Dallas Business Formation Lawyers
Personalized Attention & 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.
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. As an example, as a sole proprietor,
you are typically the sole person responsible for all decisions concerning
your company. As a partner in a partnership, however, all decisions concerning
your operation would be the responsibility of all partners. At Mullin
Rybicki, 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.
Business Formations – What Are They?
Basically, there are four types of legal structures for businesses. They
Sole proprietorships which are the simplest 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. It may require a local or state business license depending on
your circumstances but you will not be filing any incorporation documents.
In this form, you have no protection against claims or lawsuits made against
your business; your personal assets can be taken.
Partnerships which 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 which involves 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, to a limited partnership where all partners may be
responsible for management, or to 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, which are also 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. It 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.