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Choosing the Right Business Formation Structure for Your New Company

 Posted on June 23, 2023 in Business and Commercial Law

TX business lawyerThe entrepreneurial spirit is strong in Texas, so it is not surprising that hundreds of thousands of new companies are formed in the Lone Star State each and every year. Most of these new companies are smaller and primarily serve their local communities. Others aim to reach consumers far and wide online. And still, other companies are launched as large, complicated operations with broad appeal and aims to expand as rapidly as possible.

The law recognizes that companies meant to serve the residents of a small town and those with aspirations of becoming international tours de force need to be structured differently. In order to serve companies operating under a range of circumstances, Texas allows business owners to choose from a variety of different business formation structures when they go through the process of having their new enterprises recognized by the state.

Your Primary Options

There are four primary formation structures that new Texas business owners can choose from. Some of them are more well-suited to smaller enterprises and others are more well-suited to higher-risk ventures and complicated operations. They all feature potential benefits and drawbacks:

  • Sole Proprietorships – Owned by a single individual, maximum control over operations, little-to-no reporting requirements, taxed on the owner’s personal return, no personal liability protection
  • Partnerships – Owned by two or more individuals and/or entities, taxed on the owners’ personal returns, flexible managerial structure, little-to-no personal liability protection
  • Limited Liability Companies (LLCs) – Owned by one or more individuals who are referred to as members, taxed either personally or as a distinct entity, well-suited for most companies, personal liability protection
  • Corporations – Owned by shareholders, numerous reporting requirements, taxed as a distinct entity, rigid managerial structure, maximum personal liability protection

If you are looking to start a business, know that the structure that is most likely to help you achieve your goals will depend upon a variety of factors. Speaking with an experienced business attorney can help you to determine which structure will best serve your new company’s needs.

Contact a Reputable Tarrant County Business Lawyer Today for More Information

There is no single “right” way to approach the process of business formation. Different entrepreneurial visions and circumstances call for various courses of action. By speaking with the knowledgeable team of Tarrant County, TX business lawyers at Cain & Kiel Law about your goals, you will place yourself in a truly informed position to choose the right business structure for your unique company. To learn more about Texas business formation matters, you can schedule a risk-free legal consultation by submitting a contact form on our website or by calling us at 817-645-1717. We look forward to speaking with you.


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