Texas LLC Laws

By Joe Stone

In January 2010, the Texas Business Organizations Code became effective and replaced the Texas Limited Liability Act as well as all other acts applying to corporations, partnerships, and other domestic and foreign filing business entities. Regardless of when an LLC or any other business entity was formed in Texas, the provisions of the BOC apply. Under the BOC, four types of LLCs can be formed in Texas: domestic, professional, nonprofit and series.

Domestic Texas LLC

All business entities in Texas are formed by filing a certificate formation in accordance with Section 3.005 of the BOC, which requires the following minimum information: name; type of entity being formed; business purpose; the period of the entity's duration or a statement that it is perpetual; and the names and street addresses for the entity's registered agent and organizers. The certificate of formation for an LLC must also state whether the LLC will be managed by all members or a designated manager or managers, as well as the name and address of persons with management authority. Formation of the LLC is complete upon filing the certificate with the secretary of state along with the filing fee, which is $300 as of 2010. The certificate can be filed electronically using the feature on the secretary of state’s website called SOSDirect.

Professional Texas LLC

Prior to enactment of the BOC, a Texas LLC formed to provide professional services was prohibited from engaging in more than one type of service. Although the BOC includes this same general prohibition, it also includes new exceptions that were not part of the prior law. For example, a professional LLC or PLLC can include doctors of medicine, doctors of osteopathy and podiatrists in the same LLC. This same exception applies to persons licensed in the mental health professions such as clinical social work, psychology and licensed professional counseling. Even if a profession is not included in the express exceptions, the BOC also generally provides that two or more professions can form a PLLC if there is a state law regulating the professions that permits joint professional practice.

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Nonprofit LLC

Under the former LLC law, the secretary of state took the position that a nonprofit LLC was not permitted. However, this provision changed with the enactment of the BOC, and Texas is one of the few states that permits nonprofit LLCs. Section 2.002 of the BOC specifies the purposes for which a nonprofit LLC can be formed, such as a trade association or charitable organization.

Series LLC

In 2009, Texas became only the eighth state to permit the formation of a special type of LLC called a series LLC. Within this type of LLC, one or more series can be established, sometimes called cells, each with its own assets, members, managers and other membership interests. The purpose of having differing series is to prevent the liabilities of one cell from affecting the profitability of another, such as owning different parcels of real estate. To form a series LLC, the organizer of the LLC must include a notice of intention to do so in the certificate of formation.

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New Jersey LLC Requirements

New Jersey LLC requirements are primarily set forth in the New Jersey Limited Liability Company Act, which specifies how an LLC is formed, operated and dissolved. As with all other business entities, such as corporations and partnerships, New Jersey law includes certain licensing, taxation and insurance requirements, which also apply to LLCs. The Division of Revenue provides a comprehensive package of information and forms to facilitate compliance with these requirements.

Different Types of Nonprofit Organizations

In the United States, federal tax-exempt status is available for many different types of nonprofit organizations. The types of nonprofit organizations recognized by federal law are listed in section 501(c) of the tax code. While most U.S. nonprofits fall under subsection 501(c)(3), there are several different classifications for various types of nonprofit organizations.

The Texas Non Profit Corporation Act

Nonprofit corporations in Texas are governed by Chapter 22 of the Texas Business Organizations Code. Though forming a nonprofit corporation doesn’t automatically mean your organization will be tax-exempt under IRS rules, creating the corporation is often a first step toward tax-exempt status. Forming a corporation also allows your organization’s personnel to shield themselves from some liability risks.

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