Starting a new business venture is exciting but it requires a lot of planning.
You need experienced legal counsel to insure that the business is set up properly.
At Lovelace Law, P.C., we provide expert legal counsel to new business owners. We understand that there are many legal, financial, and contractual issues related to starting a business. Our legal professionals know how to answer your questions and understand the issues and complications you may face during the formation process. There are 3 critical steps we can help you take to properly establish your business:
The Right Business Entity for Your Needs
When starting a business, one of the first things you need to do is choose your business entity, or the way your business is structured. This choice determines (among other things) the tax structure of your business, your ability to get a small business loan, and your risk exposure in the event of a lawsuit. There are many different types of business entities to choose from, but the most common small business entities are:
- Sole proprietorship
- General partnership
- Limited partnership (LP)
- Limited liability company (LLC)
- C-corporation
- S-corporation
Choosing the entity for your business determines long-lasting financial and legal implications; hiring an attorney can be a smart investment to make sure you understand the nuances of each type.
Legal Issues Related to Employees
Employment laws regulate the employer/employee relationship to make sure all parties are treated fairly and with respect. As with every legal matter, there are many details involved with these laws. Policies such as workplace privacy, fair wage, workplace safety, and family leave are important factors to consider when forming your business and hiring your first employees. An attorney can offer financially beneficial advice and keep your operations on the right side of the law. Avoid potential employee lawsuits down the road by working with an attorney to establish clear employment practices that protect your business.
Protection From Personal Liability
Before starting your business, you’ll want to consider all the potential liability risks involved. Taking precautions to protect yourself from personal liability can be as simple as choosing a specific business entity. For instance, with an LLC entity, only the LLC is liable for the debts and liabilities incurred by the business — not the business owners.
However, an LLC isn’t always the best form of protection, and its level of protection will sometimes depend on the state you reside in. Other risks with an LLC include:
- Personal liability for actions by employees related to the business
- Personal liability for your own actions related to the business
- The LLC’s liability for other members’ personal debts
Legal protection is essential to growing your business. Determining what protection is best can be tricky, but picking the right law firm to help can make all the difference. You need the kind of law firm that will take the time to listen to your needs and offer practical, straightforward counsel.
Frequently Asked Questions – Business Formation Law in Texas
What does a business formation lawyer in Texas do?
A Texas business formation lawyer assists with the legal aspects of starting a business, including choosing the right structure (LLC, corporation, partnership, etc.), drafting and filing necessary documents with the Texas Secretary of State, setting up operating agreements or bylaws, and ensuring compliance with state and federal laws.
What business structure is best for me in Texas?
The best structure depends on factors like liability protection, taxes, and management needs. Common Texas business structures include sole proprietorships, partnerships, LLCs, S corporations, and C corporations. A Texas business formation attorney can guide you through the advantages and disadvantages of each to help you make an informed decision.
How do I register my business in Texas?
Registering a business in Texas involves filing the appropriate forms with the Texas Secretary of State, paying filing fees, and obtaining necessary permits. For LLCs, you’ll need to file a Certificate of Formation, while corporations require Articles of Incorporation. A lawyer can help ensure all paperwork is filed accurately.
What is the difference between an LLC and a corporation in Texas?
In Texas, LLCs offer liability protection and are generally taxed as pass-through entities, meaning the income is only taxed once at the individual level. Corporations can also offer liability protection but may be subject to double taxation (for C corporations) and have more formal operating requirements. Your choice depends on your business needs, growth plans, and tax preferences.
Is an operating agreement required for an LLC in Texas?
Texas does not require an LLC to have an operating agreement, but it’s highly recommended. An operating agreement establishes the ownership structure, management responsibilities, and procedures for profit-sharing and dispute resolution, helping avoid potential conflicts.
What is an EIN, and do I need one in Texas?
An Employer Identification Number (EIN) is issued by the IRS and serves as your business’s federal tax ID. You’ll need an EIN if your business has employees, operates as a corporation or partnership, or meets other IRS requirements. An EIN is also useful for opening a Texas business bank account and building business credit.
How can a Texas lawyer help with partnerships?
A Texas business lawyer can help draft a partnership agreement, which outlines each partner’s roles, responsibilities, profit-sharing, and procedures for handling disputes or dissolution. This is crucial for protecting your interests and minimizing misunderstandings.
What is a registered agent, and is one required in Texas?
Yes, Texas requires businesses to have a registered agent—a person or entity designated to receive official government and legal documents on behalf of the business. The registered agent must have a physical address in Texas and be available during business hours.
Can I change my business structure in Texas later?
Yes, Texas allows you to change your business structure as your company grows or your needs change. This process, known as a “conversion,” may involve dissolving the existing entity and re-registering under the new structure. A Texas lawyer can guide you through the conversion process to ensure compliance.
How much does it cost to form a business in Texas?
Costs vary by entity type and services required. For example, filing fees for an LLC in Texas are around $300, while corporations have similar fees. Additional costs may include professional legal fees, licensing, and other operational requirements. Consulting with a Texas attorney can help you estimate total costs.
How much does it cost to form a business in Texas?
Costs vary by entity type and services required. For example, filing fees for an LLC in Texas are around $300, while corporations have similar fees. Additional costs may include professional legal fees, licensing, and other operational requirements. Consulting with a Texas attorney can help you estimate total costs.
Do I need to register in other states if my Texas business operates elsewhere?
If your Texas business operates in other states, you may need to register as a foreign entity in those states. This involves filing for foreign qualification and obtaining a registered agent in each state where your business operates.
What ongoing legal requirements apply to Texas businesses?
Texas businesses must meet ongoing requirements, including annual franchise tax reports, renewing licenses and permits, and keeping accurate records. LLCs and corporations may need to file annual reports. Working with a Texas business attorney helps ensure you remain compliant with all requirements.
Do I need business insurance in Texas?
Yes, most Texas businesses should consider insurance to protect against potential liabilities, property damage, or other risks. Common policies include general liability, professional liability, and workers’ compensation. Insurance requirements can vary by industry, so consult a Texas attorney for guidance.
How can I raise capital for my Texas business?
Options for raising capital include loans, grants, venture capital, and crowdfunding. A Texas business formation lawyer can help you understand the legal implications of each funding option and draft necessary agreements for investors or partners.
What happens if my Texas business faces a lawsuit?
Your business structure impacts your personal liability. For example, LLCs and corporations can provide some personal asset protection. In the event of a lawsuit, a Texas business attorney will guide you through the litigation process, represent your interests, and develop a legal strategy for your business.
For more detailed information or to set up a consultation, please contact our office. Our experienced Lovelace Law attorneys are here to help you navigate business formation law and ensure your interests are protected.
Business transactions. Business law. Business advocates.
At Lovelace Law, P.C., we have a reputation of being the kind of law firm that helps put small business owners on the path to success. Even if you do not become a client, we will be happy to answer your questions. Allow us to help you better understand the business formation process, with no charge during the initial consultation. Call us at 817-953-9656 for more information.