New business owners face many important decisions. One of the first decisions an owner must make is selecting the type of entity for their business. Our lawyers are here to assist with your business formation. We have licensed lawyers that can form business entities or assist with mergers and acquisitions of businesses in Texas, Oklahoma and Kansas. We can also assist in drafting assignments, certificates of ownership, annual minutes, resolutions, and other business records. We are also equipped to keep your business in good standing by the preparation and submission of annual reports to the Secretary of State or other state agencies.
Below are brief descriptions of the business entities we can help you form and maintain.
Common Business Entities
Business owners should become familiar with the different types of entities, and then coordinate with a business incorporation lawyer and tax professional to complete the business formation process. The most common business structures are as follows:
- Limited Liability Company
- Series Limited Liability Company
- Limited Partnership
- General Partnership (formal formation not required)
- Sole Proprietorship (formal formation not required)
Limited Liability Company
The Limited Liability Company (LLC), including the Professional Limited Liability Company, is quickly becoming a popular entity structure for all sizes of businesses due to their unique combination of corporation and partnership features that provide flexible protection to the member(s) and assets. LLCs can be taxed as sole proprietorships, partnerships or corporations and we can assist you in determining the most advantageous tax structure.
Series Limited Liability Company
The Series Limited Liability Company is a relatively new business entity that is great for real estate investors and others who desire liability protection for multiple large assets and business ventures. Each series is treated as a separate entity for purposes of imposing liability.
The Corporation is one of the oldest and most popular entity choices for businesses for a variety of reasons, including liability protection of the shareholders. Corporations may elect various tax structures including the potentially advantageous pass-through taxation of an S Corp.
Partnerships can be used for simple small business as well as large enterprises. The limited partnership requires two types of partners, general & limited. If the partnership is set-up and managed properly, the limited partners will have liability protection from the debts and obligations of the partnership.
A general partnership is created when two or more persons associate to carry on a business for profit. A general partnership operates in accordance with a partnership agreement, but there is no requirement that the agreement be in writing and there is no state filing requirement. Like a sole proprietorship, a general partnership does not require any formal action and will automatically exist if certain criteria are met. In the absence of a written partnership agreement, many states have enacted statutes to provide an overall structure for the management and operation of the general partnership. Each individual partner, and the partnership as a separate and distinct entity, is jointly and severally liable for all debts and obligations of the partnership.
The simplest form of business structure is the sole proprietorship. In a sole proprietorship, a single individual engages in a business activity without formal organization. A sole proprietorship has no separate legal existence apart from the sole proprietor. The sole proprietor has all the control of and responsibility for the business operation and business decisions. The sole proprietor owns all the business property as an individual but also assumes unlimited personal liability for all debts and other claims against the business. If the business is conducted under an assumed name (a name other than the surname of the individual), then an assumed name certificate (commonly referred to as a doing-business-as (DBA) certificate) should be filed with the county clerk in the county where a business premise is maintained. Business entities are required to register their DBA with the Secretary of State as well.