Starting a Business in Texas
With spring in the air and a somewhat stable economy beneath our feet, the time may be right to strike out on your own and give life to your business idea. Whether you desire flexibility in scheduling your time, increased earning potential, or both, give yourself a greater chance of success by selecting the right type of business entity to meet your requirements.
Which type of legal business entity is right for me?
A sole proprietorship could be right for you if you don't have any business partners or employees. Freelancers and independent contractors often set up their businesses as sole proprietorships. On the other hand, if you have business partners or employees, you may benefit from certain protections found in other types of business entities, such as a limited liability company.
In Texas, most businesses elect one of these six legal business entities at the time of formation, depending on the anticipated business size and structure:
- Sole proprietorship — This is the simplest and most common type of business and usually consists of a single individual. Favorable tax treatment may be an advantage, but there is no protection from liability for the owner.
- Corporation — Under the law, a corporation has the same rights and duties as an individual. Owners, or shareholders, are protected from liability to some extent, but reporting requirements and tax treatment can be a disadvantage.
- Limited liability company — A limited liability company (LLC) has protections built in which can limit an owner's liability for actions other than his own.
- General partnership — A partnership is when two or more people operate a business or work toward a common goal for profit. A partnership can be formed without any formal documents, which can be an advantage or a disadvantage, depending on your situation.
- Limited partnership — In Texas, a limited partnership may be formed by two or more persons, with one or more general partners and one or more limited partners. The limited partners have minimal management authority.
- Limited liability partnership – An LLP is similar to a limited partnership, but general partners also enjoy limited liability.
The best news about choosing a type of business entity for your start up is that few things are permanent. If you start out as a sole proprietorship or other type of business and later decide you need to change your business structure, an experienced business law attorney can guide you through the process seamlessly.
Call today for advice about starting your business the right way
For advice and help deciding which type of business entity fits your circumstances, contact an experienced Bryan-College Station, Texas business law attorney. Our attorneys provide assistance and answer your business start up and management questions. Call the Peterson Law Group to make an appointment at 979-703-7014” target=”_blank”>979-703-7014 or fill out our online contact form.