Posted on Thursday 4 June 2009
The Texas secretary of state has set out clear guidelines for the conditions that categorize an LLC. By state definition, an LLC is an entity created under the 72nd Texas legislation of 1991 in which the legal and financial obligations of the organization are separated from those of its owners. Under Texas law, there are two types of LLCs.
• Domestic Limited Liability Company: This type of LLC is formed by members of the state and operates within the state.
• Foreign Limited Liability Company: These govern LLCs that were formed prior to the 1991 act under the laws of another state. Before this act, these companies operated as unincorporated associations.
Texas law stipulates that all LLCs must ascribe the title LTD, LLC or PLLC to all documents bearing the name or logo.
Ownership
The law clarifies who can become an owner of a LLC within the state. Ownership is realized from the information declared on the C-1 status form. It allows for a member, manager or officer to be an owner of the LLC. This owner is responsible to sign on behalf of the organization. Ownership must be verified by the secretary of state where the organization is assigned a file number and the date of filing, name and address of the LLC recorded.
Remuneration
Texas laws allow LLCs to pay a salary to managers, members and officers for services rendered to the LLC. Under the Texas employment act, this is considered wages and is taxable according to the formulas by the IRS. This is different from profits paid out to the members of the LLC. The IRS considers LLC members as self-employed individuals so all taxes incurred by the LLC are passed to the members, who then include them in their personal income tax filings.
TAGS: incorporate in Texas,
Texas LLC
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