A company’s corporate structure can have a significant influence on the business, including litigation risk, exposure to personal liability, administrative costs, taxes, and day-to-day operations. Business owners should give their company’s corporate structure serious thought.
One popular way to structure businesses in Texas is as a limited liability corporation (LLC), a structure that provides key benefits, particularly when it comes to reducing personal liability. An experienced Fort Worth, TX business law attorney can provide advice on the ideal corporate structure for a business.
An LLC is a corporate structure that protects business owners from personal liability for business debts and disputes. Among the most common business structures, the LLC combines aspects of a corporation with those of a partnership or sole proprietorship and is owned by LLC members. To register an LLC, business owners will submit certain forms to the Texas Secretary of State.
The LLC is a separate legal entity from its members. Its ability to shield members from personal liability is arguably its most popular feature. Business and personal assets are separate in an LLC, which means that business creditors cannot pursue the personal assets of LLC members, and personal creditors cannot pursue the business assets of the LLC. A strong operating agreement can further strengthen these liability protections.
Texas LLCs have pass-through taxation, meaning that income is taxed on the individual members’ tax returns. The business itself is not taxed, in contrast to a corporation in which both the business and its shareholders incur taxes. In this way, the LLC tax structure can save a company money on taxes.
An LLC gives its owners a great deal of flexibility to choose how they wish to manage the business. An LLC may be member-managed or manager-managed. The LLC can decide whether it wants to hire formal corporate officers, hold annual meetings, or take meeting notes — or not. This flexibility is a big advantage because businesses can choose how they structure their business legally to work for the needs of the company.
Starting a new business can be exciting, but there are also important decisions to make. At Gonzalez Law, PLLC, the experienced Fort Worth, TX business law attorney can advise you on the ideal corporate structure for your venture. Contact our law firm at (817) 349-7330 for a complimentary consultation to discuss whether an LLC is right for your business.
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