There’s no doubt that starting a business can be exciting and overwhelming. There are many aspects to becoming a business owner. As you’re about to register LLC in Texas, It’s important to make sure that you’ve gone through the major mistakes associated to LLc applications before you set up one for yourself. The following are the major mistakes to avoid when registering LLC.
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Choosing The Wrong Entity
There are a few specific forms of LLCs, the most popular is the single member, multi-member, and an S-Corp, which isn’t definitely a form of LLC but instead a tax designation of your LLC. Although those 3 technically fall underneath the LLC umbrella, they’ve specific functions. This means that getting the right LLC application Texas for your business is crucial since it will affect aspects of your business like taxes. For example, a single member LLC is the best for someone who isn’t inquisitive about maintaining numerous paperwork or corporate formalities, however desires legal responsibility safety. This kind of LLC will want to report quarterly taxes and that incomes are handed directly to the proprietor as taxable profits. When you’re a single member LLC, you’re taxed like a sole-proprietor. Unless you ask the IRS to change you to an S Corp.
S- corps are still LLCs, but are no longer taxed as a sole proprietorship and may be a pleasant ideal for those who earn greater than $50,000 in annual income and want to have some shape of tax financial savings. As an S Corp, you must adhere to exclusive tax closing dates and regulations, including paying yourself earnings and ordinary payroll taxes. If you’re uncertain of what type of entity you should shape, it’s best to consult an experienced professional who can help you determine the best choice of free LLC in Texas.
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Forgetting to keep your LLC Complaint
After submitting your initial paperwork, you’ll need to ensure that your LLC is compliant after it’s formed. Otherwise, you may run into issues such as piercing the corporate veil and your personal assets are at risk. Some actions you may need to do you protect yourself and your business include:
- Making sure you use your business name in all business documents
- Submit your annual report or statement as per your state guidelines
- Submit an articles of amendment as need if there are key changes to your LLC
- Ensuring your business funds are separate from your personal one
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Incorporating in the wrong state
Most business owners incorporate in their state, since it makes the most sense to have a business license where they live. However, some business owners want to register in another state because there may be better legal and tax benefits. Incorporating in other states tends to make the most sense for larger businesses. Smaller businesses or solo business owners who do might have to go through more hoops like filing more paperwork and paying more fees, both for the state you live in and where your business is incorporated. You’ll also need to make sure you have a registered agent for where your business resides and the state you live in.
Conclusion
For those who are setting up LLCs with a partner, getting the right types of agreements in place ensures that you can both protect your business relationship as well as the business itself. Two of the most important ones include an operating agreement and a buy-sell agreement.
