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What do I need to know about LLC Formation?

by | Apr 14, 2021 | Business |

Formation starts with the proper certificate filed with The State of Texas. You will need a Registered Agent. You will need to disclose the initial members or the managers if member managed.

Bank Account. A new Bank account should be opened in the name of the LLC. This transaction should be accomplished easily by completing a resolution which authorizes the company to open a bank account. Some banks also have their own form for the resolution that the LLC can use.

Assets and Insurance. All assets transferred by you or any other Member to the LLC should be appropriately entered upon the company’s books by your accountant. Any assets so transferred become the property of the LLC. All of your business insurance (public liability, disability, general insurance, etc.) must be acquired in the name of the LLC as well.

Existing Loans. Any existing loans which you have made in the business should be transferred to and assumed by the LLC when and if your accountant determines that no adverse tax consequences will result from such assumption of liability.

Other Existing Agreements or Arrangements. All leases, contracts and other arrangements which you have regarding your present equipment, office premises or furniture and any other contracts or arrangements which you have previously entered into in connection with your business should be modified, assigned, or rewritten in order to reflect the fact that the LLC is the contracting party to each lease, contract, or obligation. If you would like us to review any existing contracts, we invite you to contact us.

Significant Change. Please contact this firm immediately if any important change occurs that would affect the LLC, including when a member dies or becomes divorced, a member becomes bankrupt, or a Member wishes to transfer his or her interests to another person. In such event, it may be critical that the proper process is followed to avoid any negative consequences to the LLC or the Members.

Registered Agent and Registered Office. If the registered agent or office is changed, the LLC will need to file a change of registered office and/or registered agent with the Secretary of State, and this should also be reflected in the LLC’s minutes.

Assumed Name. If the LLC will transact business or operate under a name that is different in any way from the exact name as set forth in the Certificate of Formation filed with the Secretary of State and the County Clerk of the county in which the LLC has its registered office. If the principal office of the LLC is in a county other than the county where the registered office is located, the certificate must be filed in that county as well. Also, the certificate will need to be renewed within six months prior to its expiration.

Operations in Another State. Finally, should you open an office or acquire property in another state, you may be required to qualify as a foreign entity to be authorized to do business in that state. This entails filing a Certificate of Authority in that other state and paying initial and annual fees. Failure to qualify may prohibit you from suing to enforce your contracts in that state, or from receiving actual notice in the event you are sued.

If you require any assistance, contact us for an experienced business attorney. We would be happy to help you document any of the above. Our number is 713-572-4900.

 

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