Many entrepreneurs who are in the process of starting their own companies often have questions about business law Dallas TX and a common question is which type of structure is best for their businesses. Selecting the wrong type can result in financial, tax, and relationship issues. There are four types of business structures, and each has its own advantages and disadvantages.
Business Law Dallas TX: Sole Proprietorship (No Legal Entity)
A sole proprietorship is a business that is owned by one person and is not organized as any particular legal entity (i.e. corporation, limited liability company, partnership, etc.). Unlike other business structures, there are no legal requirements that entrepreneurs have to comply with in order to create sole proprietorship businesses. Having sole proprietorship of a company sounds like it is extremely beneficial, but the sole proprietor typically makes all of the decisions and reaps all of the profit; this creates one glaring disadvantage: they are solely responsible for all of the company’s debts. This means that if for example, someone files a lawsuit against the company and wins, the sole proprietor is responsible for paying the amount, even if it is worth more than the entire company itself.
Business Lawyer Dallas TX: Corporation
Corporations are owned by one or more individuals, and in order to create a corporation, the owners must meet state requirements, which often include creating articles of incorporation and bylaws, as well as issuing stock. One of the stresses of owning a corporation is the responsibility of maintaining corporate formalities and conducting regular director’s and shareholder’s meetings, which can be too much for a small business to take on. A benefit of owning a corporation, however, is that the liability of the debts of the corporation is limited to just the business owners’ investments in the business.
Business Attorney Dallas TX: Limited Liability Company
A Limited Liability Company, or an LLC, essentially combines the management of a partnership with a corporation. Business owners must meet the legal requirements as dictated by their states in order to become LLCs. Consulting with an attorney who practices business law can help you determine if you meet the requirements. Like a corporation, an LLC provides insulation to the owners for the company’s debts.
Business Law Dallas TX: Partnership
As its name implies, a partnership is created when two or more people create a business together that is not a corporation or an LLC. Depending on the nature of the partnership and the specific formation (i.e. L.P., L.L.P., etc.), more steps and requirements may be necessary to create a partnership. Drafting a written partnership agreement is recommended to help clarify each of the partners’ roles. For instance, the matters of how much each person will contribute to the business and how profits and losses are taken care of are typically discussed and finalized in this agreement. Consulting with a lawyer who specializes in business law is the ideal way to draft such a document and help to iron out the details.
Simon | Paschal Can Help You Structure Your Business
The legal team of Simon | Paschal specializes in business law Dallas TX. Schedule your appointment today by calling 972-893-9340 and find out what we can do for you.
Business Law Dallas TX
Simon Paschal PLLC
13601 Preston Road Suite W870
Dallas, Texas 75204