Limited Liability Company
Limited Liability Companies are the most common type of entities filed with the Texas Secretary of State. LLCs combine the liability protections of corporations with the tax benefits of partnerships. This makes them a very attractive corporate form for most business owners.
Owners of LLCs are called members. In this regard, any “person” may be a member of an LLC. This includes individuals, corporations, partnerships, or other LLCs. When filing the certificate of formation for an LLC, the members elected for the members themselves or for managers to govern the company. Managers are similar to the directors of a corporation.
One benefit of an LLC over a corporation is the lack of formal requirements for governance. LLCs do not require annual meetings or the specific offices (i.e. director, president, and secretary) a corporation requires. Additionally, an LLC provides to its members the same liability shield as a corporation.
By default, an LLC with more than one member is taxed as a partnership – a “pass-through” entity. However, the members of an LLC can affirmatively elect to be taxed as a corporation through a filling with the IRS.