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The benefits of forming an LLC in Texas

If you hope to begin a business, perhaps the first step includes determining which type of business you want to establish based on your company make-up. In our last post, we outlined popular business entities in Texas.

A common business entity includes the formation of a limited liability company (LLC). LLCs allow you to take the benefits of both a partnership and a corporation, and in doing so, you have the ability to act both as a member and an owner in the business.

LLCs provide significant benefits in its formation. Once you determine whether the business structure is right for your company plan, you want to decide how your company will conduct management, payment and decision-making. When deciding whether to establish an LLC in Texas, hiring an experienced business law attorney may prove significantly beneficial, as he or she will know all elements to consider when developing your business new endeavor.

The benefits of an LLC

According to Texas law, limited liabilities provide the opportunity for individuals to conduct business by making management decisions, but LLCs protect personal assets from creditors. All owners of an LLC are called “members’, and members may include:

  • An individual
  • A partnership
  • A corporation
  • A trust
  • Any legal or commercial entity

Multiple benefits exist for establishing LLCs. Some benefits include:

  1. Lack of personal liability: Usually, each member’s liability and stake in the company depends on its investment. Because members lack liability for company decisions, if the business fails, debt collectors may not come after personal property.
  2. Easy startup: An LLC forms through paperwork and small fees. Any person, even without legal business knowledge, can begin an LLC in Texas. First, it may prove wise to speak with an attorney about your exact plan.
  3. Pass-through taxation: LLCs fall under federal tax classifications. All profits that an LLC makes go immediately to its shareholders and members without being taxed by the government. All taxes are removed through regular federal income taxes in sum.

Some drawbacks exist to creating a business entity like an LLC such as the presence of self-employment tax, but if your circumstances indicate the potential success of your business and its members, you may want to create an LLC with the help of an attorney.

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