Company Formations Texas

While starting a business is an exciting endeavor, it can also be stressful and even disastrous if you a do not know the legal ramifications for each type of business formation. It is highly advisable you hire an experienced business law lawyer to help you determine your legal needs and priorities and figure out which type of ownership structure is best for you. Every state has different laws governing businesses and Texas is no different with how complicated the process can be. The most common types of businesses formed are: sole proprietorship, partnership, limited partnership (LLP), limited liability corporation (LLC), corporation, non-profit, and cooperative. For many new businesses, whether just starting small, or if you intend to remain small, the best and simplest choices are sole proprietorship and partnership, (if there will be more than one owner).

A simple partnership (between one or more people) or sole proprietorship may be the best choice if there is not a large risk of liability or being sued and requires no filing of papers or registering with the state. The business starts when you start it and the taxes are aligned with the owner's personal taxes. Even with a simple partnership, you may want legal advice to draw up a contract between the owners and decide whether all are equal partners or will have unequal percentages in the business dependent on amount invested and management stakes. Limited partnerships and LLPs are more costly to set up and run, but a good idea if there is a risk of litigation and acquired business debts down the road. LPs and LLPs generally have one main partner for investment and management purposes having more control over daily operations and decisions, and then other partners for investment purposes, but with limited control and therefore limited liability to business debts. Corporations and limited liability corporations (LLCs) are even more costly to set up and run, but are worth the extra cost and effort in the long run if you want to protect your personal assets, or have a much more limited liability for the business debts. A corporation is a completely separate legal and tax entity, so the corporation pays its own taxes and is completely separate from the owner's personal taxes, other than reporting the salary they draw from the corporation. A LLC is more like a partnership when it comes to tax reporting, but has the similarity to corporations in terms of its limited liability for business debts and claims. Non-profits are fairly self explanatory because of their association with charitable work and well known tax free status. Cooperatives are common for small food or book stores or work groups for artisans. While they have specific state laws that address them, they are much less common than the others.

When you consider the complexities of liability, tax, contracts, registering, permits, licensing, and capital; the need for an experienced business attorney is obvious to aid you in starting your dream rather than creating a nightmare trying to figure the laws out on your own. Contact The Pursley Law Firm to get your dream started on the right track.

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