Texas law recognizes several different business entities with different characteristics. Choosing on a business entity for your enterprise depends on the specific needs, strengths, and goals of your business. At the Law Office of Nancy Perry Eaton, PLLC, you will have access to an experienced legal advisor who can guide you through the preliminary phases of planning and forming your own business.
Attorney Eaton can help determine which of the following entities best suits your business needs:
- Sole proprietorships: A sole proprietorship is a form of business organization involving one individual. The individual is personally liable for business obligations, including contractual responsibilities and paying taxes.
- Partnerships: A partnership involves two or more persons carrying on a business for profit. The partners are co-owners of the business and are personally liable for its legal obligations. Forming a partnership involves preparing a written partnership agreement and registration of the entity with the Texas Secretary of State.
- C Corporations: A corporation is a business entity with centralized management that exists as a separate legal entity from the company’s owners. Because the corporate entity is distinct from its owners, the owners are not personally liable for the corporation’s business obligations. As a separate legal person, the C corporation must pay taxes on its earnings. When the corporation distributes profits to its owners, the owners must also pay taxes on those distributions. Corporations are formed by preparing articles of incorporation, designating an agent for service of process, preparing corporate bylaws, and filing a certificate of formation with the Texas Secretary of State.
- S Corporations: An S corporation has the same characteristics and formation requirements as C corporations, but qualifies for pass-through tax treatment by the Internal Revenue Service. An S corporation does not have to pay taxes on its revenues—only its shareholders pay taxes on distributions they receive. Your attorney can advise you on whether your business qualifies for S corporation election.
- Professional Corporations: A professional corporation is made up of owners licensed in the same profession. The governing body for the profession must approve the formation of a professional corporation. For example, the State Bar of Texas must approve the formation of a professional corporation of lawyers, while the Texas Medical Board must approve the formation of a professional corporation of physicians.
- Limited Liability Companies (LLC): Limited liability companies can be thought of like a mix between a corporation and a partnership. Like a corporation, the owners of an LLC are not personally liable for the company’s business obligations. Like a partnership, the LLC does not pay taxes on its revenues; only the company owners pay taxes on the company’s profits. Moreover, LLCs are not subject to the same formalities as corporations.
To schedule a consultation, call the office at (254) 221-8588 or complete a consultation request form online today.