A person should consult with an attorney and accountant before deciding on a company structure, taking into account concerns such as tax, liability, management, continuity, transferability of ownership interests, and formality of operation.
In general, companies take one of the following formats when they are founded and run:
Single proprietorship: The sole proprietorship is the most popular and straightforward kind of company. A sole proprietorship is a business in which a single person operates without the need for a formal organization. An assumed name certificate (often referred to as a DBA) should be submitted with the county clerk's office in the county where the business premise is kept if the business is run under an assumed name (a name other than the individual's surname). If there is no business premise, an assumed name certificate should be submitted in each county where the assumed name is used.
A general partnership is formed when two or more people get together to run a profit-making firm. A partnership works on the terms of a partnership agreement, but there is no necessity that it be in writing or filed with the state. If the partnership does business under an assumed name (one that does not contain all of the partners' surnames), an assumed name certificate (also known as a DBA) should be filed with the county clerk's office in the county where the business premise is located. If there is no business premise, an assumed name certificate should be submitted in each county where the assumed name is used.
A Texas company is formed by obtaining a certificate of incorporation with the Secretary of State in the state of Texas. The Secretary of State supplies a form that satisfies the minimal standards of state law. SOSDirect is a website that allows you to file a certificate of formation online.
A corporation is a legal entity with limited liability, centralized administration, indefinite existence, and the ability to transfer ownership interests easily. Shareholders are the people who own a company. “Directors” are the people who run a company's business and affairs. State corporate law, on the other hand, allows shareholders to engage into shareholder agreements to remove directors and replace them with shareholders who will govern the company. You should consult an attorney before deciding on the optimal management structure for your business. You will not be helped by the Secretary of State.
The formation of a "S" company is a federal tax election rather than a state corporate law issue. By submitting an election with the Internal Revenue Service, a for-profit business may choose to be taxed as a "S" company. Regarding your choice to be taxed as a "S" company and the formalities for submitting the election, please contact the IRS or competent tax counsel. The Secretary of State is unable to help with this problem.
A Texas limited liability corporation is formed by obtaining a certificate of formation with the Secretary of State of Texas. The Secretary of State supplies a form that satisfies the minimal standards of state law. SOSDirect is a website that allows you to file a certificate of formation online.
The limited liability company (LLC) is a unique form of business that combines the powers of both a corporation and a partnership. It is neither a partnership or a corporation. The LLC may be compared to a general partnership with limited liability, a limited partnership in which all owners are free to participate in management and all have limited liability, or a “S” corporation without the ownership and tax restrictions imposed by the Internal Revenue Code, depending on how it is structured. Unlike a partnership, where the person is the most important component, the limited liability company's essence is the entity, necessitating more formal criteria for its formation. 1 2.10, The Limited Liability Company, William D. Bagley and Phillip P. Whynott (2d ed. 2d rev. James Publishing, 1995).
“Members” refer to the LLC's proprietors. A person, a partnership, a company, a trust, or any other legal or commercial organization may be a member. In most cases, the members' liability is limited to their investment, and they may be eligible for the pass-through tax benefit that partners in a partnership get. An LLC may benefit from structural flexibility as well as advantageous tax treatment according to federal tax categorization guidelines. Those considering incorporating an LLC should, however, get legal advice from a qualified attorney.
Managers or members of a limited liability business may run it. In the certificate of establishment, the management structure must be mentioned. The LLC and its members must decide on a management structure. The Secretary of State is unable to provide guidance on organizational structure.
A limited partnership in Texas is one created by two or more people with one or more general partners and one or more limited partners. The limited partnership runs its affairs and conducts its business in line with a partnership agreement, either written or oral, between the partners. The limited partnership must submit a certificate of formation with the Texas Secretary of State, even if the partnership agreement is not public record. The Secretary of State supplies a form that satisfies the minimal standards of state law. SOSDirect is a service that allows you to file your certificate of formation online.
A general or limited partnership may choose to register as a limited liability partnership in order to minimize its general partners' liabilities. A form for forming a limited liability partnership is available from the Secretary of State. Through best online incorporation services, you may file your registration online.
When it comes to deciding on a company structure, the material on this website should not be used as a replacement for legal and tax advice.