Texas LLC Formation Requirements, Forming an LLC in Texas
Articles of Organization:
formation, articles of organization must be delivered to and filed with the Secretary
of State. State law requires that certain information be included in your articles
of organization during
formation. This information must include:
· The company name
· A statement as to the
type of entity formed
· A statement as to the
purpose for which the entity is formed
· The duration of the
if this period will not be perpetual (for a set amount of time)
· The street address
of the registered office and the name and street address of the registered
agent (If you do not have a registered agent, LegalZoom can arrange to be
your legal agent - see below for additional details)
· The name and address
of each organizer
· The signature of each
· A statement as to whether
the company will be managed by a manager or managers and, if applicable,
the name and address of each initial manager or in the alternative the name and
address of each initial member
· The signature of a
manager, member, organizer, fiduciary or trustee and the capacity of the signer.
· Any other relevant
LLC is considered organized once an original
and a duplicate copy of the articles of organization are delivered to the Secretary
of State with the proper filing fee and the Secretary of State determines that they
are in compliance with state requirements. The Secretary of State endorses both
copies but retains the signed original and returns the duplicate copy to the
LLC or its representative. The document
is effective as of the day and time it is filed or if a date and time is indicated
the document is effective as of delayed effective date and time.
formation requires inclusion and/or consideration of the following:
Duration: Perpetual unless otherwise
specified in the articles of organization or other governing documents.
LLC members may adopt an operating agreement to regulate the affairs
of the company, which may also be amended and repealed as allowed by the agreement
or applicable law. The articles of organization may contain restrictions or prohibitions
on the power of the members to adopt, amend, or repeal an operating agreement. The
operating agreement may not conflict with the articles of organization or any other
provisions of law.
Membership: A limited liability
company must have one or more members. Requirements:
· Minimum Number of Members:
One or more
· Eligibility Requirements:
A member must be an individual
· Procedure for Membership:
An individual may become a member by, but is not required to:
Make a contribution to the company
Pay cash or transfer property to the
Assume an obligation to make a contribution,
pay cash or transfer property
A member can resign from a LLC; however, certain prohibitions exist surrounding
the ability of a member to resign from the company.
· A member may not resign
LLC except in accordance with the operating agreement or articles
· A member may not resign
LLC before a minimum term set for membership set out in the operating
agreement or articles of organization
LLC may pursue certain remedies for
any damages suffered by the LLC as a result of the resignation
Contribution: The contributions
of a member to the limited liability company may be in cash, property, promissory
notes, services previously rendered, or other obligation to contribute cash, property,
or contracts for services to be rendered
Do I need two members?
Unlike a corporation which can have as few as one shareholder, most states require
that an LLC consist of two or more members (owners). Recently, however, more states
are allowing single-member LLCs. Please note, however, that the IRS may treat a
single person LLC differently than an LLC with more than one member.
Are the members of an LLC responsible for
Ordinarily, only the LLC is responsible for the company's debts, thus shielding
the members from individual liability. However, there are some exceptions where
individual members may be held liable:
Where an LLC member has personally guaranteed the obligations of the LLC, he or
she will be liable. For example, where an LLC is relatively new and has no credit
history, a prospective landlord about to lease office space to the LLC will most
likely require a personal guarantee from the LLC members before executing such a
Alter Ego Liability:
Very similar to the judicial doctrine applied to corporations where a court may
hold the individual shareholders liable where the business entity is merely the
"Alter Ego" of its shareholders, a member of an LLC may also be held liable for
the LLC's debts if the court imposes its "alter ego liability" doctrine.
Must I hold LLC meetings?
Although a corporation's failure to hold shareholder or director meetings may subject
the corporation to alter ego liability, this is not the case for LLCs in many states.
In California, for example.an LLC's failure to hold meetings of members or managers
is not usually considered grounds for imposing the alter ego doctrine where the
LLC's Articles of Organization or Operating Agreement do not expressly require such
Who votes in an LLC?
Ordinarily, voting interest directly corresponds to interest in profits, unless
the articles of organization or operating agreement provide otherwise.
Can I sell Member Shares?
Transferability: In most jurisdictions, no one can become a member of an LLC (either
by transfer of an existing membership or the issuance of a new one) without the
consent of members having a majority in interest (excluding the person acquiring
the membership interest) unless the articles of organization provide otherwise.
How long does an LLC endure?
Although many states now allow an LLC to have a perpetual existence, LLC's traditionally
were required to specify the date on which the LLC's existence will terminate. In
most cases, unless otherwise provided in the articles of organization or a written
operating agreement, an LLC is dissolved at the death, withdrawal, resignation,
expulsion, or bankruptcy of a member (unless within 90 days a majority in both the
profits and capital interests vote to continue the LLC).
Do I need an Operating Agreement?
To validly complete the formation of the LLC, members must enter into an Operating
Agreement. This Operating Agreement may come into existence either before or after
the filing of the Articles of Organization and may be either oral or in writing
in many states. We suggest EVERYONE put it in writing.
What is a Registered Agent?
Almost ALL jurisdictions require that the corporation designate a registered agent
for service of process. However, in most cases, anyone who has a street address
(NO PO BOXES) within the state of incorporation may act as a registered agent for
MyCorporation.com can select a registered agent service for you if you are in need
of such services. Persons who require our registered agent services are usually
those who are incorporating in one state (
for example) and operating a business in another state (
Why must my business designate a Registered
Any entity conducting business within virtually every state must register to do
business in that state, designate and maintain a registered agent, and in some cases
a registered office.
What is the purpose of a Registered Agent?
A Registered Agent acts as the representative for accepting Service of Process served
upon the company within the jurisdiction of any state where the company conducts
business. Service of Process is broadly construed to include any legal proceeding,
legal notice, or official government communication presented to the company while
it is within the jurisdiction of a state.
What happens if my company fails to register
or designate and maintain a Registered Agent?
The failure, to register and designate a registered agent, may foreclose or hinder
the company's ability to legally enter into contracts and gain access to the state
courts. Moreover, it may subject the company to monetary, civil, and possibly criminal
sanctions. Also, failure to maintain a registered agent may cause your company to
fall out of "good standing" within the state. This will subject your license to
do business within a state to forfeiture, with monetary penalties assessed to reinstate
your company to a "good standing" again.