There are many tax benefits that come with an LLC in Texas, which includes not being required to pay corporate federal income taxes first. The earnings of the business are passed directly to the owners, who end up paying individual income tax rates.
There’s a lot of tax flexibility with an LLC, allowing the owners of the business to decide how they want to get taxed, whether as a C corporation, S corporation, sole proprietor or partnership. Depending on how you set the business up, you have the opportunity to avoid paying business taxes first.
How to form an LLC
If you want to form an LLC, it’s important to request an LLC Articles of Organization Form with the state. Choose a name for your business and submit an LLC Articles of Organization Form. Work with your partners on the details of the operating agreement in advance to avoid any surprises.
It’s also crucial that you set up your LLC in the specific state where you plan to do business in the future, which offers both tax and operational advantages. If you’re not bringing in a lot of revenue yet, you can register the business in the state where you live before changing it to the state where you do business. A business formation attorney may offer assistance and help you understand your state’s laws.
Who can you contact for legal assistance?
If you want to set up an LLC or learn more about the tax advantages, reach out to a business formation attorney for answers to your questions. A legal professional may help protect you from common legal mistakes and explain how to set up an LLC when you’re starting a new business.