Choosing which type of entity to use for your business can be a confusing and overwhelming task. This may leave you feeling frustrated and wanting to just get it over with, thereby causing you to quickly pick whichever type of entity sounds the best. Despite this, you should always make sure that you carefully consider which type of entity best suits you and your business. Your choice of entity establishes the legal structure under which your business operates. A less than ideal choice will inevitably create problems down the line, while correctly and carefully choosing a type of entity during the early stages will create a solid foundation on which your business can grow to its full potential.
How Can I Structure My Business?
In Texas, the main forms of entities are general partnerships, corporations, limited liability companies, limited partnerships, and limited liability partnerships. To further complicate things, many of these types of entities have further subdivisions—a corporation, for example, can be formed as a non-profit corporation, a professional corporation, or an S corporation, each of which have a number of different requirements, advantages, and disadvantages.
What Is The Best Type of Entity?
There is rarely a standard type of entity that is best suited to all types of businesses and business owners—instead, your choice of entity will be determined by your own unique goals. No one can tell you how you should structure your entity without first knowing you and your situation inside and out, so the best way to figure out which entity type to choose is to discuss your goals and your business plan with an experienced business attorney.
Which Factors Should I Consider?
Different types of entities will have different formation requirements and processes, tax benefits and consequences, liability issues and protections, management structures, record keeping requirements, and more. These factors will affect each business differently. There are often ways that these different structures could affect your particular business that you could not possibly be aware of without experience in forming entities with various structures. On a personal level, your choice of entity should also be well-suited to your own preferred level of risk and management style. Each business and business owner is different, so it is vital to discuss choice of entity with an attorney who is aware of the ins and outs of each type of entity and how they apply to your own unique situation.
We Can Help
At Bailey Law Firm, our attorneys can guide you through the choice of entity process, making personalized recommendations based on you and your business’s needs. To meet with one of our attorneys for help choosing a type of entity or for any other entity formation inquiries, please contact us with any questions by clicking here or by calling our office at 832.510.2900 to schedule a complimentary consultation.
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