INVEST Act Clears House, Pending Senate Approval
More than a decade after the JOBS Act, Congress is moving to cut the remaining red tape that holds back early-stage investment. The INVEST Act proposes significant…
Choosing an entity is one of the first legal decisions a business makes, and it shapes how the company is owned, taxed and run from day one.
The right structure depends on who owns the business, how it will be taxed, how much risk it carries and whether it will raise money. We form entities for new ventures, professional practices, real estate investors and companies restructuring as they grow.
Attorney
Entities We Form
Limited Liability Companies
The most common choice for Texas small businesses, with liability protection and flexible management and tax treatment.
Corporations
Often used by companies planning to raise outside capital, and by businesses that elect S corporation tax treatment.
PLLCs and Professional Corporations
For licensed professionals, such as physicians, dentists, attorneys and CPAs, who practice through a professional entity.
Limited Partnerships
Common for real estate and investment ventures, with a general partner managing and limited partners investing.
Nonprofit Corporations
Formation of the nonprofit corporation and its application for federal tax-exempt status.
Holding Company Structures
A parent company that owns one or more operating companies to keep assets and risks separate.
More Than a Filing
Filing a certificate of formation with the Texas Secretary of State creates the entity. The documents behind it decide how the business runs: who makes decisions, how profits are shared, what happens when an owner wants out and how disagreements are resolved. We draft those documents around the owners' actual plans. See our page on operating agreements and formation documents.
Professional Practices
Physicians, dentists, CPAs, attorneys and other licensed professionals usually practice through a PLLC or professional corporation. For a group practice, the company agreement also needs to cover how income is divided, how new owners buy in and what happens when an owner retires, leaves or loses a license.
A professional entity protects its owners from the practice's business debts, such as a lease or a vendor contract, but not from liability for their own professional mistakes, which is why malpractice insurance still matters. Our article on how to form a Texas PLLC walks through the steps.
How Formation Works
Choosing the Structure
We talk through ownership, taxes, liability and future plans, with your CPA when needed.
Filing With the State
We prepare and file the certificate of formation with the Texas Secretary of State.
Governing Documents
A company agreement, bylaws or partnership agreement written for the owners.
Getting Set Up
The EIN, initial consents and the documents a bank needs to open accounts.
Staying in Good Standing
Franchise tax reports, registered agent updates and records that keep the liability shield intact.
Frequently Asked Questions
Have a question that isn't answered here? Call us at (817) 631-8842 or send a message.
Ask a QuestionDo I need a company agreement if I'm the only owner?
Texas doesn't require one, but it is still worth having. A company agreement shows banks, investors and courts that the company is separate from its owner, and it sets out what happens if the owner dies or can no longer manage the business.
What is the difference between an LLC and an S corporation?
An LLC is a type of entity formed under state law. An S corporation is a federal tax election. An LLC or a corporation that qualifies can elect S corporation tax treatment, so the two aren't alternatives in the way people often assume. Your CPA should weigh in on the tax side.
Should I form my company in Texas or Delaware?
Most Texas businesses that operate locally form in Texas, which keeps costs and filings simple. Companies planning to raise venture capital often form in Delaware because investors expect it. A company formed in another state must register with the Texas Secretary of State before doing business here.
How do I keep my LLC's liability protection?
Keep company and personal money separate, sign contracts in the company's name, keep the company in good standing and document major decisions. Our article on maintaining your LLC's liability protection covers the Texas rules.
More in Startups, Entity Formation, and Venture Capital
- Startups and Venture CapitalFormation, founder equity and fundraising for emerging companies.Learn More
- SAFEs and Convertible NotesEarly-stage financings that turn into equity at the next priced round.Learn More
- Priced Equity RoundsSeries Seed and Series A preferred stock rounds, on the company side.Learn More
- Securities ComplianceExemptions, offering documents and filings for private capital raises.Learn More
- Founder Equity and VestingFounder stock, vesting, IP assignments and the first cap table.Learn More
- Equity CompensationOption plans, restricted stock and profits interests for employees and advisors.Learn More
- Operating Agreements and Formation DocumentsCompany agreements, partnership agreements and shareholder agreements.Learn More
- Entity ConversionsChanging entity type or home state without starting a new company.Learn More
- Shareholder and Buy-Sell AgreementsTransfer limits, buyout triggers and pricing terms the owners agree on in advance.Learn More
- Fund FormationStructuring and documenting venture capital and private equity funds.Learn More
- Dissolution and Wind-UpWinding up and terminating a Texas LLC or corporation the right way.Learn More
Related Articles
Convertible Notes 101: A Founder's Guide to Startup Funding
This article demystifies convertible notes for early-stage founders, explaining how the instrument converts short-term debt into equity and unpacking key terms such…
SAFE 101: A Founder’s Guide to Simple Agreements for Future Equity
Learn how SAFEs can streamline your early-stage fundraising strategy. This quick guide provides startup founders with an overview of Simple Agreements for Future…
Request a Consultation
Initial consultations are held by Zoom and typically last 20 to 30 minutes.