a younger man speaking with an older man and woman while looking at a tabley business formation

As a business owner, you will be responsible for making a multitude of decisions, the first of which is how you would like your new business to be organized. You should not make this decision alone. It is always wise to consult with a qualified attorney when making decisions about business formation. Attorney Sanjeev Kumar has experience working with companies across a wide array of industries and can help you select the best structure for your new business.

There are various types of business organizations, each with its own advantages and disadvantages.   

Types of Texas Business Organizations:

Sole Proprietorship

A business is considered a sole proprietorship when only one person engages in the business and owns all the assets. The sole proprietor is also personally liable for any claims against the business.

General Partnership

A general partnership exists when two or more people engage in business subject to a partnership agreement. In general partnerships, the personal assets of general partners are available to creditors to satisfy any partnership liabilities.

Limited Partnership (LP) and Limited Liability Partnership (LLP)

An LP is similar to a general partnership but in addition to the General Partners also includes Limited Partners with limited responsibilities and limited liabilities. In order to form an LP, a Certificate of Formation must be filed with the Texas Secretary of State. An LLP is also similar to a general partnership except that all partners can share the responsibilities of running the partnership but still have limited liability. For an LLP, registration with the State of Texas is necessary.   


A corporation is a business that is considered an individual legal entity. Corporations are owned by shareholders and managed by directors. Shareholders and directors have limited liability for claims made against the company. There are many formal requirements involved in the formation of a corporation, the first being the filing of a Certificate of Formation with the Texas Secretary of State. Articles of Incorporation and bylaws must also be executed during the formation of a corporation.  

The State of Texas recognizes various types of corporations. An S-corporation is one that is taxed only at the shareholder level when profits are being distributed. A C-corporation is subject to double taxation, meaning that it is taxed at the corporate level and at the shareholder level. A non-profit corporation is one in which the profits of the corporation are not distributed to its shareholders or directors. Non-profit corporations can be exempt from Federal and state taxes with the prerequisite that the appropriate forms are filed with the IRS.

Limited Liability Company (LLC)

An LLC is a business that combines the characteristics of a partnership and a corporation and is popular among startups. The owners of an LLC, called members, have many options when it comes to the business structure, management, and tax treatment, making this business organization a preferable option for small and large companies alike. Another benefit of the LLC is limited liability for members.

Austin Startup Company Attorney

If you are starting a new business, you need the assistance of a competent attorney who can provide you with sound legal counsel on the best business formation strategies for your new venture. At the Kumar Law Firm, attorney Sanjeev Kumar will take time to understand your goals, and your business and help you implement safeguards to protect your dream, and your assets, now and well into the future. Contact our team to schedule your initial consultation today.