Making the Most of Texas Corporation and Partnership Law

Protect your assets with a Texas corporation

The key to making the most of Texas corporation and partnership law is the decision to incorporate your business. A corporation affects your ability to gain capital, controls the amount of debt you assume and determines your tax obligations. However, these advantages must be balanced against the additional taxes your business will incur.

Texas partnership law makes a partnership subject only to personal income tax, unlike a corporation. On the other hand, business partners may be held responsible for business debts.

There are several options for forming a company under Texas corporate law. These include:

1. Texas incorporation as a profit or non-profit corporation. An S corporation (S-corp) is taxed under Subchapter S of the Internal Revenue Code which generally does not include income taxes.

2. A Texas limited liability company. This is a hybrid business entity that shares the characteristics of both a corporation and partnership. It pays incomes taxes and is more suitable for a small business with one owner.

3. A Texas limited partnership. This type of partnership has limited partners in addition to general partners.

Determine the type of corporation that best suits your business under Texas corporation laws

The most important factors to consider are the personal liability obligations and tax implications. You should also familiarize yourself with the operating requirements and reporting regulations.

Find an attorney that specializes in Texas corporation and partnership law

Incorporating in Texas must comply with the disclosure, operating and reporting requirements. Texas corporation law specifies these requirements in detail.

Register your TX corporation or TX partnership

You must file the registration forms and pay the associated fees as required by Texas corporation law in order to form a TX corporation or TX partnership. You may also need to file Articles of Incorporation, depending on the type of corporation you decide to register.

• Texas corporation law requires annual fees and filings to maintain your corporation. Corporations are automatically C-corps unless they specifically register as S-corps with the primary difference being the way they are taxed. One person may frequently hold more than one position in these corporations and many if not all shareholders are also directors in a small corporation.

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