How to start your LLC in McKinney, TX

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:

• Limited Liability Company
• Limited Company
• An abbreviation of the above phrases, such as LLC, LC, or Ltd. Co.

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:

• It’s cheap: Avoids an additional expense for your new business.
• It’s simple: Use the same contact information across the board.
• It’s reliable: All documents and important notices will come directly to you.

Some of the disadvantages include:

• No privacy: The registered agent’s address is public information. It is listed on the Texas Comptroller and Secretary of State websites.
• Junk mail/spam: High-volume advertisers can target your registered agent address.
• No breaks: Registered agents must be available during all business hours.
• Business interruptions: Avoid embarrassing situations by separating your business functions. Legal notices and lawsuits stay out of sight of your customers.
• It’s your fault if you miss something: Failing to identify important notices is your responsibility alone without a registered agent service.

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:

• They determine the rights and duties of LLC members. If one LLC member is responsible for running the business or managing the books, the operating agreement should say so.
• They say whether the LLC has a member or non-member manager and what the manager has the right to do. Managers also have special duties to the company and the members. The operating agreement should state these.
• They outline what the LLC is legally able to do. The operating agreement should also set down how the company is allowed to conduct its business from day to day.
• They say how new members can join the company. They also have rules about how exiting members can leave.
• They set down how and when profits are paid to members. They can also create different types of membership and payment schemes.
• They say whether members or managers are in charge. They also say how to hire and fire managers.
• They say how and under what circumstances the LLC should end. You might not want to dissolve your business now, but you might in the future. It’s best to think about it and plan before it becomes an issue.
• They say how to change the rules. You may need to amend your operating agreement in the future. The operating agreement should set down the rules for making changes.

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:

• more than one member,
• hires any employees,
• or is taxed as a C-corporation or S-corporation.

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