The document at the center of any LLC is its Articles of Organization, also referred to as the Certificate of Organization. An LLC’s Articles of Organization make it a legal entity that is recognized and protected by the state. To form an LLC in Texas, the Articles of Organization for your LLC must be filed with the Texas Secretary of State’s office, either online or by post, along with a filing fee of $300.
The Articles of Organization for an LLC are similar to the Articles of Incorporation for a corporation. Its primary function is to provide the state with the most basic identifying attributes of your business, such as its name, owners, and purpose.
Your Articles of Organization must be filed with the state before you pursue any additional filings, such as filings for different business licenses and permits. This is because you will need the identity of your LLC when pursuing these filings, so, logically, you will need the LLC to be created first.
Requirements for Articles of Organization in Texas
In Texas, an LLC’s Articles of Organization must include the following information. In legal terminology, these sections of information are referred to as provisions:
- The Name of the LLC
You must choose a name that is available to use in Texas. When you submit your Articles of Organization, the state checks to make sure that the name is available. If it is not available, you will be forced to resubmit your Articles of Organization.
You can conduct an independent search of business names on the Secretary of State’s website to determine whether a name is eligible to use. You may also want to conduct a trademark search to avoid costly trademark infringement. This can be done on the US Patent and Trademark Office’s website.
- The Purpose of the LLC
This is where you briefly state the type of business you are pursuing. Keep this section as broad as possible so that your LLC will have a maximum amount of flexibility.
- Name & Address of Your LLC’s Registered Agent
Your LLC’s Registered Agent is essentially its official point of contact with the outside world. If someone needs to serve the LLC with legal papers, then this person is legally the person who represents the LLC and will need to be served. This person and his or her address must be listed in your Articles of Organization.
The registered agent for your Texas LLC must be someone you know, with an address in the state of Texas, and who will allow you to use their address to receive your LLC's mail.
You can also hire a company to act as your commercial registered agent who will receive and forward mail for you. Typical fees for a registered agent in Texas range between 0100 - 0350 per year.
- Names of the LLC’s Managers or Members
Texas requires you to list the name and address of at least one member or manager of your LLC. It is best to have all your initial members in place at the time of filing. Though these names may be changed down the road, depending on the restrictions outlined in your LLC's operating agreement, it may be tedious to do so.
Additional Provisions For Your Articles of Organization
You may add additional provisions to your Articles of Organization to address whatever issues you wish. One of the most common additional provisions addresses the indemnification of the LLC's managers and members.
An indemnification provision specifies that the LLC's managers and members are not personally liable for the company’s actions, even if they authorized or ordered the actions to be taken. An indemnification provision simply reiterates the main reason for forming an LLC: personal liability protection.
Nevertheless, many business owners like to have a formal statement on record expressing their intention to take advantage of all indemnities to which they are entitled. Provisions concerning how the business is to be operated, and that address matters that you do not want to become a matter of public record will be placed in your LLC’s Operating Agreement.
Why Work With an Attorney?
The best way to protect your investment is to focus your time and effort on doing what you excel at and then outsourcing everything else to specialists, wherever possible. This is especially true when deciding whether to draft and file your Articles of Organization on your own or whether to hire an attorney to do it for you.
If you are forming multiple LLCs at once, or converting an existing business into an LLC that will require the assets of the old business to be transferred over, then you should always work with an attorney. This does not mean that you shouldn't consult an attorney if you are not in one of these situations, just that the legal complexities of the aforementioned circumstances especially warrant professional help.
As a best practice, you should contact an attorney who handles the formation of LLCs and other related business matters on a daily basis. An attorney who specializes in these matters will understand the need to get to know your business inside and out before drafting and filing your Articles of Organization.
If you are forming an LLC in Texas and need assistance with filing the Article of Organization, we can help. Call us today to arrange a free consultation with a knowledgeable and experienced Texas Business attorney.