How to start your LLC in Midland, TX

How should you name your LLC? You might have your heart set on a name, but there are important things to consider first. You’ll want to ensure that it follows state rules and isn’t too close to an existing business’s name.

The rules for naming your company in Midland, TX are fairly simple according to Section 5.5056 of the Texas Business Organizations Code.

Your Texas LLC name must end with one of the following:

• Limited liability company
• Limited company
• An abbreviation of one of the two phrases above, like LLC, LC, or Ltd. Co.

Current Texas regulations do not let you use only the words “limited” or “company” by themselves to identify an LLC.

Your LLC name must be unique and easily distinguishable from other Texas businesses. You want to avoid confusing the public with a name similar to that of another Texas business.

Let’s say you have your heart set on the name “Midland Air Conditioner Repair, LLC,” but after a search, you find another Texas corporation named “Midland Air Conditioner Repair, Inc.” The names are too similar even though “Inc.” is a different kind of company.

If you make a simple change to your name such as “Midland Air Conditioner Service, LLC,” you should be okay.

Whatever name you choose shouldn’t be misleading to the public. This includes using another company’s name or choosing a name that would cause people to confuse it with government entities.

Texas Administrative Code also bans the use of several words such as:

• “Olympic” or similar words
• “Bank” or similar words
• “College” or similar words
• “Veteran,” “Disabled” or similar
• “Lotto” or “lottery”

If your business name implies that you carry any form of professional license, at least one of your members must have that valid license issued by an appropriate government agency.

For example, if your business is named “Midland Private Investigations, LLC,” you’ll need to hold a valid Texas Private Investigator License.

Before filing your paperwork, check to see if your name is available in Texas. You can perform a search for the name on the Texas Secretary of State SOS Direct website. There is a $1 fee for each search.

The State Comptroller’s Taxable Entity Search website provides an easier method for searching and is free of charge. This site lets you search multiple names and word combinations to be confident that you’ve done all your homework.

After naming your company, it’s also legal in Texas to apply to do business under an assumed name or “DBA,” but more on that later in this article.

What is a registered agent?  A registered agent is an individual or company that receives service of process, legal documents, and official notices on your business’s behalf.

Service of process is a legal term for business letters or legal papers. Your agent is the gatekeeper between you, the state, and the public.

Texas state law requires that you appoint a registered agent and provide their details at the time of filing your Certificate of Formation. Texas’s rules for naming and changing registered agents are in sections 5.200 to 5.208 of the Texas Business Organizations Code.

Registered agents must meet the following requirements:

• Be at least 18 years old
• Have a physical address in the state of registration
• Be available to receive mail and sign official documents during normal business hours, Monday to Friday, 9 a.m. to 5 p.m.

A registered agent must also respond quickly in the event of a lawsuit so that your business avoids missed deadlines, fines, or penalties for non-compliance.

Some business owners choose to designate themselves as registered agents because:

• It’s cheap: You’re not paying someone for something you can do yourself.
• It’s simple: The only address and contact information you have to keep current is your own.
• It’s reliable: You will receive all important documents personally.

However, there are several downsides to this:

• No privacy: You’ll have to make your address available to the public on the Comptroller’s and Secretary of State’s websites.
• Junk mail/spam: Public-facing addresses are swarmed by junk mail in addition to a small amount of legitimate mail.
• No breaks: Registered agents must be open for service during all business hours. They don’t get time off.
• Business interruptions: If your agency address is the same as your business address, your business and clients may be interrupted by your duties as an agent. If you are getting served with a lawsuit in front of customers, that could be embarrassing or even hurt your business.
• It’s your fault if you miss something: You always have to make sure your agency address is correct and up to date. If you make a mistake or miss something, that’s on you.

For these reasons, most experienced business owners hire companies to act as their registered agents. These services cost between $100 and $150 per year. If you choose to use a law firm, you could spend up to $500 per year.

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.

What are Articles of Organization? These documents turn your business idea into an actual legal entity ready to sign contracts and do business. Texas law states that filing the Certificate of Formation makes it official.

To file, you’ll need the following basic information as listed in Section 3.005 of the Texas Business Organizations Code:

• The name of your LLC
• The purpose of your LLC
• If not permanent, an estimated length of time that the company will exist
• The registered street and mailing addresses of the LLC
• The name and address of the LLC’s registered agent
• The name and address of each person forming the LLC

You can print and mail the fillable Certificate of Formation or send them to the Secretary of State through the SOS Upload system.

The filing fee for your Certificate of Formation is $300.

Average processing times are estimated to be between 5-7 business days for mail-in forms and 4-5 through SOS Upload.

You can also request expedited service for $25 per document. For this, you need to include a cover letter specifically requesting expedited processing with a phone number where you can be reached during business hours.

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.

What is an operating agreement? An operating agreement is a contract between you and other members of your LLC. It outlines the rules by which your company does business, keeps you prepared for everyday situations, and protects against the unexpected.

Your operating agreement should list each member of the company and how they’re expected to work.  It can be as simple or detailed as you’d like to make it.

Although not required by Texas LLC law, we strongly urge you to consider one. Without an operating agreement, state law acts as a fallback. Remember that state laws don’t always work in favor of the business owner.

The benefits of having an operating agreement include:

• 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.

When it comes to hiring, firing, and everything in between, an operating agreement allows you to customize the rules of the LLC according to your expectations. They should be signed by every member and kept somewhere safe.

The best LLC formation services provide operating agreement templates for as low as $50, and we highly recommend them.

What is an EIN? EINs are tax identification numbers assigned to businesses by the Internal Revenue Service. They function much like social security numbers, but for businesses instead of individuals.  They allow the IRS to keep track of companies that pay taxes.

Here are the most common cases in which your business will need an EIN:

• You have more than one member
• You have employees
• Your business is taxed as a C or S corporation

We highly recommend getting an EIN even if they’re not required. Most banks and online payment services require them to open an account.

Obtaining an EIN is easy and can be done in minutes on the IRS website. You can also file via mail or fax.

It’s free of charge and shouldn’t be paid for unless part of a larger LLC formation package.

Read More: How to get an Employer Identification Number in Texas