About Entity Formation for Businesses
Forming your business is an exciting yet comprehensive process which requires a variety of choices at each step, all critical choices that will define how your new business will operate. Working with an attorney during your business formation journey will provide you with support and peace-of-mind throughout the entire process, saving your growing business valuable time, money, and resources. Our attorneys understand the importance of making the correct business and legal decisions at every step to protect the interests of your business.
Types of Business Structures
Of the many choices your business will need to make during its lifetime, choosing the correct business structure will likely be the first legal decision you make with our attorneys, making it one of the most critical decisions. Working with our attorneys to choose the correct business structure will ensure you understand your personal protection, all necessary documents are completed, and the proper tax structure is in place. Our attorneys will provide expert guidance through the formation of the following business structures, as well as many others not described below but are legally recognized in Texas.
- Sole Proprietorship
A business with a single owner that is not incorporated with the State. This business structure is not taxed as a separate entity from the business owner, instead, the business income is reported on Schedule C of the business owner’s Form 1040. There is no liability protection for sole proprietors through this business structure.
- General Partnerships
Business structure is created when two or more people operate a for-profit business together and is a result of business activity, rather than formation through documentation with the Texas Secretary of State.
There is no liability protection for the partners in this structure. An additional risk is assumed by each partner in a general partnership as each partner can be held liable for the actions of their partner. Partners have additional legal obligations to the other.
- Limited Partnerships
This business structure is most common for business owners who operate as partners, but do not want to be liable for the actions of their business partner. There are different types of limited partnerships, including limited liability partnerships, and limited liability limited partnerships, all legally recognized by the state of Texas.
Our attorneys will assist in filing your certificate of formation with the Texas Secretary of State, essential in the legal recognition and structuring of your new business. Additional documents and decisions may be required depending on the type of partnership being formed. All partners must comply with the structure agreed upon during the formation of your business in order to preserve legal liability protections granted by the structure.
- Limited Liability Companies
The most common business structure is the LLC. This is because a Limited Liability Company is relatively easy to operate with multiple members and provides you protection from business liabilities. Our attorneys will handle the most complicated steps, the formation of the LLC with the Texas Secretary of State and the filing of your EIN with the Internal Revenue Service. Although operating an LLC can be easy, the formation is comprehensive and requires numerous documents and agreements. Our attorneys will ensure you are preserving your liability protection by properly structuring your LLC.
In addition to the liability protection provided by this structure, forming an LLC provides business owners, managers, and members the ability to obtain permits and business licenses, open bank accounts, hire employees, and enter into contracts.
- Series Limited Liability Companies
The Series LLC allows business owners and investors to compartmentalize the liabilities, financials, and assets of numerous companies. Often the various subsidiary companies are all doing business within the same company, but the Series LLC business structure allows the distinction and separation of each company’s assets and liabilities. This business structure is best for those business owners and investors who expect to establish numerous businesses, all of which to some degree operate dependent on the others. Structuring your business through a series of LLCs provides the same liability protection, taxation structure, and management arrangements.
Corporations, much like limited liability companies, are very common and provide you with protection from business liabilities. Laws and regulations regarding the formation and operation of corporations are more complicated, therefore guidance from an attorney is critical in the formation of your corporation.
This business structure is best for those businesses that are interested in selling ownership of their business to investors and shareholders. Although Texas has a legal exception, the most common corporations will elect a board of directors who will govern the operations of the business. Corporations are legally required to keep record of meetings, agreements, amendments and resolutions, as well as financial records.
Taxation is unique for corporations as one of two structures will be selected, C Corp or S Corp. Understanding and selecting the best tax structure for your corporation can reduce the tax liability of your business and your shareholders.
The formation, operation, and maintenance of a corporation is more complicated than other business structures, and additional risk can be introduced as a result. Protect yourself and your business by scheduling a consultation today.
Getting Started with Entity Formation for Your Business
- Email email@example.com with a thorough, but precise description of your business and business goals. Include information regarding all current/potential owners, managers, and members. Specify which business structure you are forming or those structures you are most interested in; our attorneys will address this during the consultation as well. Attach any relevant documents to this initial email. The contents of your email will remain confidential.
- Within 1-2 business days (often faster), you will receive a response to your email with a quote, payment link, and engagement letter for the initial consultation based on the summary of your business and the length and complexity of the documents attached.
- In no circumstance will you be charged more than your initial consultation quote unless you give written authorization to proceed with the representation. After the initial consultation, you may agree to proceed on an hourly basis, on a flat fee if available, or you may decide to end the representation.
Please note, the information on this webpage should not be considered legal advice and is strictly for informational purposes. Any interaction with this webpage or initial correspondence with our attorneys does not qualify as providing legal advice or retaining legal representation. Legal advice is available only to clients who have an executed Engagement Agreement with Forbes Barrentine Law PLLC. Forbes Barrentine Law PLLC does not provide legal advice relating to federal or state income taxes.