Q. My accountant has told me to change to an LLC. I have done that and am wondering if there are any restrictions on the type of business I must continue to operate? I am just thinking down the road that I might keep my business name and change the type of business I do.
A: The purpose clause stated in your Articles of Organization is a general purpose clause and allows the Limited Liability Company to engage in all conceivable activities of the Limited Liability Company permitted by law. You are restricted, however, from engaging in the banking business, trust company business, building and loan associations, insurance business, railroad activities, cemetery business, abstract of title business, and other businesses requiring either a special license or organization under an Act other than the Texas Limited Liability Company Act.
Should the Limited Liability Company do business under a name other than the exact limited liability company name, an assumed name certificate must be filed with the Secretary of State and with the County Clerk of the counties in which the registered office of the Limited Liability Company is located. If the principal office of the Limited Liability Company is located in a county other than the county containing the registered office, the certificate must be filed with that county as well. If an event occurs which makes the information in the assumed name certificate misleading, a new certificate will need to be filed. Also, the certificate will need to be renewed within six months prior to its expiration.
Finally, should you open an office or acquire property in another state, you may be required to qualify as a foreign Limited Liability Company to be authorized to do business in that state. This entails filing your Articles of Organization and paying initial and annual fees. Failure to qualify may prohibit you from suing to enforce your contracts in that state, or from receiving actual notice in the event you are sued.
Q. What should I tell my accountant once my LLC is set up? Anything important that he and I should discuss before conducting business?
A: With the assistance of your accountant, and where necessary with your lawyer’s assistance, the following steps must be taken immediately prior to, contemporaneously with or subsequent to your commencing business in the limited liability company form.
Any loans which you have made in your business should be transferred to and assumed by your Limited Liability Company when and if your accountant determines that no adverse tax consequences will result from such assumption of liability.
New loans made after you commence business as a limited liability company should be made in the name of the Limited Liability Company, even though you may be required to endorse or guarantee the same personally.
Whenever such a loan is made, it should be approved by a meeting of the Managers of your Limited Liability Company and the appropriate resolution adopted and inserted in the Minute Book of the Limited Liability Company.
All leases, contracts, and other arrangements which you have regarding your present equipment, office premises or furniture and any other contracts or arrangements which you have previously entered into in connection with your business should be modified, assigned, or rewritten in order to reflect the fact that the Limited Liability Company is the contracting party to each lease, contract, or obligation.
Editor's note: The information in this column is not intended as legal advice but to provide a general understanding of the law. Readers with legal problems, including those whose questions are addressed here, should consult attorneys for advice on their particular circumstances.
