Entity Formation | Form Your Business in the United States

What are the advantages of LLC in Texas?

There are tax benefits, asset protection, and ongoing support from the Texas Secretary of State for those who set up a limited liability company or LLC in Texas. The characteristics of corporations and partnerships can be seen in the LLC. Let’s look at some other advantages of LLC in Texas.

Protecting your name

In the state of Texas , upon the approved registration of your limited liability company, you will have proprietary protection over your business name. The reputation and brand image for the name of an LLC is safeguarded.

Existing into perpetuity

A sole proprietorship needs its owner to be living for the business to be recognized. The LLC can survive even the death of its founders. Clients, vendors, and employees would greatly appreciate this advantage of LLC in Texas.

Make use of tax savings and flexibility

Corporations get taxed twice because of the profit declared and again when dividends or distributed profits are disbursed to shareholders. The LLCs in Texas can deduct operating costs and business expenses from their gross revenue. Legitimate business expenses can also be honored as deductions so reported profits to the IRS are placed at a lower rate. Depreciation of company assets can also be considered as deductions.

Texas allows the LLC to choose its tax bracket. It can elect to be taxed as a sole proprietorship, partnership, or corporation. The default setting for the LLC is taxed as a “pass-through entity” which is either a sole proprietorship or a partnership. The profits and losses of the LLC “pass through” the LLC to its members. They, in return, report these profits and losses on their individual tax return. Federal income taxes are not incurred by the LLC because of this flexible arrangement, which is a pretty neat advantage for the LLC in Texas.

Personal assets are also protected

If a lawsuit is filed against a Texas LLC, the assets of the business can be taken into consideration by the creditor. But, the lawsuit leaves the personal assets of the members of the LLC untouched.

Support given by the Secretary of State

The LLC registered in the state of Texas means that you are registering the business with the state. Additional protection and support is given via the Texas Business Corporation Act (TBCA) and the Texas Miscellaneous Corporation Laws Act (TMCLA).

Profit choices are also flexible

The state of Texas allows the businesses operating in its jurisdiction to decide the structure of the LLC. This flexibility in Texas allows the LLC to operate as a corporation or as a partnership. Even if Texas doesn’t have a state tax, businesses still need to register with the state for the Texas Franchise Tax.

There is no requirement for record keeping

Minutes of meetings and other records may apply to other corporations. But, for the Texas LLC, these types of business records need not be established or maintained. That’s a considerable advantage of the LLC in Texas.

There is that added air of credibility and professionalism

Having that LLC or Inc. at the end of your business name does make a great impression to your potential clients and partners. LLC’s can also choose to be managed by the members or seek outside management professionals. There is also less formality for the LLC with regards to upkeep and other requirements.

Now that you’ve found out some of the advantages of LLC in Texas, it would be better to consider this option.

Leave a Reply

Your email address will not be published. Required fields are marked *