Entrepreneurs wishing to start their own business will need more than an idea and an office. The starting point for any business is choosing the type of corporate entity to form, and contacting a business lawyer Dallas TX is the first step in that process. Choosing a corporate form may seem rudimentary, but the type of business the owner intends to run as well as the number of owners, the number of employees, and the volume of sales can also play a role. Texas business owners have multiple choices when it comes to business formation.
Business Lawyer Dallas TX: Types of Business Forms Available in Texas
The basic types of business entities in Texas include:
Sole Proprietorship. In a sole proprietorship, an individual operates a business without a formal corporate entity. He or she files personal tax returns and includes the business income. There is no separate legal entity, and so the business’ obligations are the owner’s obligations also – that means that if the business gets sued, the owner is personally liable for the outcome.
Partnership. There are several types of partnerships. A general partnership is similar to a sole proprietorship in that there is no legal corporate entity, even if the business is operated under an assumed name, except the business is owned and operated by two or more people. Like with a sole proprietorship, there is no liability shield for the owner. Limited Partnerships (LPs) or Limited Liability Partnerships (LLPs) are similar but follow certain corporate formalities and may protect the partners from liability for the acts of the partnership or the acts of the other partners.
Corporation. A corporation is a separate legal entity formed by filing certain documents with the Texas Secretary of State. Corporations must follow certain formalities, such as drafting articles of incorporation and bylaws, and they must appoint officers and directors. Corporations are owned by shareholders. A shareholder of a corporation may be subject to double taxation – that is, the corporation is taxed on its income and the shareholder is taxed on any dividends, although many small businesses do not issue dividends. Generally, the shareholders of a corporation cannot be held liable for the actions of the corporation except in certain limited circumstances.
Limited Liability Company (LLC). A limited liability company, or LLC, is the corporate form of choice for many small businesses because it offers the protections of a corporation without the complexities in taxes and formalities. Instead of shareholders, an LLC is comprised of members, and management of the business can be delegated to one or more managing members or to all members. LLC members, like corporate shareholders, are shielded from liability for the acts of the LLC unless certain conditions are met.
Professional Corporation (PC). A professional corporation is a corporation formed by professionals – attorneys, accountants, architects, etc. It has the requirements and protections of a regular corporation. In Texas, professionals can form a PLLC, which is a Professional Limited Liability Company.
Business Law Dallas TX: Choosing the Appropriate Corporate Form
Choosing a corporate form is an important decision. Those who are considering starting a business will need to consider the tax implications of their choice, as well as personal liability if something goes wrong. The best way to choose the correct corporate form is to consult with a business lawyer Dallas TX. Our experienced attorneys are available for consultations at (972) 893-9340, or we can be reached on the web at simonpaschal.com/contact-us/.
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