Limited Liability Company (LLC)

A limited liability company (LLC) in Houston is defined as a domestic business organization subject to Texas’ laws, or the state’s laws where it was incorporated. An L.L.C. is one of the most popular types of business structures and is not classified as a partnership or a corporation.

The owners of an LLC have limited personal liability for any debts or liabilities the business may accrue. Additionally, LLCs have management flexibility and pass-through taxation. Pass through taxation means the L.L.C. is only taxed once, such as in the form of partnerships, where the LLC is not directly taxed, but instead the tax burden is passed on to the members of the L.L.C., who then pay the taxes on their individual share of profits. Generally, this results in a smaller tax burden than in other forms of business entities.

Houston LLC Attorney

If you want to create a Limited Liability Company (L.L.C.) in Houston, or any of the surrounding areas in Texas, including Spring, Humble, Tomball, Aldine, Atascocita, Klein, Jersey Village, The Woodlands, Conroe or Oak Ridge North, contact the law offices of Wilhite & Associates, P.C. The attorneys at Wilhite & Associates are experienced in Texas business law and will help you create the best business entity for your particular situation. Call Wilhite & Associates at (281) 537-2171 about creating a limited liability company.

Limited Liability Company in Houston

Anyone who participates in an L.L.C. is not considered to be a part of the business, and is only considered an owner of the business. Therefore, the LLC is viewed as operating itself, so the business is solely liable for any debts. Under the Texas Business Organizations Code § 101.144, the owners and members of an LLC are not responsible to repay any debts, obligations or liabilities of the company. 

The owners of an LLC are called members, and can include individuals, corporations, trusts, partnerships, other LLCs, other legal entities, other commercial entities and foreign entities. There can be any number of members in an LLC, but there must be at least one member, according to the Texas Business and Organizations Code § 101.101.

Anyone can become a member of an LLC, and the members of an LLC are not required to do any of the following if they become a member:

• Make a contribution to the company,
• Pay cash or transfer property to the LLC, or
• Assume an obligation to make a contribution, pay cash or transfer property.

According to the Texas Business Organization Code § 101.105, after the company has been formed, the LLC can issue membership interests to anyone as long as all of the existing members approve admitting the new member. Additionally, a member of the LLC cannot withdraw from the company or be expelled by the other members from the LLC. However, a member of an LLC can assign their interest in the company to another person.

As stated in Texas Business Organizations Code § 101.201, the profits and losses of a Texas LLC in Texas are generally allocated to each member on the basis of the value of their contribution to the LLC.

Creation of an LLC in Houston

In order to form an LLC in Texas, the members of the LLC must first enter into a partnership agreement and file certificate of formation with the Texas Secretary of State.

The partnership agreement regulates the daily activities of the business, and may be amended or repealed by the members. The certificate of formation, or articles of incorporation, includes:

• The LLC’s name, which must contain “limited liability company,” “limited company,” “LLC,” “LC,” “L.C.,” or “L.L.C.” Additionally, the name by be distinguishable from any other domestic or foreign LLC;
• The address of the principal office of the LLC where the records are kept;
• The management structure, or whether a manager or member will manage the LLC
• The duration of the LLC if the LLC is intended to have a specific period of duration; otherwise the LLC will last continually;
• That the business organization formed is a Limited Liability Company;
• The specific purpose of the LLC;
• The registered office’s street address of the LLC and the name of the registered agent;
• The name and address of every organizer or member; and
• The signature of all members or managers.

A registered agent is anyone who can be served with process on behalf of the LLC. This person is designated as an agent or representative of the company.

Additionally, the certificate of formation must include the management structure. The management structure states whether managers or members will be in charge of the company’s daily operations, and also states the relationship, responsibilities and duties of all members, managers, officers of the company, assignees of a membership interest in the company, and the actual LLC.

Drawbacks of a Houston LLC

Although a limited liability company is generally perceived to include the best qualities of a corporation and partnership, this type of business organization is still subject to some disadvantages. These can include:

• The earnings of each LLC member are usually subject to self-employment tax;
• The IRS does not recognize LLCs with only one member as an LLC, but instead classifies these types of LLCs as partnerships. The IRS only recognizes LLCs with two or more members, even though the LLC with one member is recognized under Texas law;
• The LLC could dissolve without the intent of the owners, such as when one owner dies;
• The LLC is a relatively new business structure, and is subject to varying laws; and
• The LLC is subject to strict record keeping requirements and complicated tax rules.

Wilhite & Associates, P.C. | Houston L.L.C. Lawyer

Contact Wilhite & Associates, P.C. today for a consultation about creating a limited liability company in Harris County in Texas. Attorney C. Wilhite Law of Wilhite & Associates is an experienced business lawyer in Houston who will help you identify your best business entity option and follow the correct procedures and guidelines to create your business in a swift manner. Contact Wilhite & Associates, P.C. at (281) 537-2171 for a consultation about creating an L.L.C. throughout Harris County, and the surrounding areas of Montgomery County, Washington County, Grimes County, Fort Bend County and Waller Count.