Making your dreams a reality by starting your own business is an exciting adventure, whether you are a new startup that has never been in business before or an existing or past small business owner. However, ensuring that your business is structured to your advantage is a critical step in setting up your enterprise.
Many types of business structures exist, each with its own set of pros and cons. At the Law Office of Jason Brown, we can walk you through them and help you choose the one that best fits your needs. How your business is formed will play a key part in its future. We can make sure that your business venture has the proper foundation it needs so that you can move forward safely and securely.
Business Formations in Texas
Various business structures come with certain benefits and risks. We can help you understand them so that you have the legal protections you need and want.
Business entities can include:
Sole Proprietorship. You are the sole owner of your business. This is achieved simply by beginning business operations in which you and the sole proprietorship are one. This means you will pay taxes on any business profits as income on your personal taxes. You are also personally responsible for any business debts or liabilities.
Partnership. This Is similar to a Sole Proprietorship, except that it is owned by two or more people. No need exists to file any papers or pay any fees to establish a Partnership. Each partner will report their fair share of the business profits on their personal taxes as income and each partner is personally liable for any business liabilities.
Limited Partnerships (LP) or Limited Liability Partnerships (LLP). These require filing fees, are more expensive to set up, and are more complicated. They usually consist of “general partners” and “limited partners.” General partners normally deal with day-to-day operations and are generally personally liable for business liabilities. Limited partners are not personally liable and are not involved in the day-to-day operations.
Corporations and Limited Liability Corporations (LLC). These may shield you from any personal liability resulting from business debt. Corporations are their own legal entity for tax purposes, while LLCs are not their own entity, meaning the owners of the LLC must pay personal income taxes on their share of the profits.
Professional Limited Liability Corporations (PLLC). These are LLCs established for certain licensed professionals. These professionals are not held liable for any business debts or lawsuits.
Nonprofits. These are corporations formed with the intent to carry out charitable, educational, literary, religious, or scientific purposes. Usually, the money taken in for charitable purposes is not taxed by either the federal or state government.
Co-ops. These are businesses associated with grassroots organizations.
After understanding the tax consequences, personal liability protection or lack thereof, the ease of setup, the separation between owner and management, and other aspects of the various formations, Attorney Jason Brown can act on your behalf to handle all the needed legal steps to make your business an existing reality.
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