How Long Does an LLC Last in Texas?

In Texas, Limited Liability Companies (LLCs) are a common alternative for business structures. They provide flexibility in management and taxation as well as personal asset protection. The lifespan of an LLC is one of the often asked questions. In Texas, how long is an LLC valid?

In Texas, an LLC has an indefinite existence unless the Operating Agreement specifies otherwise. This implies that the LLC will continue to exist even after its owners’ (members’) passing or departure. However, failure to submit an annual report by an LLC to the Texas Secretary of State may result in administrative dissolution.

Within 75 days of its incorporation, an LLC must file Form 2553 with the IRS if it chooses to be taxed as a S corporation. S corporations have a pass-through taxation system, which means that the company’s gains and losses are transferred to the owners’ personal tax returns.

The LLC will be taxed twice if it elects to be treated as a C company, on the other hand. Because C corporations are different legal entities from their owners, any gains are subject to both corporate taxes and additional taxes when they are paid out as dividends to shareholders.

So what makes a C company preferable to a S corporation or a partnership? Like an LLC, a C corporation provides limited liability protection and has the opportunity to develop and expand through the selling of stock. C corporations can also give employers greater options when it comes to how to structure employee remuneration and benefits.

In Texas, an LLC has an indefinite existence unless otherwise specified in the Operating Agreement. LLCs have the choice of being taxed as a partnership, S company, or C corporation, with each having pros and cons of its own. When thinking about forming an LLC, it’s crucial to speak with an attorney or accountant to identify the optimal structure and tax classification for your unique business requirements.