How to select a name for a McKinney, Texas LLC? To set your business up for success, the LLC name should have solid marketing potential. It also needs to follow the legal requirements of Texas.
Section 5.5056 of the Texas Business Organizations Code requires Texas LLC names to include one of the following:
You don’t want to have your business confused with others. Search the Texas State Comptroller’s Taxable Entity Search to verify the name is unique.
Avoid using offensive terms, illegal activities, and anything indicating involvement in strictly-regulated businesses. See the Texas rules for business entity names for specific examples.
Even if you don’t want a website immediately, it’s wise to investigate the domain names (URLs) related to your LLC name. If you don’t, someone else could purchase it to resell at a significant markup.
Doing-business-as names (DBAs) allow you to operate under a name different from the LLC. For example, “McKinney Fermented Drinks LLC” could operate under “McKinney Beers and Ciders.” If you get overwhelmed about selecting the perfect LLC name, remember that you can select a DBA name to operate.
What is a registered agent? In Texas, every LLC must appoint a registered agent as the main point of contact for the business. It is the contact for legal service of process, tax communications, and other notifications.
The service of process is the paramount role of the registered agent. If anyone brings a lawsuit against your LLC, they send legal notices to the registered agent’s address. It’s important to maintain a presence at the registered agent’s address.
Business owners may appoint themselves as registered agents. Doing so comes with the following advantages and disadvantages:
Some of the disadvantages include:
We recommend using a registered agent service to mitigate these risks. Costing around $100-$150 per year, the service receives important notices and keeps your address confidential. Attorneys can charge up to $500 per year to serve as registered agents.
If you choose to start your LLC by using a business formation company, they often include a registered agent service in their packages. Feel free to take a look at our registered agent recommendations article for more information.
How do you file a Certification of Formation for a McKinney, Texas LLC? It’s time to grab some coffee if you’re dozing off because this step is critical to forming an LLC in Texas. Filing the Certification of Formation converts a business from an idea to a registered entity. Other states call this the Articles of Organization.
Although some people think only an attorney can complete this task, it’s likely more straightforward than you think.
The Texas Business Organizations Code Section 3.005 specifies what should be in a Texas LLC Certificate of Formation. It needs to include the LLC name, purpose, and duration. Plus, it has the contact information for the registered agent and the people forming the LLC. The Texas Secretary of State provides a fill-in form to make this process painless.
Once complete, submit your Texas LLC Certificate of Formation. There is a $300 filing fee for McKinney LLCs, as described in the Texas Secretary of State’s fee schedule.
You can also review the estimated processing times, which can be up to 72 business days for documents submitted by mail or fax. Shorten the delay to as little as 10 days through expedited processing and filing electronically through the SOSUpload portal.
The Secretary of State will process the application and issue an acknowledgment of the filing. Upon receiving the acknowledgment, you can celebrate that your McKinney LLC now exists and can do business. But don’t stop here.
To save time and avoid the hassle of LLC filings, all seasoned entrepreneurs use LLC formation services. For recommendations, check out our article on best LLC services.
How to draft an operating agreement for a McKinney, Texas LLC? We encourage every business owner to create an operating agreement. This private contract depicts the rules by which your company does business. Without one, a McKinney LLC falls back to the Texas laws that might not align with your interests.
Take the time to draft and execute an operating agreement for your Texas LLC. It customizes the rules according to your business needs and expectations, including:
Unlike some states with mandatory requirements, creating an operating agreement for an LLC in McKinney, Texas is not required. You do not need to file it with the state. They are private contracts between the LLC members.
Experienced business owners complete this vital step to protect their business and interests. We recommend using one of the best LLC formation services, which provides operating agreement templates for as little as $50.
How to obtain an EIN for a McKinney, Texas LLC? Employer Identification Numbers (EINs) are numbers used by the IRS to track tax information and payments. They’re like social security numbers used for individuals.
Not all McKinney LLCs need to get an EIN, but many do. The IRS stipulates that an LLC needs an EIN if it has:
Even if none of the above apply, we recommend getting an EIN for any McKinney LLC. Some states require one to file taxes. And banks need an LLC’s EIN to open a business bank account.
Obtaining an EIN is a free, painless process completed online through the IRS. It should only take a few minutes to apply. There is no reason to pay to have a third party file for you unless it’s part of a wider LLC formation package.
Read More: How to get an Employer Identification Number in Texas
Every new business must be mindful of state and city-level licenses or permits. Failure to apply for and obtain any necessary license can result in serious consequences. It is vital to review the license and permit laws before starting your business.
For most Texas LLCs, a state-level general business permit or license is not required. But Texas issues licenses for specific types of businesses. These are highly-regulated industries, such as medical, legal, and financial professionals.
Like the state of Texas, McKinney does not require a general permit or license to operate a business in the city. But for businesses engaged in some activities, a McKinney permit is required, such as:
We recommend contacting the City of McKinney to make sure your permit needs are covered. Operating a business that fails to have proper permits could be disastrous for your new LLC.
Good leaders know that trying to do everything on their own is far from ideal. Instead, you should learn from the experience of those around you. This will allow your new business to find quick and enduring success.
McKinney is full of incredible groups dedicated to helping businesses of all types get ahead. While everyone is strapped for time, taking a moment to engage with these groups can be well worth the investment.
Here are some of the best organizations that can help get your business off the ground:
Most importantly, having an LLC will ensure your personal assets are protected if your business cannot pay its debts. Running your business through an LLC can also provide you with better tax treatment. In addition, LLCs have fewer and less complicated reporting requirements compared to other types of businesses, making them particularly suitable for smaller businesses.
It is not strictly necessary to form an LLC in order to start a business. You can engage in business as a sole proprietorship instead. However, in that case, your personal assets may be at risk if your business takes on too much debt or loses a lawsuit in court.
It doesn’t cost much to set up an LLC for your business. In most states, you will need to pay less than $150 to register your new LLC with the local state authorities. In some states, you may need to pay some additional costs later on, for example, when filing an annual report or filing for a DBA.
The time it takes to have your LLC approved can vary wildly depending on the state, the filing method you used and if you opted for expedited filing. In some states, you can have your LLC approved in as little as one day, while in others, it may take weeks or even months.
If you want the fastest possible turnaround time, you should consider using online filing and pay for expedited service, if available.
The IRS and most state tax authorities treat LLCs as “pass-through” entities. This means that your LLC does not pay taxes directly (as corporations do). Instead, the tax burden is passed through to the members of your LLC. The members will then include profits and losses from the LLC’s business on their personal income tax returns.
It is generally best to form your LLC in your home state, where you will actually carry out your business. Some people believe that it is advantageous to form your LLC in Delaware or Nevada. In reality, you would then have to register with the authorities in your home state as a foreign LLC and pay additional fees – without much benefit in return.
You are not generally required to file for a DBA (“Doing-Business-As”). However, most business owners choose to do so anyway. Getting a DBA will allow you to omit the letters LLC from your customer-facing business name. You can also have multiple names for your LLC if you want to run more than one business through your LLC.
Yes, you can form an LLC for your business in any US state. There is no requirement for you to be a US citizen in order to form an LLC, nor do you need the right to reside in the US. If your business is going to own physical property in a given state, you may want to form your LLC in that state.
No, you don’t need to hire an attorney to form an LLC for you. It is generally much cheaper and straightforward to file the necessary paperwork yourself or to hire an affordable LLC formation service to handle the work on your behalf. However, you may want to consider hiring an attorney if your business is very complex.