If you are in business in Texas or about to embark on a business venture in Texas, it is important that you understand how the business laws will apply to your business so that you do everything by the book. When it comes to business, Texas has a rock-solid reputation because of low business taxes, no income tax and an economy that is generally in good shape.
Of course, there are many things to consider when it comes to your business and before you make such a major decision as setting up a business in a specific location, you must think about it seriously. If you do end up having a business in Texas in the end, it is essential that you understand all of the relevant state and federal laws as well as understanding what to do if a legal issue should happen to come up.
Business structures in Texas
There are numerous existing business structures that you can choose in Texas and each one has positive and negative points to them. It is important to keep in mind that the business structure that you end up choosing will affect your tax responsibilities as well as what you are liable for as a business owner. The four main business structures are:
- Sole proprietorship: This is a business that is owned and run by one person. This type of business structure doesn’t require a formal organization; however, the business owner still has an obligation to apply for the needed business permits and licenses.
- Partnership: This is a business owned by at least two people. Each partner has an equal share (or proportionate share of the business. Within a partnership, there are three sub-partnerships that may exist:
- General partnership: This is a partnership in which all owners have an equal share of the business.
- Limited partnership: This is a partnership in which each partner has a share that is based on their particular personal investment in the business.
- Limited Liability Partnership (LLP): This type of partnership is similar to a limited partnership; however, there are some tax benefits and protection against debt and liability for the partners.
- Corporation: This is a business that is treated like a person who is a limited liability partner and protects the owners (also called shareholders) of the corporation from liability. The employees (or directors) run the corporation on behalf of the shareholders.
- Limited Liability Company (LLC): This is a business structure that is a combination of a partnership and a corporation. All business owners (or members) pay the company’s taxes as part of their personal tax returns and have limited liability, which is relative to their investment.
Help from a Texas business attorney
If you own any type of business in Texas, the experienced advice of a Texas business attorney can really help to keep your business running smoothly and to educate you about the business laws that are important for your business. It is important to have a trusted legal advisor who can help you to navigate the process and your attorney can fill that role. You may find that business law in Texas is complicated and the right advice can make a tremendous difference to your business now and in the future.