Are you in the process of forming a new business in North Texas? If so, it is essential that you and your partners put the proper legal structure in place. A limited liability company or LLC is a great option for many business people and entrepreneurs. In this article, our Celina corporate and business law attorneys provide an overview of limited liability companies (LLCs) and explain why you might need one in Texas.
What is a Limited Liability Company (LLC)?
A limited liability company (LLC) is a type of business entity. As defined by the Texas Secretary of State, an LLC “is not a partnership or a corporation but rather is a distinct type of entity that has the powers of both a corporation and a partnership.” In other words, an LLC can be thought of as a hybrid entity that blends some of the advantages offered by forming a partnership and some of the advantages offered by forming a corporation.
The Benefits of Forming an LLC in Texas
If you are setting up a new business in Texas, you may be wondering if an LLC is the right choice. It is important to consider the benefits and drawbacks. Here are three primary advantages of setting up a new small business as a limited liability company:
- Cost Effective: Forming an LLC is not expensive. It is a relatively inexpensive and efficient way to form a new business.
- Taxes: LLCs are taxed as pass-through entities. This means that an LLC does not pay its own taxes. Instead, the income “passes through” the business entity and the individual LLC members are taxed directly on their earnings. In this way, an LLC is similar to a partnership.
- Liability Protection: Perhaps the single most important reason to set up a new business as an LLC is formed liability protection. With an LLC, the owners of the company are generally protected from personal liability. Forming an LLC in Texas will help to ensure that you are not personally responsible for a mistake made by one of your employees.
The Bottom Line: An LLC is an efficient and cost-effective way to set up a new business. It offers a number of different advantages, especially to entrepreneurs forming a small business. Of course, it is not the best option for every situation. Some companies are better set up as a sole proprietorship, partnership, or corporation. If you are forming a new business in Texas, an experienced attorney can help you determine the best legal structure for your circumstances and your objectives.
Call Our Celina, TX Business Formation Lawyer for Immediate Help
At The Cawlfield Law Firm, PLLC, our Texas business formation attorney is an experienced, effective advocate for entrepreneurs. If you have any questions about setting up an LLC, we are more than happy to help. To set up your confidential consultation, please do not hesitate to contact us today. With an office in Celina, we provide corporate and business law services throughout the region, including in Frisco, McKinney, Denton, Lewisville, Garland, Rockwall, and Carrollton.