What is the most effective way to start an LLC?

Discussion in 'LLC Formation' started by Kumar, May 31, 2022.

  1. Kumar

    Kumar New Member

    I am currently located in NJ and wish to start an LLC in Texas and would like to know if there will be any tax advantages.
    If not please advise what would be the most cost effective way to start an LLC as I am planning to quit my full-time and get back into consulting. Prior to my full-time job I used to work as a consultant for another consulting firm and now my intention is to start my own tech consulting firm to offer Java development and mobile development services to clients. To begin with I will be the sole employee of the company and possibly my wife will be the second employee and hopefully in near future I can expand the company with more employees. This is all very new to me and I am clueless on where to start and I don't know how much it can cost. I will appreciate if someone can provide some guidance on how to begin this process in the most cost efficient and tax efficient way. I will appreciate your inputs.

  2. Charles T

    Charles T Administrator

    First of all @Kumar congrats on making the decision to switch from full-time employment to independent consulting! It takes courage and sheer willpower to do so, and that's no small thing in this world.

    In terms of cost, it's actually pretty reasonable to start an LLC in Texas. The Texas Secretary of State charges a $300 filing fee to get things going, plus an additional state-mandated 2.7% convenience fee on that to file an LLC Certificate of Formation. It will cost around $40 to file a name reservation application if you wish to reserve your LLC name prior to filing the Certificate of Formation (this is highly recommended to do early).

    To register your Texas LLC, you'll need to fill out & file Form 205 - Certificate of Formation with the Texas Secretary of State. You can apply with that online, by mail, or in person (I'm assuming you'd prefer the former two if you're still living in NJ). When filing your Certificate of Formation, you'll need to state whether your LLC will be member-managed vs. manager-managed.

    There are a lot of other caveats to filing an LLC, so don't be too hasty about filing before you've done your research and chosen the best setup for your tech consulting business - but also don't delay filing because it isn't as daunting as it seems - the hardest part is taking the first step, and I'd say you already have enough certainty about your Java/mobile focus that you're on solid ground.

    My 2 cents: dedicate a Saturday to researching (with breaks), take notes, fill out paperwork on Sunday, and then set a deadline for yourself to file by first thing Monday morning. Filing for an LLC shouldn't be a step that holds up your getting going - you've got this!

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