If you want to protect your personal assets from your business's liabilities and debts, you should register your company as a LLC in Texas. An LLC allows you to separate your business and personal finances and can help reduce taxes.

You'll also need to get an EIN (also known as an FEIN or Federal Tax ID Number) for your LLC. It functions like a social security number for your LLC and is required when you open a bank account or file taxes.

Choosing a Company Name

The name you choose for your business carries weight. It will be the name used on all official documents and will signal to potential customers that your LLC is a legitimate operation with credibility. It will also be the name used when registering for certain state licenses and permits, like a permit to purchase goods for resale without paying sales tax.

You should avoid words that indicate your company is a bank or insurance agency, and avoid deceptively similar names to existing businesses, since this can lead to confusion and legal issues. You should also check URL availability, and avoid including titles or professional designations (like Dr. or Esq.) as these may require additional registrations and licensure requirements.

An LLC operating agreement is not required in Texas, but it’s advisable to execute one to set forth the rights and responsibilities of the members and managers, management structure, capital contributions, distribution of profits and losses, and buyout provisions for when a member leaves or dies. BetterLegal can help you draft an LLC operating agreement for a reasonable fee.

Getting a Registered Agent

Your Texas LLC needs a Texas registered agent, whose name and address must appear in the filing. The agent must be available during business hours to receive service of process and to sign for documents. You can use a person or a service such as BetterLegal (which offers a full privacy option for $90/year).

Once you’ve filed your Certificate of Formation, the state will review and approve it. Once that happens, you can obtain an EIN, a business bank account and start operations.

Now that you’ve checked off the initial boxes on starting your new business, it’s time to think about insurance. You’ll want to make sure you have a policy in place that protects your assets and your employees. You can get help finding the best policy for your needs by comparing quotes from various providers. This is also a good time to consider health insurance, which can cover your employees in the event of a workplace accident or illness.

Getting a Business Bank Account

Regardless of whether you choose to form a corporation or an LLC, you should create a governing document. These documents, called company agreements in Texas, outline operating procedures and ownership. In addition, they help prevent future misunderstandings about the company’s purpose, structure and profitability.

You will also need to get an EIN. Banks use this number to identify businesses and separate them from individuals. You can apply for one online and it won’t cost you anything.

After you file your certificate of formation, the state will send you a Welcome Letter with your LLC’s 11-digit Taxpayer Number (not to be confused with a federal Tax ID Number). You can then use this number when setting up your business account. It’s a good idea to make phone calls to local banks and credit unions to see what their charges are for business accounts. You will need to have this information handy when you meet with the banker to open your account.

Getting an EIN

The last step is to obtain an EIN (Employee Identification Number). This is a unique number that the IRS assigns to a business. It separates the owner’s personal assets from those of the company and is necessary when filing taxes. You can apply for an EIN online. You’ll need the company name, address and contact information. You’ll also need to select whether the LLC is member-managed or manager-managed. The applicant must have a Social Security number or Individual Taxpayer Identification Number and must be an authorized representative of the business.

Using an LLC service is a good option for new business owners because it eliminates the need to hire a lawyer and saves time and money. However, if you prefer to do it yourself, the process is relatively simple and straightforward. Just be sure to set aside a chunk of time to complete the application because it will not let you return to your work.