If you’re an international entrepreneur looking to start a business in Texas and sell your products or services in the US, one of the most beneficial business structures to consider is a Limited Liability Company (LLC). In this guide, we’ll show you how to start an LLC in Texas from the comfort of your own home and save money in the process.
The good news is that setting up an LLC in Texas is a relatively simple process, and it can be done entirely online. Even non-US citizens can set up an LLC in Texas without having to travel to the US. But before we dive into the specifics of how to start an LLC in Texas, let’s explore what LLCs are and how they function in the US.
What is an LLC?
Opening your business under the Limited Liability Company setup will allow you to establish some key management aspects autonomously. Ownership percentage depends on initial capital investment or equity and the profits can be distributed however and whenever you specify in the company’s internal protocol documents.
LLC owners are called members and they can decide whether they form a board of directors to run the company or if they hire an external, non-member manager.
One of the most appealing aspects for entrepreneurs is that LLCs do not pay federal or state corporate income taxes. The profits pass through directly to the members whenever they’re distributed. Income taxes are levied on an individual basis only.
3 steps to start an LLC in Texas
With Globalfy, you can do the entire process from home and there’s no need for an American visa, US residency, or US tax ID. You can open and run your Texas LLC without ever leaving your home country.
These are the steps you must complete to register your LLC in Texas:
- Submit the Certificate of Formation. The fees to submit this document vary depending on the state, however, in Texas the price is $300. You might also create an Operating Agreement to establish your LLC’s management structure (not mandatory but recommended). The submission is included in Globalfy’s all-in-one business plan.
- Apply for the EIN. Fill out and submit Form SS-4 to the IRS via mail to obtain your EIN (Employer Identification Number, the American business tax ID). With Globalfy, you don’t have to send this correspondence, the company will take care of your EIN processing.
- Get an American business bank account. Your business will need a US bank account for finance and tax purposes. With Globalfy’s all-in-one business plan, you get a US bank account 100% online.
The business formation process is pretty straightforward and you can do it all by yourself. However, with Globalfy, you only have to fill out an online form submitting your information and the rest is on us. Completing the form takes less than 5 minutes and from there on you will be receiving via email your business formation documents and EIN confirmation letter from the IRS as they are approved. In a few days, your company will be ready and you will be able to do business in the United States without having to set foot in the country.
1. Submit the LLC’s Certificate of Formation
This is the information you have to include in the document you submit to the Texas Secretary of State to register your LLC. It’s also called Articles of Organization in some states-
- The LLC’s name and address
- The name and address of the LLC’s Registered Agent
- The names and addresses of the LLC’s members or managers
- The LLC’s purpose or business activity
- The duration of the LLC, if it is not perpetual
Now, besides the formation document, you can also create and notarize your Operating Agreement to specify how the LLC will be run and organized.
2. Apply for the EIN
You won’t be able to run your LLC unless you get an Employer Identification Number from the IRS.
All you have to do is access the IRS website and click on the “Apply Online” link to begin the EIN application process.
Complete and submit the online EIN application form with personal and business info and you will receive your EIN immediately if your application is approved.
3. Open a business bank account for your Texas LLC
When you use Globalfy to form your LLC in Texas, you’ll get a US business bank account included in the package. So you can easily manage your business finances and start doing business in the US right away!
The bank account includes physical and virtual Visa debit cards and has no maintenance or domestic ACH transfer fees.
How long does it take to register an LLC in Texas?
Check out how long it takes for the Texas Secretary of State to review and approve LLC submissions.
- In-person filing: 7 weeks.
- Online registration: 7 business days.
Time is crucial for everybody but especially for entrepreneurs. That’s why Globalfy gives you the opportunity to open your own Texas LLC without talking to any rep, or going to any public office, and 100% online.
How are LLCs taxed in the state of Texas?
All profits generated by the LLC pass directly to the members without being taxed on a corporate level, however, you still must report your gains.
If you open a single-member LLC you must fill out and submit Form 1040, Schedule C to the IRS and pay for the company’s income on an individual level. In case the LLC yields losses during a fiscal year, those losses may be deducted from your income tax or carried forward to the next year.
If you open a multiple-member LLC, the company must file a 1065 U.S. Return of Partnership Income form to the IRS. There is no tax payment for the LLC since it’s just an informative return. The LLC will also provide a Schedule K-1 to each member, so they can fill out and submit their individual income tax returns and pay taxes based on their share of the profits.
At a state level, Texas LLCs don’t have to inform anything regarding income or losses, however, they must submit the Public Information Report to the Texas Comptroller’s office annually.
Is a single-member LLC in Texas the best option for you?
Did you know that if you open a Texas LLC by yourself, with no other partners, and your operations are oriented on providing services in the US from abroad, you can enjoy tax reductions? That’s right! If you open a single-member LLC in the United States to provide digital services from your home country you will not have to pay federal individual income taxes.
Does Texas offer more protection to LLCs?
In Texas, LLCs benefit from a robust charging order protection policy that shields their assets from liabilities incurred by individual members. This extra layer of protection, in addition to the inherent liability protection offered by all LLCs in the US, provides peace of mind for LLC members in Texas. So if you’re considering forming an LLC in Texas, rest assured that the state has some of the strongest policies in place to safeguard your assets and financial interests.
What are the differences between LLCs and Corps?
Contrary to LLCs, Corporations are a more rigid structure in which owners (shareholders or stockholders) have responsibilities and limitations dictated by law.
Raising capital and getting investment is also very different for Corps than it is for LLCs. Corporations are able to issue stocks or shares and participate in stock exchanges to get external investments. Public stock trading is very appealing to venture capitalists and investors, for which raising capital can be less challenging for Corps than for LLCs. On the other hand, LLCs can offer equity or debt to collect funds from external sources.
Nevertheless, Texas LLCs are still able to offer unique benefits that C Corporations do not possess such as pass-through taxation and charging order protection.
More benefits of opening an LLC in Texas
By having a presence in the American market, you will be able to do business in the world’s most profitable environment. The US alone is responsible for a third of the global revenue in the IT sector.
Meanwhile, the e-commerce industry is projected to enjoy accelerated growth in the next 2 years, with the American sector positioned at its forefront.
Texas’ low tax rates and the foreign-friendly of business and financial institutions, also make the state more than appealing to international entrepreneurs and companies of all sizes. With Globalfy, you will get an all-in-one service for your venture to thrive in the American and global markets: An LLC in the US from abroad, an American business bank account, a Virtual Address, a Registered Agent, over US$200,000 in discounts from our Rewards program, and more!
Here are some aspects for you to see how starting an LLC in Texas can be more beneficial than in other popular states.
|LLC state formation fee||US$125||US$90||US$300||US$50||US$100|
|Individual state income tax||None||None for out-of-state residents||None||Between 1.7% and 5.9%.||None|
|Annual report or franchise tax||Between US$138.75 and US$150||Minimum of US$225||Between 0.375% and 0.75% of taxable margin||None||Minimum of US$62|
|Privacy||All records are public||Total privacy||All records are public||Total privacy||Total privacy|
|Globalfy’s all-in-one business formation plan cost||US$599 + state formation fee||US$599 + state formation fee||US$599 + state formation fee||US$599 + state formation fee||US$599 + state formation fee|
You can now participate in the biggest market in the world without leaving your home country. See how to start an LLC in Texas without ITIN, social security number, or any US tax ID whatsoever.