When starting a new business, you can face many obstacles: finding real estate, hiring employees, drafting a marketing plan and more. Before you even start with these important big-picture items, you must consider which business entity structure works best.
Wait, there are more than just small and large businesses?
Yes. The Texas Secretary of State lists some of the many options you can choose for your business, each with considerations to your business’s liability, transferability and taxes. The secretary says the most common business type is a sole proprietorship, where a person operates the business solely without a business entity to mitigate liabilities and taxes. If you operate a business in Texas without filing anything with the Texas SOS, then you are automatically considered a sole proprietorship.
What are LLCs?
A more complicated business type and one often selected for its liability advantages, is a limited liability company, or LLC for short. You may have seen this on someone’s business card or website locally in Plano. LLCs confer some tax benefits too, and in contrast to a sole proprietorship, transfer management of the company to the legal entity, the LLC, thereby limiting the liability of the individuals involved.
Are there any other types of entities?
These are just two of the various business structure options you have in Texas. Others include partnerships, corporations, limited liability partnerships, etc. Each of these business structure types comes with unique registration, tax, liability and other considerations.
How can I explore my options?
If you are exploring the idea of beginning your own business, an attorney can be an asset to discuss your options for selecting a business structure. They can also assist with many of the state and local requirements for beginning a business. For example, if you decide to become a business owner in Collin County, you must comply with Collin County and Texas regulations. It is important to follow state, federal and local regulations when running a business. Let an attorney manage the legal red tape, and you can focus on embarking on your new revenue stream.