Starting a business is a major undertaking. Although opportunities for success abound, there are a number of potential hazards. Many of the risks that new business owners will encounter involve state and federal law. If you’re ready to start a company, it just makes sense to have an experienced Houston business lawyer in your corner.
The Oracle Legal Group has helped countless new business owners build their enterprises on a solid legal foundation. We’re ready to assist you as well.
Selecting the Best Legal Entity
Among the first steps in starting a business is deciding how it will be organized. This means choosing the legal entity that will best serve your and the other owners’ interests. Each of these options has its own advantages and disadvantages, which we can discuss in depth with you.
Corporation
Pros:
- Shields owners from personal liability
- Fairly easy to raise capital by selling stocks
- S corporations have pass-through tax benefits
Cons:
- Complicated record-keeping and reporting requirements
- Annual and ongoing fees
- C corporations trigger possible double taxation
Partnership
Pros:
- Partners share financial burdens and responsibilities
- Pass-through tax treatment
- Potentially limits partners’ personal liability
Cons:
- Possible liability for other partners’ actions
- Risk of interpersonal conflict
- Limited profits due to sharing them with other partners
Limited Liability Company (LLC)
Pros:
- Personal assets usually not exposed because of liability limits
- Pass-through tax benefits
- Fewer formalities compared to a corporation
Cons:
- Members typically pay self-employment tax
- LLC funds must not be intermingled with personal funds
- Forms and filing fees required
Instead of choosing among the above entities, you may wish to simply operate as a sole proprietor. Regardless, let us review your objectives, explain the different options, and help you select the right legal structure.
Registering Your Business
Sole proprietorships and partnerships generally register and file the business name (DBA or assumed name) with their county clerk’s office. Corporations, LLCs, and limited partnerships must file a certificate of formation with the Texas Secretary of State. We can assist with this step and make sure your business is compliant with registration requirements.
Drafting Business Governance Documents
Business governance documents lay out how the company will be organized and operated. Creating governance documents is typically related to the above step. These documents protect the rights and interests of owners and settle how major business decisions will be made.
Depending on what legal entity your business is, you may need such documents as:
- Articles of incorporation
- Corporate bylaws and amendments
- Operating agreements
- Partnership agreements
- Stock purchase agreements
Handling Tax Matters
Taxes are a part of doing business, and you must comply with state and federal rules. For example, your business has to withhold employment taxes like Social Security and Medicare. We can give you some general tips about tax issues that you might encounter in your business.
Our advice will be based mainly on the legal structure your company has chosen. You need to obtain a tax identification number from the IRS. You may also need to register with the Texas Comptroller’s office.
Obtaining Insurance
Having insurance and in the right coverage amounts, is critical to protecting your business from serious liability. You may need, for example, premises liability insurance if customers visit your business. If you hire employees, you will likely need workers’ compensation insurance. If company vehicles are used, then purchasing automobile liability insurance is critical. Certain types of businesses need professional liability coverage.
Our firm knows the basics of business insurance and which types of companies need which coverage. Just talk to our experienced Houston business lawyers to learn more.
Drafting Essential Business Contracts
As you do business and hire employees, your company will form relationships with parties inside and outside your organization. It is critical that you have comprehensive, effective, and enforceable business contracts. Without solid contracts in place, your business’s rights and interests could be jeopardized.
Oracle Legal Group can draft such contracts as:
- Manufacturing contracts
- Supplier and vendor contracts
- Bank loan and line of credit agreements
- Non-compete agreements
- Non-disclosure agreements
- Employment contracts
- Real estate purchase agreements
- Commercial property leasing agreements
- Intellectual property licensing contracts
Helping You Start and Operate Your Texas Business
The above items are only a few steps necessary to launch your new business. Our firm can examine your company to give you more detailed advice. And we can help with matters that go beyond starting a business, like defending it in court. To get started, connect with the Oracle Legal Group today.
