Forming A Business Entity In Texas

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It’s always an exciting time when an individual or group of individuals is ready to start a new business or take an existing business to the next level. In doing so, however, business owners are faced with a pressing initial question: just what type of legal entity will your new business be? Choosing the right kind is critical to the short and long-term success of your business. Below, let’s look at some of the most common business entities and what their classification means.


Corporations are traditionally larger, complex businesses that are owned by a group of shareholders. Corporate status limits the liability of shareholders, who often trust the running of the company to appointed directors. There are also tax advantages and potential shareholders should carefully consider benefits of filing as a “C corporation,” which are subject to heavy federal taxes, or an “S corporation,” where shareholders are taxed directly for business income.


General partnerships are for groups of two or more people who wish to run a for-profit business according to terms set in a partnership agreement. While these agreements allow for much freedom (in terms of the business organization and policy) and are not required for filing for a partnership, it is highly advised that, for the sake of protecting every partner’s interests, one is established with the help of proven counsel.

Limited Liability Companies

Limited liability companies, or LLCs, are common for small businesses looking to reap some federal tax benefits and, as the name implies, limit their liability from those looking to take legal action against the company. In many ways, limited liability companies offer a hybrid of advantages from both corporate protections and the freedom a partnership would offer. Because of this, they are incredibly popular for small and medium-sized businesses.

Sole Proprietorship

Sole proprietorships are businesses that owned and run by one person. While that one person usually conducts business under a business name, many sole proprietorships are run out of homes. This distinction gives that business proper recognition from the Texas Secretary of State, as well as critical state and federal tax considerations.

Are you ready to form your own business entity? At Toppins Law Firm, P.C., our proven Houston business litigation attorneys have more than 40 years of experience. Our firm can not only guide you through the process of forming your new business entity but speak for your interests if any complication should occur.

Want to learn more about what our firm can do for you? Call us at (713) 574-2299 today.