

1. Single-member LLC for the Sole Proprietorship or Solo Entrepreneur

If you only own your business, a single-member LLC would be the best option. Additionally, you can operate your business as a separate legal entity. 

With a single-member LLC, you can enjoy liability protection and tax advantages. However, you must remember that you are personally responsible for your business debts and obligations.

2. Multi-member LLC (Member-managed or Manager-managed)

A multi-member LLC is the perfect choice for your business if it has more than one owner or several general partnerships. Likewise, your company’s owners must agree on and sign a particular document. For instance, you may create an operating agreement to govern the business’s operation. 

Furthermore, you and your partner can get equal liability protection. However, you must ensure that your properties do not interact with the companies’ debts to avoid bankruptcy.

3. Domestic LLC and Foreign LLC

A domestic LLC in Texas that helps you operate your business in the home state where you started the business. For example, you start a bakery business in Texas, and all your customers are local. In this case, your bakery would be a domestic LLC in Texas because you conduct your business within the state where it was started. 

However, a foreign LLC helps when you start a business in one state but operate the business in another state. For example, if you start a bakery business in Texas but then open a branch in California, you need to own a foreign LLC in California.

Furthermore, a foreign LLC will be best for you if you tend to grow your business in another state. Moreover, you can find business-friendly laws, cost-effective registration, and lower tax rates with this type of LLC in Texas.

4. Series LLC

A series LLC is a particular type of business structure that allows you to have multiple smaller LLCs under one larger parent LLC. In Texas, this type of LLC allows you to separate the risk and liability between the different units, so problems in one part of your business don’t affect the others. 

Each fund in your business will have its own asset base. The way this series plays off this division among the parties serves the group’s interests and provides the reality that other people are in the shares of this debit.

5. L3C Company (Low-profit LLC)

With this particular type of LLC in Texas, you can make good profits and fulfill your company’s purpose. If you are an entrepreneur, it will be the best LLC for your startup business entity. 

Furthermore, you want to attract regular business investment and charitable donations. In that case, you can offer promising marketing strategies and show the advantages of both profit and non-profit organizations. 

Overall, an L3C can positively impact your business by giving you a handsome profit. Still, you must be aware that it may come with risks and uncertainties.

6. Anonymous LLC

If you want to maintain privacy, create an anonymous LLC. This helps to keep the names of business owners, managers, or members private.  

Furthermore, by maintaining privacy, you can minimize legal risks and liability for the owners of anonymous LLCs, also known as confidential LLCs and private LLCs. 

7. Restricted LLC

Suppose you want to avoid paying high taxes while transferring assets to family members. In that case, a restricted LLC will be ideal because it lowers your tax rates. 

However, this benefit is only available if you are local to Nevada City, Texas. It isn’t meant to conduct traditional business dealings and is only helpful for people with multiple properties.

To set up a restricted LLC, you must carefully fulfill the articles of organization of the tax department with the right tick in the correct box when you create the business. Besides, the rules around restricted LLCs are flexible and can be changed over time if needed.

8. PLLC and LLC

Suppose you are a professional service provider like an accountant, lawyer, or doctor and want to trade in Texas. In that case, you must own a license, like a Professional Limited Company (PLLC) or Liability Company (LLC) from the State Regulatory Board of Texas. 

Additionally, if you want to continue your business in your profession, you may have to follow extra rules and regulations. 

With this type of LLC in Texas, you can get the same benefits as a regular LLC. For instance, protecting the owners from personal liability and allowing pass-through taxation from the state. 

Besides, you may also pass the profits and losses on to the individual tax returns.

Conclusion​

In the end, you might find a suitable one among the different types of LLC in Texas. Each type of LLC offers unique benefits and caters to specific business needs. 

Whether you are a solo entrepreneur, part of a partnership, or a licensed professional, there’s an LLC structure tailored to your specific needs. All you need to do is find out which best suits your business, situation, and goals.

So, take the time to explore your options, consider your objectives, and consult with professionals to select the ideal LLC structure that sets your business up for success in Texas.

Lastly, do you know the pros and cons of forming an LLC in Texas?

Key Points

  • A single-member LLC is ideal for sole proprietors. It offers liability protection and tax advantages while requiring personal responsibility for business debts.
  • A multi-member LLC is suitable for businesses with multiple owners or partnerships. It provides liability protection, but you must sign an operating terms agreement to avoid financial complications.
  • Domestic LLCs operate within the home state, while foreign LLCs are for businesses operating in another state. Both offer benefits such as favorable laws and tax rates.
  • Series LLC allows you to protect different business units of your multiple smaller LLCs under one parent LLC, separating risks and liabilities.
  • L3C Company is designed for entrepreneurs balancing profit and social impact, attracting business and charitable investments.
  • Anonymous LLC has a high ability to maintain privacy by concealing owner identities, reducing legal risks and liability.
  • Restricted LLC helps you by lowering tax rates for asset transfers to your family members. It suits those with multiple properties, primarily in Nevada City, Texas.
  • PLLCs and LLCs are required for licensed professionals like accountants and lawyers in Texas. They offer benefits similar to regular LLCs but with additional regulatory requirements.
  • Each type of LLC has its own tax implications, ranging from pass-through taxation to corporate taxation.
  • Each state governs LLCs differently, recognizing various types and imposing unique rules and regulations.

Frequently Asked Questions

What is the Texas Secretary of State file number?

The Secretary of State (SOS) file number is a unique 10-digit number. It’s given to each business company or organization for name reservation. The number is preprinted, and you cannot change it. It’s also known as a Charter Number.

Can I file an LLC in Texas application online?

Visit the Secretary of State’s official website and apply online for your LLC. The filing fee may be $300, and the credit card processing charge may be $8.10. The online application takes 2 to 12 business days. 

How to start an LLC in Texas for free?

If you are a veteran forming a new LLC, you may not pay any filing fees and franchise taxes for the first five years. Otherwise, you must pay the filing fees and cannot avoid them. 

Max Smith - LLC Formation

He is a seasoned entrepreneur and legal expert at LLC Formation Hub. With a stellar track record in both business and law, Max simplifies the complexities of LLCs. His practical insights, featured on LLC Formation Hub, empower entrepreneurs across the USA. Max merges business finesse with legal acuity to guide businesses toward success.


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