Choosing a business structure is one of the most important decisions you'll make. The most common types in Texas are sole proprietorships, partnerships, Limited Liability Companies (LLCs), and corporations (C-Corps and S-Corps). Each has different implications for liability, taxation, and administrative requirements. An LLC is often a popular choice for small business owners because it provides personal liability protection without the complexity of a corporation. The best option for you depends on your specific business goals, the number of owners, and your risk tolerance. A business attorney can help you weigh these factors.

The primary difference is taxation. A C-Corporation is a separate taxable entity from its owners, meaning the business pays corporate income tax on its profits, and shareholders pay taxes on dividends received (this is known as "double taxation"). An S-Corporation is a "pass-through" entity, where profits and losses are passed directly to the owners' personal tax returns, thereby avoiding the double taxation that C-Corps are subject to. S-Corps have specific eligibility requirements, such as a limit on the number and type of shareholders.

While not always legally required, it's highly recommended. A business lawyer can help you navigate the complex legal landscape of forming and operating a business in Texas. We can assist with selecting the correct entity, drafting and filing formation documents with the Texas Secretary of State, creating an effective operating agreement or bylaws, and ensuring compliance with all local, state, and federal laws. This upfront legal guidance can save you from costly mistakes down the road.