Denison Business Entity Formation & Operation Lawyer
Serving All of North Texas
When a person starts a business, there’s a lot to deal with. They have to find a customer base for their product or service. They may need to hire employees and consider business contracts. Financing has to be addressed. In the midst of what can be a very chaotic time in the life of the entrepreneur, a knowledgeable Denison business entity formation and operation attorney can provide valuable guidance on fundamental legal questions of structure and governance.
The Law Office of Brett Evans has over 20 years of experience helping the business community of North Texas make informed decisions on business entity formation and operations, and then working with them on compliance. Call our Denison office today at (903) 201-1934 or contact us online to set up a consultation.
The myriad of legal issues involved in business entity formation comes down to reducing the liability of the owner(s), gaining an advantageous tax position, and keeping as much money as possible in the pocket of the business. The lawyer’s role is to recommend the business structure most likely to do this and then to work at keeping the business in compliance with all appropriate regulations and best practices moving forward.
Types of Business Structures in Texas
There are six general legal structures that an entrepreneur in the state of Texas can choose from:
When the entrepreneur is the sole owner of the business, a proprietorship offers an easy formation. There are no filing fees. At tax time, a single return can be filed covering both personal and business income. The owner retains total control (e.g., no board of directors). However, a significant downside is that there is no liability protection. A creditor or plaintiff in a lawsuit could come after the owner’s personal assets.
The general partnership presumes at least two owners of the business. The principal advantage of this structure is the way income flows. The profits or losses of the business are allowed to effectively “pass through”, straight to the owner’s personal tax return. The early years of any business are often difficult, and losses are not uncommon, even for businesses that will ultimately be very successful. A general partnership structure can make those losses more manageable through the tax code.
Reducing one’s personal liability is one of the key advantages for incorporating a business. Under this structure, business assets are considered separate from personal ones. A creditor or plaintiff might come after the business, but they cannot reach the assets of the owners themselves. The state of Texas offers tax breaks to incorporated businesses that are not necessarily available to those in a proprietorship or general partnership. Raising capital is made easier by issuing stock.
These benefits do come at a price though, and not just the cost of filing the paperwork with the state government in Austin. Corporations have more regulations to comply with and an experienced business operations lawyer can be an essential part of that task.
Limited Liability Corporation (LLC)
The LLC has the liability protections described above. Ownership also has options in choosing how they want to be taxed. An attorney can advise on whether the S-Corp or C-Corp offers the better tax position for each individual situation. There are no mandated board meetings with minutes that need to be filed in Austin. The cost of this? A big disadvantage is that LLCs cannot issue stock certificates as a means of raising capital.
Limited Partnership (LP)
In a limited partnership, there is an unequal relationship between the partners. The limited partner does not have much official say in the direction of the company (beyond what they can get the primary partner to do through simple persuasion). On the other hand, the limited partner gains liability protections that that the other partner(s) may not have.
Limited Liability Partnership (LLP)
The similarity in name that the LLP shares with the LP gives away that the structures themselves are also nearly alike. But not entirely. In the LLP, the entire ownership team has liability protection. The downside of the LLP is that the annual registration costs with the state are higher.
The type of structure that’s right for an entrepreneur depends, in large part, on what their future plans are for the business, what level of involvement each partner wants and the risk tolerance of all involved parties. It’s the job of an experienced Denison business entity formation and operations lawyer to ask all relevant questions and make sure the involved parties know the pros and cons of whatever decision they choose to make.
Why Choose Attorney Brett L. Evans
His education and experience have given him a comprehensive understanding of the challenges faced by business owners. He works with startup operations in setting up their governing structures and has a sharp grasp of leasing issues. Landlords require an attorney who can work smoothly in residential and commercial real estate law. Attorney Evans is an attorney who can do just that.
The legal issues faced by a business owner in North Texas generally, and our small town of Denison specifically, are different from what might be confronted in Fort Worth or Dallas. Local business owners need a local attorney who understands the intricacies of the community. They need their lawyer to be well-versed in both the law and the business and economic realities of Denison and surrounding areas.
The Law Office of Brett L. Evans has over 20 years of experience serving the business community of North Texas. Attorney Evans understands the implications of each business structure and works to make sure his clients understand how it applies to them.