Formation resources for Texas for profit LLC

So you’ve decided to start a for profit, cash flow positive, self funded, jump started business in the great state of TX.  You’ve done your research and found that you want to start a series LLC to provide maximum flexibility and asset protection. 

This is the exact route I took with Turn Net Systems. We were formed in the last days of 2015. Three years later (almost to the day) I have learned quite a bit about forming,  administering, governing, operating an LLC. Yes those are four distinct functions. 

Some presumptions:

  1. You are not immediately taking outside capital. You want to reserve that option for later. 
  2. You are granting equity to founders, with desire to retain option to pay salary later
  3. You want to run it as a real business , with a Board Of Directors , officers etc 
  4. You aren’t afraid to armchair legal/accounting all the standard off the shelf bits. 
  5. You are starting with ~10 total people , across directors and founders (split perhaps into officers (managers) and individual contributors. For reference as of 12/9/2018, TSYS has four directors, three officers (CEO/CFOO/CTO) and four individual contributors. Officers are authorized in the operating agreement to enter into contracts , they report to the board quarterly etc. Individual contributors have broad authority (including budgetary) but do not have ability to bind the company into contracts (and some other pro forma items). 

Here’s what I used to get started , with all the above in mind (80% of that was in place day 1, 20% evolved over 3 years)

Legal: 

https://www.lonestarlandlaw.com/

Buy his book: https://www.lonestarlandlaw.com/book-info.html

Taxes:

Buy the Nolo books

Use Quickbooks Online, neat.com, get TurboTax . Your taxes won’t be that complicated the first few years as you are starting up.  Keep good records, scan them to neat. Integrate neat to QBO. 

Here’s a collection of links I used when forming the LLC/drafting operating agreement etc. 

Entity Formation

http://www.baylor.edu/content/services/document.php/181957.pdf << a great article on what exactly is liability from a legal perspective. capital calls are given extensive treatment.

http://www.sos.state.tx.us/corp/forms/205_boc.pdf

http://www.lexisnexis.com/legalnewsroom/tax-law/b/federaltaxation/archive/2012/06/11/substantial-economic-effect.aspx << here be dragons. You don’t want to be subject to a “substantial economic test” it’s where laywers and IRS act like cats playing with mice before killing them.

http://www.swlaw.com/assets/pdf/news/2010/02/18/Series%20LLCs%20(BXS)_BaharSchippel.pdf << the professionals are nervous about series llc, but that is their job no?

http://apps.americanbar.org/buslaw/committees/CL690000pub/newsletter/200807/kean.pdf << lots of good tax info in here

http://thestartuptoolkit.com/blog/2013/02/equity-basics-vesting-cliffs-acceleration-and-exits/ << vesting basics

http://www.mosaichub.com/answers/question/how-to-create-a-vesting-schedule-for-a-company << vesting llc practical

http://www.brightjourney.com/q/actually-setup-vesting-agreement-co-founders-w-breaking-budget << more llc vesting stuff

http://www.baylor.edu/content/services/document.php/181957.pdf << withdrawl/expulsion of members. ties into vesting.

http://foundrs.com/ << equity calculator

https://www.clerky.com/yc-stock-plan-forms << equity vesting for yc companies

http://www.nolo.com/legal-encyclopedia/llc-operating-agreement-30232.html

Bizops:

http://firstround.com/review/Positioning-Your-Startup-is-Vital-Heres-How-to-Do-It-Right/
http://www.stmaryslawjournal.org/pdfs/Outenreath_Step12.pdf
http://comptroller.texas.gov/taxinfo/taxpubs/tx96_114.html

Here is a good collection of curated links on accounting:

https://bench.co/syllabus/bookkeeping/catch-up-bookkeeping-guide/
https://bench.co/syllabus/tax-deductions/small-business-tax-deductions/
https://www.irs.gov/publications/p535/ch01.html#en_US_2013_publink1000208623
http://blog.bench.co/how-to-go-paperless
https://www.odoo.com/documentation/functional/accounting.html
https://www.irs.gov/publications/p583/ar02.html#en_US_201408_publink1000269308
http://www.dwmbeancounter.com/tutorial/Tutorial.html

Most of the links were sourced from:

https://news.ycombinator.com/item?id=11239437

Leave a Reply

Your email address will not be published. Required fields are marked *