Start Your Business with a Houston LLC Formation Lawyer
One of the most important decisions to make when forming a new business is deciding on the right type of business entity.
Once you’ve determined your entity type, an experienced business formation lawyer helps with the next important steps.
Depending on your entity, the success of your business depends on the creation of bylaws, an operating agreement, or a company agreement. Having clear written agreements is crucial to ensuring your business runs smoothly.
An experienced Houston LLC attorney near you can help navigate the Texas Business Organizations Code for successful business formation. Don’t hesitate to contact the Curley Law Firm today.
What Business Entity is Right for Me?
Businesses in Texas can take on various forms, and each form has different strengths.
Sole Proprietorship
One of the main advantages of a sole proprietorship is the ease of set-up and low start-up costs. Sole proprietorships are ideal for simple businesses. However, the individual owner is financially responsible for all the debts and liabilities of the business.
Sole proprietorships are common and do not require formal paperwork filing. If your business is not your legal name, a DBA or “doing business as” must be filed in your county.
You may also need a business license for your sole proprietorship.
Partnerships and Limited Partnerships
A general partnership is the most common type of partnership. This is a simple agreement between two parties to form a business. Each partner shares equally in the profits and losses of the partnership.
General partnerships are treated precisely as sole proprietorships. Financial responsibility for the debts and liabilities of the business belongs equally to each partner.
A limited partnership in Texas includes general partners and limited partners. General partners share equally in the profits and losses of the partnership. Liability for any debts of limited partners never extends beyond the initial investment in the partnership.
A limited liability partnership affords partners more liability protection than a typical general partnership. Liability for debts of limited liability partners never extends beyond their initial investment. Filing regulations in Texas exist for LLPs and require:
- That the business have “LLP” in its name,
- That each partner pay a $200 filing fee, and
- That the LLP maintains at least $100,000 in insurance at all times.
Partnerships offer many advantages suitable for many business models.
Limited Liability Company
A limited liability company is a unique entity. LLCs share features of partnerships and corporations. Like a limited partnership, liability of members is limited to their initial investment. Members enjoy the same pass-through tax treatment of partnerships and S-corporations.
Texas law outlines specific set-up requirements for LLCs. You must file Articles of Organization with the Texas Secretary of State. The Articles of Organization provide information about business operations.
A PLLC, or professional limited liability company, is a specific LLC formed by a subset of professions identified in the Texas Business Professions Code.
Corporations and S-Corporations
For a Texas corporation, you must file a certification of formation with the Texas Secretary of State. Corporation benefits include limited personal liability, the continued existence despite death of owners, and tax advantages.
A qualified business formation attorney identifies objectives and liabilities to pick the best structure for your needs and goals.
The choice you make can determine what kind of tax liability you have, what legal documents are required, your risk exposure if there is a lawsuit, and what type of business loan you can secure.
Other things to consider when forming a business include:
- What is the name of your company?
- Where will you obtain funding and capitalization?
- What does a succession plan look like?
- What kinds of licenses and permits are needed?
- What kind of business insurance is necessary?
- What type of operating agreement or internal documents do you need?
- What employment laws and regulations apply to the business?
- What tax requirements apply?
- What level of control does the owner or partners have over the business?
Starting a business can be complex and time-consuming. Working with a business attorney can help you understand the different types of entities and effectively navigate each of these considerations.
Why Set Up an LLC in Houston?
The advantages of LLC are best suited for businesses seeking the formality of a corporation with the flexibility of a partnership. Similar to corporations, Articles of Organization must be filed with the Secretary of State. Registration costs for an LLC in Texas are $300 with no annual registration fee.
In contrast to a corporation, there is no requirement to hold annual meetings or keep detailed minutes. Additionally, no limitations exist for the number of members in an LLC in Texas.
Do I Need a Business Formation Attorney?
Regardless of the entity structure you choose, an experienced Texas business formation lawyer near you can help:
- Generate the appropriate paperwork to file,
- Lay the initial groundwork for how your new entity will operate, and
- Identify licensing or regulatory issues you need to be aware of for your industry or business.
The Curley Law Firm has experience helping both large and small companies get off the ground with comprehensive legal advice on the advantages and disadvantages of different business entities.
Adam Curley helps businesses ensure they begin on a solid foundation. In his ten years in business, Adam Curley has worked tirelessly with his clients to resolve various complex business matters.
The Curley Law Firm has dedicated much of its focus to business law and understands what it takes to form the right organization for your needs. Contact the Houston LLC lawyers at The Curley Law Firm today with your business formation questions and find out how we can help you and your business.
How Much Does a Business Formation Lawyer Cost?
The cost of a business formation lawyer varies depending on the complexity of the business structure you select and what other services you want support with. Forming a sole proprietorship or a partnership may require less legal assistance than a corporation or limited liability company. Therefore, costs involved could be lower for helping with simpler business structures.
Some lawyers charge flat fees for their services and others may charge hourly fees. In addition, there may be costs associated with forming the business like filing fees, obtaining licenses or permits, and other administrative costs. Speak with your attorney at the beginning to clearly understand their fee structure and what the estimated costs might be.
While it may seem like costs are high, remember that it can be mitigating potential future costs of setting up a business incorrectly.
Houston Business Formation FAQs
What Legal Forms Are Required in Texas to Start a Business?
Once you’ve decided which Texas business entity structure fits your venture’s needs, the next step is to make it official by filing the proper forms with the state and drafting essential business legal documents.
File Formation Paperwork
To start a business in Texas, you must file the correct formation paperwork with the state.
- Sole Proprietorships and Partnerships. Unlike other business structures, filing formation paperwork with the Secretary of State’s office is not required in Texas. However, you may still be required to obtain specific licenses and permits.
- LLCs/LPs/LLP. To properly form a limited liability company (LLC) or limited partnership (LP), you must file Articles of Formation with the Secretary of State’s office. Limited liability partnerships (LLP) must start as an LP or general partnership and then file for LLP election if the conditions are met.
- Corporations. Forming a corporation requires filing Articles of Incorporation with the state.
If you have a question about what paperwork you need to file with the state, contact a corporate or LLC lawyer. Ensuring you have the correct legal forms and are compliant with Texas laws and regulations is crucial for starting your business smoothly and legally.
Obtain an Employer Identification Number (EIN)
An EIN is a unique nine-digit number the Internal Revenue Service (IRS) assigns to businesses for tax purposes. It serves as the business’s social security number, identifying it for tax filings, hiring employees, opening bank accounts, and handling financial transactions. No matter the size of the business, an EIN is essential. It’s required to file tax returns, hire employees, establish retirement plans, and conduct various business operations.
Apply for Licenses and Permits
The state, city, or county may require specific licenses or permits depending on the type of business, industry, and location.. This includes sales tax permits, liquor licenses, and professional licenses. It is a good idea to consult with a Texas business formation attorney to ensure you don’t run afoul of any laws.
Draft Corporate Bylaws or Operating Agreement
Operating agreements and bylaws are the internal documents that outline the business’s operational and management structure. An operating agreement details an LLC, LP, or LLP’s ownership rights, member responsibilities, profit distribution, decision-making processes, and dissolution plan. Bylaws define a corporation’s rules for shareholder meetings, director responsibilities, officer roles, stock issuance, and corporate decision-making procedures. In Texas, having an operating agreement, while highly encouraged, is not required by law. On the other hand, state law requires corporations to establish bylaws, although they do not need to be filed with the Secretary of State’s office.
Appoint a Registered Agent
In Texas, businesses must designate a registered agent, a person or entity that serves as the official point of contact for legal and state correspondence. They must have a physical address within the state and be available during business hours to receive legal notifications and official documents on behalf of the business.
What Business Entity Should I Choose for My Houston Business?
Selecting the proper entity structure for your Houston business requires balancing many factors, including:
- Liability protection,
- Tax implications,
- Ownership and management structure, and
- Scalability.
For entrepreneurs seeking simplicity and control, a sole proprietorship offers easy control but lacks liability protection. Partnerships are suitable for multiple owners, who share profits and responsibilities but have shared liabilities unless they choose a limited partnership or are eligible to form an LLP. Choosing an LLC structure combines liability protection with flexible management and pass-through taxation and is the choice for small and medium-sized businesses. Corporations provide strong liability protection, allow stock issuance, and suit larger companies seeking scalability and investment opportunities. Choosing the right entity depends on your business’s size, growth plans, desire for personal asset protection, and tax considerations.
Do I Need an LLC Attorney in Houston?
Deciding whether you need a corporate or LLC attorney in Houston depends on the complexity of your business and your comfort level with legal formalities. While not mandatory, an LLC attorney can offer invaluable expertise and guidance throughout the formation and operation of your business entity. An attorney can help you decide which structure suits your needs, navigate the legal requirements for establishing that entity in Texas, and ensure you have all the proper documentation to make it happen.
In addition to formation, an attorney can help keep you compliant with state laws, and draft and review bylaws and operating agreements, contracts, and other crucial documents. A business attorney can also offer advice and guidance on tax implications, liability protection, and corporate governance. If you are launching a business in Texas, partnering with an experienced business formation lawyer can help make the process as smooth and easy as possible. An attorney’s insight into Texas law can help you safeguard your business against potential legal pitfalls such as lawsuits, fines, or even having your right to operate your business terminated. With a trusted partner, you can feel empowered to focus on growth and innovation.