If you run a business as a single proprietor in Texas, you might think about changing it to a limited liability company (LLC) for more security and adaptability. This procedure entails updating your company’s organizational structure as well as submitting specific documents to the state. Continue reading to find out how to convert your single proprietorship in Texas to an LLC.
Step 1: Select a name Your LLC must have a distinctive name that is not already being used by another Texas-registered company. On the website of the Texas Secretary of State, you can look up name availability. Once you’ve decided on a name, you can submit a Name Reservation Request form and pay a fee to reserve it for up to 120 days.
File a Certificate of Formation in Step 2 You must submit a Certificate of Formation to the Texas Secretary of State in order to formally change your sole proprietorship into an LLC. Your company’s name, registered agent, and management structure must be included on this form. A filing fee is furthermore due.
Step 3: Update your company’s permits and licenses You most certainly received a number of licenses and permissions as a lone proprietor to run your business. To reflect your new LLC status, you must amend these with the relevant authorities. This can entail getting a fresh assumed name certificate, a new sales tax permit, and any required professional licenses. If I switch to an LLC, do I need a new EIN? You will need to get a new Employer Identification Number (EIN) for your LLC if you previously operated as a single proprietor and already had one. This is due to the fact that an LLC needs a distinct EIN because it is a separate legal entity from its owner(s). The IRS will issue you a new EIN at no cost to you. How much does forming an LLC in Texas cost?
The filing fee and any additional expenses for name reservation or expedited processing are only two of the many variables that affect how much it costs to incorporate an LLC in Texas. A Texas Certificate of Formation must be filed for $300 as of 2021. Additionally, you might have to pay extra for professional or legal services. Which is preferable, an LLC or a single proprietorship?
Your particular business demands and interests will determine whether you should form an LLC or a single proprietorship. The simplest and most affordable business structure is a sole proprietorship, but the owner has no liability protection. An LLC, on the other hand, provides greater managerial and tax freedom along with limited liability protection. A legal or financial expert should be consulted to help you choose the right business structure.
Finally, filing a Certificate of Formation, changing your licenses and permits, and, if required, obtaining a new EIN are all steps in the process of converting your sole proprietorship in Texas to an LLC. A $300 filing fee is part of the cost of creating an LLC in Texas. Your particular business demands and interests will determine whether you should form an LLC or a single proprietorship.