Richmond, TX · Member since 2017 · 4 posts · 0 votes
I'm looking to create an real estate investment LLC here in Texas. Can I use an Accountant, or should I go with an Attorney. Does anyone have a take on this? Feel free to share or refer either an Accountant or Attorney that you have used before and are happy with :)
Rental Property Investor · Dallas/Fort Worth, TX · Member since 2017 · 64 posts · 59 votes
9y
Filing/forming an LLC is quite simple in Texas. You can do all of it online through the Texas Secretary of State website. You will need to first do a name search to verify that the name is available. Then select a registered agent. Many of the registered agent services will file the LLC for you for a small fee. You will receive confirmation / certificates of formation within 1-2 business days if you file online. If you do a little research, you will probably be able to file an LLC on your own. However, going it alone or using registered agent services will not give you the guidance and advice that a knowledgeable CPA or Real estate Attorney can provide when needed. You will probably want a CPA and real estate attorney anyway as part of your support team as well as lenders, real estate agent, contractors, etc.
I created my LLC on my own with no help from either. In AZ, it takes about 3 or 4 minutes. If you are in need of an operating agreement for a partnership, then you should really speak with a lawyer. But you should go to llcuniversity.com to learn how to do it yourself. Lots of good info there.
Real Estate Broker/Owner & Property Manager · Sugar Land, TX · Member since 2013 · 660 posts · 459 votes
9y
@Bobby Trinh If it's simple one or two member LLC, you can create your own. Texas efile website is very friendly and it doesn't take that much time. You just pay the fees $300+. If you don't want to take that chance. I can refer CPA who does it for $595 including the filing fee. She also give operating agreement doc for you to execute if needed.
Accountant · Houston, TX · Member since 2015 · 87 posts · 33 votes
9y
@Bobby Trinh My philosophy is to let the experts do what the experts do. When it comes to asset protection and tax/accounting related issues, I'd much rather pay a few hundred extra now to let a lawyer/accountant do it because it is what they do full time. With that said, check out KKOS Lawyers and Kohler and Eyre CPAs. Mark Kohler, a partner in both firms, has a podcast that provides great tax and legal education and these firms are uniquely suited to serve entrepreneurs, and especially real estate investors. You can set up a free 15 minute consult with each to see if they can help you in your particular situation. I wish you the best in your investing!
@Bobby Trinh If it's simple one or two member LLC, you can create your own. Texas efile website is very friendly and it doesn't take that much time. You just pay the fees $300+. If you don't want to take that chance. I can refer CPA who does it for $595 including the filing fee. She also give operating agreement doc for you to execute if needed.
Investor · Manvel, TX · Member since 2016 · 133 posts · 54 votes
9y
When it comes to something like this, I am hiring an Attorney to produce an iron-clad document. This isn't where I am going to pinch pennies. Also, there is a bit more to it than just creating an entity. An Attorney understands the law and can properly advise you on all of the above.
Rental Property Investor · Dallas/Fort Worth, TX · Member since 2017 · 64 posts · 59 votes
9y
Filing/forming an LLC is quite simple in Texas. You can do all of it online through the Texas Secretary of State website. You will need to first do a name search to verify that the name is available. Then select a registered agent. Many of the registered agent services will file the LLC for you for a small fee. You will receive confirmation / certificates of formation within 1-2 business days if you file online. If you do a little research, you will probably be able to file an LLC on your own. However, going it alone or using registered agent services will not give you the guidance and advice that a knowledgeable CPA or Real estate Attorney can provide when needed. You will probably want a CPA and real estate attorney anyway as part of your support team as well as lenders, real estate agent, contractors, etc.
Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
9y
All of this is pretty good advice and notice it ranges from DIY to hiring an attorney! I have clients who hire me for the first formation, then file their own down the road. Better to be safe than sorry.
Philadelphia, PA · Member since 2011 · 155 posts · 124 votes
9y
@Bobby Trinh, I know I'm a little late here... but what the heck, maybe you'll need these steps again when you form your next Texas LLC ;) Here's the break-down:
1. Texas LLC Name: You need to make sure your desired LLC name is "distinguishable", meaning unique among all the other businesses registered in Texas. Don't ask me why, but Texas has the MOST STRICT requirements when it comes to name availability. Yea, there is a "name search" via the Comptroller (https://mycpa.cpa.state.tx.us/coa/), but use that ONLY as a preliminary search. You'll need to call the Corporations Section and get pre-clearance. Their hours are 8am to 5pm, M-F.
Your TX LLC name must end with an allowable designator: LLC (most common), L.L.C., Limited Liability Company, Limited Liability Co., Ltd. Liability Company, Ltd. Liability Co., Limited Company, Ltd. Co., or Limited Co.
2. Registered Agent: A fancy word for a person or company who agrees to accept Service of Process if your LLC is involved in a legal or court matter. It's where your LLC can get served. Address of Registered Agent must be a street address. PO boxes are not allowed. You can be your LLC's Registered Agent, or you can use the address of a friend or family member. You can also hire professional Registered Agent services, more technically known as a Commercial Registered Agent.
3. Certificate of Formation: This is the document that creates your legal entity (once processed and approved by the state). Also known as Form 205. If filing by mail, you'll also need to send in a Consent to Serve Form (Form 401A), which is the Registered Agent accepting their appointment as such. Filing fee for the Cert. of Formation is $300. You can also file these online via SOS Direct: https://direct.sos.state.tx.us/acct/acct-login.asp. It's kind of quirky as they make you enter your credit card info every time you login, but don't stress. It's only charged if you complete the filing. Approval by mail takes 5-7 business days. Approval online takes 2-3 business days. Once your TX LLC is approved, you'll get back a stamped and approved Certificate of Formation and a Certificate of Filing.
4. Operating Agreement: Have all LLC members sign an Operating Agreement. Spells out who the owners are, how much they own, how profits are split, how taxes are paid, how the LLC is managed, and more.
6. Bank account: Open LLC checking account. Some banks charge monthly maintenance fees, but if you call and shop around you can find banks that don't charge monthly fees. There's always a few in each area.
7. Annual Report & PIR: The "Annual Report" in Texas is known as the Public Information Report (PIR) and Franchise Tax, and this is required by all Texas LLCs. Annual Report is filed with Comptroller, not the Secretary of State. You'll pay a franchise tax (usually 1%) if gross receipts are over $1M. Due by May 15th. The first one is due the year after the year of LLC formation. Most filers don't pay anything, but I recommend speaking with an accountant in Texas.
Attorney · Houston, TX · Member since 2016 · 61 posts · 38 votes
9y
@Matt Horwitz nailed it. That's a pretty good description of what needs to happen. I usually tell people that they can create and file an LLC on their own (if that's the sort of business structure they want). It's cheap and easy. But if you're looking for a solid operating agreement or bylaws, then I would talk it through with a lawyer. It may save a lot of headache on the back end.
Investor · Flower Mound, TX · Member since 2017 · 182 posts · 198 votes
9y
Creating the entity I would do (and have done) yourself. It's pretty easy as described. Then depending on the number of members you either get one of those canned operating agreements from nolo.com or get an attorney to draft one. For a multi-member LLC with substantial assets, you probably want your lawyer to do it. You'll probably need one (a lawyer) for other things anyway once you are a certain size. I just recently updated my estate plan with my wife and since the lawyer/firm also specialized in Texas real estate, he read over a couple of purchase contracts for me for free. I told him I was going to have him re-draft my operating agreement some time. In the meantime I converted my LLC to a Texas Series LLC, and will definitely have him create the operating agreements for each new series as I create them. I haven't needed to yet, since I'm pretty new to REI.