Business entities available to the Texas entrepreneur
One of the first and most important issues facing the proprietor of a new Texas business concern is the choice of business-entity type.
December 17, 2013 /24-7PressRelease/ -- Business entities available to the Texas entrepreneur
Article provided by Mastriani Law Firm, PC
Visit us at http://www.commerciallawtexas.com/
As the economy slowly improves, more Texans can consider starting new small or medium-sized businesses. One of the first and most important issues facing the proprietor of a new business concern is the choice of business-entity type. The legal structure of a new enterprise is crucial because it has many ramifications down the road for the running and success of the business such as impact on tax planning, personal liability and managerial control.
Texas business entities
Texas law provides for several different types of business entities to consider in business formation:
-Partnership: general, limited or limited liability
-Limited liability limited partnership
-Joint venture or joint enterprise
-Limited liability company, also called LLC
-Joint stock company
Well known types
The sole proprietorship is the most informal business type in Texas, having the simplest structure and least complex legal issues. A sole proprietorship has one owner, who has all management responsibility and is personally liable for the activities of the business.
In a general partnership, the partners agree to share the profits, losses and liabilities; and all have management rights. The limited partnership introduces a second kind of partner: the limited partner, who makes financial investments in the partnership without management power. A limited partner's liability is capped by the level of his or her financial contribution. A limited partnership also includes general partners.
A joint venture is similar to a general partnership except it is created to carry out a single transaction rather than an ongoing business concern.
A limited liability company is a corporation-partnership hybrid.
A Texas corporation has its own legal identity and is considered to be a "person" in Texas law for some purposes. The people who incorporate the business, who own shares in it, who run it and who work for it are separate from the corporate entity for liability purposes and are not personally liable for debts or losses of the corporate business.
Retain a business attorney early on
Any Texan considering creating a business entity should speak early on with an experienced lawyer who can explain the various entity options in detail as well as take the time to understand the goals, strengths and weaknesses of the business. Legal counsel with a deep understanding of the business can then advise the entrepreneur about which entity is a good choice.
Once the decision is made of which type of business entity to establish, the business organization attorney can draft the requisite legal documents needed and provide guidance about public filings and notices.
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