Own some real estate in the state of Texas? You might want to consider registering your holding as an entity. Here’s how.

 

Some land and property owners choose to register their real estate as a formal entity in the state of Texas as a Limited Liability Company (LLC) or a Corporation to hold and manage the properties. Here’s how you do it.

 

How to Real Estate as a Formal Entity

Choose a Legal Structure

Determine the most suitable legal structure for your real estate entity. LLCs are a popular choice due to their flexibility, liability protection, and ease of management. Corporations may also be considered, depending on your specific needs and long-term goals.

 

Select a Name

Select a unique name for your real estate entity that complies with the Texas Secretary of State’s naming requirements. Ensure the name is distinguishable from existing businesses in Texas and includes the appropriate designator (e.g., LLC, Ltd., Corp., Incorporated).

 

Draft Formation Documents

Prepare the necessary formation documents for your chosen legal structure. For an LLC, you will need to draft and file a Certificate of Formation, while a Corporation requires the preparation and filing of Articles of Incorporation. These documents outline important details such as the entity’s name, registered agent, management structure, and purpose.

 

Designate a Registered Agent

Designate a registered agent who will be responsible for receiving legal documents and official correspondence on behalf of your real estate entity. The registered agent must have a physical address in Texas.

 

File Documents and Pay Fees

Submit the completed formation documents along with the required filing fee to the Texas Secretary of State. The filing fees may vary depending on the chosen legal structure and can be found on the Texas Secretary of State’s website. Filing can be done online, by mail, or in person, with online filing being the most convenient option.

 

Create an Operating Agreement or Bylaws

Although not required by the state of Texas, it is advisable to create an Operating Agreement for an LLC or Bylaws for a Corporation. These documents outline the internal rules, ownership structure, decision-making processes, and responsibilities of members or shareholders. They are vital for establishing governance and protecting the interests of the real estate entity.

 

Obtain an Employer Identification Number (EIN)

Apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). An EIN is necessary for taxation purposes and is typically obtained by completing an online application through the IRS website.

 

Compliance with Additional Requirements

Depending on the specific activities and location of your real estate entity, you may need to comply with additional requirements such as obtaining permits, licenses, or adhering to local zoning regulations. Research and understand the applicable rules and regulations governing real estate operations in Texas.

 

Maintain Compliance

After registering your real estate entity, it’s important to maintain compliance with ongoing requirements such as annual reporting, filing of tax returns, and adhering to any state or local regulations related to property management and leasing.

 

Conclusion

It’s worth noting that while this information provides a general overview of the registration process for a real estate entity in Texas, it is advisable to consult with an attorney or business professional familiar with Texas laws and regulations to ensure compliance and address any specific circumstances related to your real estate holdings.