Austin TX Business Law Blog

Thursday, December 31, 2015

Business Entity Options for Texas Start-Ups

One of the first question a business must ask itself is “how should we organize?” Of course, the answer to this question varies significantly based on context, however the legal organization of one’s enterprise should be of preeminent concern from the get-go – and here are a few reasons why:


            #1: Liability is Everywhere: It’s true – just ask any one of the thousands of business facing expensive, time-consuming litigation each year. From the food industry to technology, there is no private sector business that is immune to liability, which means the savvy entrepreneur must take steps from Day 1 to protect against its pitfalls.


            #2: Exposure May be Reduced: There are a number of positive action steps a start-up can take to help limit exposure to liability – and many are inexpensive, no-brainer type options that can make the difference between booming and bankruptcy. More on that in a minute.


            #3: It’s an Investment: For the start-up, expenses like legal fees and organization consultations may seem beyond the budget. However, the costs of litigation far exceed that of a short legal consultation and incorporation package – so think of it as the company’s first official investment in its future.


When it comes to incorporating in Texas there are several options to consider when forming a business, including:


  • Private domestic corporation
  • Close corporation
  • Benefit corporation
  • Foreign corporation
  • Non-profit corporation
  • Limited liability company
  • Partnership
  • Professional associations & corporations (e.g., law, medicine, architecture)


Of course, each option carries distinct benefits which may be best-suited to the particular endeavors of a start-up entity – and an experienced Texas business attorney can help officers choose the best way to incorporate from the outset, keeping in mind the factors listed above.


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