There are plenty of successful entrepreneurs in Texas â€“ and many of them are serial entrepreneurs. An article in DM Magazine features the stories of 34 innovative Dallas entrepreneurs. Thereâ€™s no doubt these entrepreneurs found the secrets to launching and running a successful business. They also formed the right entity for their businesses; a foundation required for success.
Serial entrepreneurs are everywhere, thanks to the ability to run a business entirely online. However, they donâ€™t always launch all of their businesses under one entity. Many create multiple, distinct businesses, and form them under separate LLCs. Having multiple business entities presents a bit of a logistical inconvenience. However, serial entrepreneurs in Texas have an advantage.
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LLC advantages in Texas
In addition to a standard LLC (Limited Liability Company), Texas has three special types of LLCs: a Series LLC, a Professional LLC, and a Foreign LLC. Each special type of LLC meets some common needs beyond what is available through a standard LLC.
The Series LLC
Available only in a handful of states, a Series LLC is perfect for simplifying investment portfolio management. According to Incfile, a Series LLC is designed to â€œallow you to manage multiple separate LLCs under one master, umbrella LLC. These can be very useful if you donâ€™t want to set up a separate Texas LLC for every individual business you run.â€
Each â€œmini-LLCâ€ in your Series can have its own members, bank accounts, debt accounts, and any other quality of a standard LLC. Each series can obtain a unique EIN and be treated separately under federal tax laws. However, theyâ€™re all under one filing.
A Series LLC offers all the regular benefits and protections of a standard LLC, but provides additional flexibility to separate or prevent shared liability. For instance, say a real estate investor with five properties places all properties under one standard LLC. All their properties share liability. If someone sues that real estate investor for something that happened on one property, all properties are vulnerable in the court proceedings. However, using a Series LLC to separate each investment would protect their properties as separate investments.
As with everything, there are precautions to take before jumping in to form a Series LLC. For example, if your business operates in different states, you may run into issues. Some states prohibit the Series LLC, so youâ€™ll need to consult with a professional before deciding on your business structure.
Also, managing the finances for a Series LLC can be complex and costly. For many serial entrepreneurs, itâ€™s the right choice. For others, itâ€™s not.
The Professional LLC
Some businesses in Texas canâ€™t form a standard LLC due to the industry, but they can form a Professional LLC. For example, professions that have special licensing requirements like dentists, attorneys, veterinarians, psychologists, architects, and physicians in Texas can form a Professional LLC.
Forming a Professional LLC would make sense for entrepreneurs who hold specialized licenses required to provide services to clients. There are no limits to the number of owners, no annual meeting or minute book requirements, and owners do get limited liability coverage for business debts. However, a Professional LLC doesnâ€™t get the tax benefits of a corporation and canâ€™t issue stock.
The Foreign LLC
A Foreign LLC is formed when the primary location of a business is out of state. This is the LLC option serial entrepreneurs will need to file in the state of Texas if theyâ€™re expanding to do business in Texas. Filing a Foreign LLC isnâ€™t necessarily an advantage specific to Texas, but it is an important requirement every serial entrepreneur should be aware of.
Are you a serial entrepreneur?
Do you have big dreams of achieving mega-success, like Richard Branson did (and continues to do) with his Virgin Enterprise? If thatâ€™s what youâ€™re setting your sights on, do some research into forming a Series LLC. When you launch multiple businesses or acquire multiple investments, you need a business entity that will provide you with the ultimate protection.
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