Forming an LLC in Texas

Choosing the appropriate business structure for a new commercial venture is one of the most important decisions that entrepreneurs in Texas and around the country make. Forming a sole proprietorship is the quickest and easiest way to get a new business up and running, but sole proprietors have no asset protection and can lose their personal homes and savings if their businesses are sued. Corporations offer limited liability, but they are more complex and expensive to form. Subchapter S corporations protect assets like a C corporation and provide pass-through tax benefits, which is why they have become extremely popular. Another form of business entity that has been growing in popularity in recent years is the limited liability company.

A hybrid business structure that offers multiple benefits

LLCs are becoming increasingly common because they offer asset protection, structural advantages and tax benefits. An LLC operates in a similar way to a partnership, but its owners are known as members rather than partners. While partners have to be people, members can be people, trusts, partnerships, corporations or any other kind of commercial or legal entity. Members do not have the same legal exposure as partners, but they do enjoy similar pass-through tax benefits.

Forming an LLC in Texas

To form an LLC in Texas, a certificate of formation must be filed with the Secretary of State. The Secretary of State provides a form that meets requirements laid down by state law, and it can be completed and submitted online. However, the Secretary of State advises individuals who are thinking about forming an LLC to consult with an attorney before moving forward.

Legal help for Texas entrepreneurs

The economy in Texas provides entrepreneurs in the Lone Star State with significant opportunities, but seizing them and achieving long-term success requires careful planning. If you are thinking about opening a business in Texas, an attorney with business law experience may explain the legal, financial and administrative differences between partnerships, corporations and LLCs. An attorney may also help you to choose the type of business entity that will offer the most advantageous combination of asset protection, tax savings and structural flexibility.