Selecting a business structure is an exciting but often challenging undertaking. One of the most important decisions you will make is choosing the type of business you will open. The business structure you choose will have legal and tax implications. Generally, businesses are created and operated in one of the following forms:
- Sole proprietorship: The most common and the simplest form of business is the sole proprietorship. In a sole proprietorship, a single individual engages in a business activity without the necessity of formal organization.
- General partnership: A general partnership is created when two or more persons associate to carry on a business for profit. A partnership generally operates in accordance with a partnership agreement, but there is no requirement for state-filing or that the agreement be in writing.
- Corporation: A corporation is a legal entity with the characteristics of limited liability, centralization of management, perpetual duration, and ease of transferability of ownership interests. The owners of a corporation are called “shareholders.” The persons who manage the business and affairs of a corporation are called “directors.” However, state corporate law allows shareholders to enter into shareholders’ agreements to eliminate the directors and provide for shareholder management. Choosing the best management structure for your corporation is a decision you make with the advice of an attorney.
- Limited Liability Company: The limited liability company (LLC) is not a partnership or a corporation but rather is a distinct type of entity that has the powers of both a corporation and a partnership. Unlike the partnership, where the key element is the individual, the essence of the limited liability company is the entity, necessitating more formal requirements for its creation.
- Limited Partnership: A Texas limited partnership is a partnership formed by two or more persons and having one or more general partners and one or more limited partners. The limited partnership operates in accordance with a partnership agreement, written or oral, between the partners as to the affairs of the limited partnership and the conduct of its business.
- Limited Liability Partnership: In order to limit the liability of its general partners, a general or limited partnership may opt to register as a limited liability partnership. The Secretary of State provides a form for registration as a limited liability partnership.
All Texas business entities are created by filing a certificate of formation with the Texas Secretary of State. The Secretary of State requires a payment of fees for each filed certificate of formation. The Texas Secretary of State Business Formation Fee Schedule follows below.
For questions about business entity formation process in Texas, contact business law attorney at Filippov Law Group, PLLC by calling 832-900-2177.
Texas Secretary of State Business Formation Fee Schedule:
| Certificate of formation for a Texas entity (except nonprofit corporation, cooperative association, PA or LP) (Forms 201, 203, 205, 206) | $300 |
| Certificate of formation for a Texas professional association or limited partnership (Forms 204, 207) | $750 |
| Certificate of formation for a Texas nonprofit corporation (Form 202) or cooperative association | $25 |
| Registration or renewal as a Texas limited liability partnership or LLLP (Forms 701, 703) | $200 per partner |
| Foreign entity application for registration (except nonprofit corporation, LLP, cooperative association or credit union) (Forms 301, 303, 304, 305, 306, 309, 311, 312, 313)* A foreign entity that has transacted business in Texas for more than ninety days without registering is subject to a late filing fee. The late filing fee is equal to the registration fee for each full or partial calendar year that the foreign entity transacted business in Texas without being registered. | $750* |
| Foreign nonprofit corporation, cooperative association, or credit union application for registration (Forms 302, 309)* A foreign entity that has transacted business in Texas for more than ninety days without registering is subject to a late filing fee. The late filing fee is equal to the registration fee for each full or partial calendar year that the foreign entity transacted business in Texas without being registered. | $25* |
| Foreign limited liability partnership application for registration or renewal (Forms 307, 308)* A foreign entity that has transacted business in Texas for more than ninety days without registering is subject to a late filing fee. The late filing fee is equal to the registration fee for each full or partial calendar year that the foreign entity transacted business in Texas without being registered. | $200 per partner in Texas, but not less than $200 nor more than $750* |
The decision regarding business structure should be made after a consultation with an attorney and a tax adviser because it involves the consideration of issues regarding tax, liability, management, continuity, transferability of ownership interests, and formality of operation. The Business Attorneys at Filippov Law Group, PPLC will help you learn about the different types of business structures and find the one best suited for your business. Call us at 832-900-2177 or email our managing member directly at [email protected] to schedule an appointment.