Dallas Business Formation Lawyers
Customized Solutions to Your Business Needs in North Texas
Starting a new business is an exciting and often challenging task. You
will need to juggle various issues and complete certain steps before you
can even open the doors. Among these tasks is deciding what type of legal
structure your business will have.
The type of business formation you choose is necessary at the outset, whether
you are starting out with a simple DBA or forming something more complex.
Some of these formations are easy and inexpensive to put together, while
others involve more steps.
At Mullin, P.C., we can educate you on all business formations, their pros
and cons, and advise you on what would best meet your needs. We are here
to get you started with the right formation to help you get your business
off the ground and moving forward.
Our attorneys are experienced in all matters of
corporate formation and governance. Reach out today!
Business Formations – What Are They?
Only a handful of business formation types exist, each with its own advantages
and disadvantages. The type you choose will have a deciding factor on
such matters as your personal liability, your tax liabilities, and other
important aspects of your operation.
Sole Proprietorships
Sole proprietorships are the simplest business structure to form. This
is a one-owner business done under your name or a DBA (doing business
as) with you and your business as one entity.
This type of business may require a local or state business license depending
on your circumstances. However, you will not be filing any incorporation
documents.
With a sole proprietorship, you have no protection against claims or lawsuits
made against your business. Your personal assets can be taken.
Partnerships
Partnerships are the simplest business formations for co-owners. Generally,
you have a partnership agreement that lays out how the business will operate
and how your profits and losses will be handled.
Partnerships come in two forms: general and limited:
- In a general partnership, the general partners have joint authority and
can both be held personally liable for all business debts
- In a limited partnership, the limited partners cannot be held personally
responsible for business debts - only the general partners can
Limited Liability Company
Limited liability companies, or LLCs, are formed through filing a certificate
of formation with the Texas Secretary of State. This legal structure is
distinct from the others in that it has the powers of a corporation as
well as a partnership.
Depending on how it is formed, it may be similar to:
- A general partnership that has limited liability
- A limited partnership where all partners may be responsible for management
- An “S” corporation without corporate ownership or tax restrictions
In an LLC, the owners are “members,” who can be people, partnerships,
corporations, or other legal structures.
Corporations
Corporates are created by filing a certificate of formation with the Secretary
of State. This is a legal entity whose owners are shareholders that provides
limited liability protection.
This type of business is generally managed by directors, although shareholders
can make agreements to eliminate directors to have shareholder management.
- In a “C” corporation, its earnings are taxed and shareholders
pay taxes on corporate dividends
- In an “S” corporation, the owners take profits and losses
Corporations must file corporate tax returns, have annual meetings, and
have accounting obligations.
