When starting a new business, one of the most important decisions is to decide on the right type of business entity with the help of our skilled Houston LLC lawyer at GK Law. With each business venture in Texas, various federal, state, and local legal concerns must be addressed.
Your business assets must be protected, and your personal assets must be guarded against the liabilities that arise in common business transactions. Contact our law office now and schedule an initial consultation with our trusted Houston business law attorneys.
A business owner can choose among various structures to operate a Texas business. These structures range from a simple sole proprietorship - to the more complex, such as a C corporation. One extremely popular entity type is the limited liability company (LLC). Whichever entity is right for your business plan, our qualified Houston LLC lawyers can get you off to the right start.
At GK Law, we can help:
We proudly serve the Houston area and look forward to helping your Texas business. Contact our law office now and schedule an initial consultation with our top-ranking Houston business attorney.
A limited liability company (LLC) is becoming an increasingly used business entity for entrepreneurs across various industries. It is a popular business structure combining the characteristics of both a corporation and a partnership. A Texas LLC provides its owners with liability protection similar to that of a corporation while retaining the beneficial tax characteristics of a partnership.
An LLC can have one or more owners, commonly known as "members." This business structure allows you to separate your business affairs from your personal matters. A credible Houston LLC lawyer can help you understand the nature of this business structure.
There are many benefits to structuring your business entity as an LLC rather than a sole proprietorship, partnership, or corporation. The advantages of LLC are best suited for businesses seeking a corporation's formality with a partnership's flexibility. A knowledgeable Houston LLC lawyer can help determine whether establishing an LLC is the most appropriate option.
There is no legal distinction between you and your business when you have a general partnership or a sole proprietorship. Since LLCs exist as independent entities, their owners are not liable for the company's obligations and debts. It can protect your personal assets from being taken into pay debts or claims against your business.
One of the key benefits of forming an LLC is pass-through taxation. With pass-through taxation, business partners pay taxes on all business profits on their individual tax returns. LLCs allow owners to avoid this so-called "double taxation" by choosing pass-through status with the Internal Revenue Service (IRS). With double taxation, income gets taxed both at the corporate level and when distributed as dividends to owners. With an LLC, income is only taxed at an individual member level rather than at the company level.
LLCs don't have to use a formal structure. There are no minimum or maximum limits on the number of owners, also called members, that an LLC can have. The LLC's members have more choices about how they run the business and make decisions.
In terms of paperwork, the requirements and fees for an LLC are relatively light, though there is wide variation in what states charge in fees and taxes. LLCs don't have to hold annual meetings and usually are not required to keep extensive records.
Aside from knowing the benefits, understanding the disadvantages of an LLC is also important in determining the right legal entity for your company. A qualified Houston LLC lawyer can help you weigh the pros and cons of building an LLC.
Unlike a sole proprietorship or a partnership, it generally costs more to form and operate an LLC. Some states charge initial formation fees, annual report fees, and/or franchise tax fees. Depending on how much your business earns, your profits, and how you take your money, the tax benefits of operating an LLC might not be worth the initial investment, set up of the business, and continuing paperwork.
Sometimes, an LLC may not be ideal for business owners seeking outside investors. This is specifically true if you're looking for funding from venture capitalists, who usually fund corporations. Big investors typically prefer to invest in corporations over LLCs.
Once you decide to file an LLC in Texas, knowing the process and the applicable state rules is crucial. A trusted Houston, TX, LLC attorney can help walk you through the process of forming an LLC and ensure its compliance with Texas business laws. Here are the steps you need to take to create a limited liability company (LLC).
The name of your LLC must be unique and different from the names of other business entities filed with the Texas Secretary of State. The LLC name must contain one of the following:
In Texas, every LLC must appoint an agent to service the process in the state. A registered agent is an individual or business entity that accepts legal papers on behalf of the LLC.
You can establish an LLC by filing a Certificate of Formation for a Limited Liability Company (Form 205) with the Texas Secretary of State.
Although an LLC operating agreement is not required in Texas, it is highly recommended to have one. This document establishes how you will run your LLC and sets out the rights and responsibilities of the members and managers.
If your LLC has more than one member, you must get an IRS Employer Identification Number (EIN), even if your LLC has no employees.
Texas does not require LLCs to file annual reports with the Secretary of State. However, LLCs must file annual franchise tax reports.
Understanding the benefits and disadvantages of an LLC and knowing how to form your LLC is essential for business success. To determine whether an LLC is the best structure for your company, it is in your best interest to work with our experienced Houston LLC lawyer at GK Law.
Our business law firm is committed to helping our clients achieve their business formation goals in Texas and throughout the United States. We have extensive experience in helping large and small companies get off the ground with comprehensive legal advice on the advantages and disadvantages of business entities such as sole proprietorships, partnerships, LLCs, or corporations. If necessary, we can help build dispute resolution strategies and provide effective legal representation during litigation. Schedule an initial consultation with our Houston business lawyer today to find out how we can help you and your business.