Business Formation Attorney in Houston

Lawyers for Starting Your Texas Corporation, Partnership, or LLC with Confidence

Forming a corporation in Texas begins with making informed decisions from the start. In addition to creating a corporate structure compliant with Texas law and navigating administrative and regulatory processes, you want to be sure any risks, agreements, and relationships central to your business are properly managed.

The attorneys at Hendershot Cowart P.C. have been guiding Texas businesses on the path to success since 1987. With decades of collective experience and a multi-disciplinary team, we tailor business- and industry-specific strategies to facilitate proper entity selection, and set the stage for future growth and success.

Selecting the Right Entity for Your Texas Business

Which entity is best for your business? Broadly speaking, there are four types of entities in Texas:

• Sole Proprietorship
• Corporations
• Limited Liability Company (LLC)
• Partnerships

Each entity type (sole proprietorship, partnership, LLC, corporation) has distinct advantages and disadvantages that might make it more suitable for your specific business needs.

Discuss these questions with a business formation attorney before deciding which entity is right for your Texas business:

• How many owners will the business have initially and potentially in the future?
• Will ownership transitions (additions/departures) be likely?
• Does your profession require a specific entity type, such as PLLC or PA?
• What business assets and personal assets do you need to protect?
• Do you want to be taxed personally for business income (pass-through) or separately (corporate)?
• Will you seek outside investors?
• Will you operate in multiple states? 
• Do you have the resources and/or are you willing to maintain formal recordkeeping and compliance requirements?
• Is business continuity important if an owner leaves or dies?

A business formation attorney can help you weigh your options based on your needs, preferences and long-term vision and growth plans.

Sole Proprietorship

This is the most basic type of business structure: This is a one-person operation conducting business for profit.

Under Texas law, the sole legal requirement is that if you’re conducting business under any name but your surname, you must file a “Doing Business As” (DBA) form with the county clerk’s office in the counties where you are conducting business.

The great drawback of the sole proprietorship is that you’re personally liable for debts and obligations of the business, and if you cannot pay your bills, creditors may go after your bank account and personal possessions to satisfy the debt.

Corporations

Texas law views corporations as an entity separate from the owners, which means that when you organize a corporation you create a legal “person” that has the capacity to own property, sue and be sued, and also has to pay taxes.

Under most circumstances, a board of directors – chosen by the shareholders – governs the major operations of the corporation, including the appointment of executive officers who will conduct the day-to-day business affairs.

You can organize your corporation as a C-Corp or an S-Corp:

• C-Corps are required to pay taxes on their profits before distributing dividends to its stockholders. Additionally, shareholders pay income taxes on the dividends received, and this double taxation is one of the major drawbacks of a corporation.
• The advantage of the S-Corp is its tax structure. An S-Corp has what is called “pass-through” tax status, meaning the S-Corp does not directly pay taxes on its income, which allows S-Corps to avoid the double taxation found in C-Corps.

Learn more about forming a corporation in Texas. 

Texas Limited Liability Company (LLC)

An LLC is owned by one or more members and can be either member-managed or manager-managed. And like a corporation, executive officers can be chosen by the members or the managers, depending on whether it is member-managed or manager-managed.

Learn more about forming your Texas LLC.

Partnerships

There are generally two types of partnerships:

• General Partnerships – This business structure is a slight step above the sole proprietorship and is essentially any association carried on by two or more people for a profit. Each person involved is a general partner, and they split profits and losses. One problem, however, is that if your partner loses a lot of money at their end of the business, they might sue you for half those losses.
• Limited Partnership (LP) – The LP is the next step above a general partnership and offers advantages over the latter. There are two types of partners in an LP: general partners and limited partners. General partners act much like the partners in a non-filing general partnership. They conduct business operations and are also responsible for the partnership’s debts and obligations under Texas law. Limited partners enjoy liability protection under Texas law; however, they are not allowed to participate in the management or operation of the limited partnership. They are essentially “silent partners.”

Making It Official – How to Create your Business Entity in Texas

While every business is unique, there are some general steps to take to form a legal entity in Texas:

1. Business name. One of the first steps in forming an entity is choosing a business name. The name must be distinguishable from names of other businesses currently operating in the state of Texas. The Texas Secretary of State provides information about business name availability and allows business names to be reserved for up to 120 days.
2. Certificate of Formation. Some entities do not require you to file paperwork with the State of Texas; these are called non-filing entities and include Sole Proprietorship and General Partnerships. Filing entities, by contrast, must be registered with the Secretary of State in Texas. These include LLCs, Corporations, LLPs, and non-profits. These entities are legally created in Texas when a Certificate of Formation has been filed with the Texas Secretary of State. The Certificate of Formation includes relevant information about the company, including the name of the entity, purpose of the entity, management or leadership structure, names and addresses of key people, address of the principal place of business, and name and address of organizer. 
3. Registered agent. Texas requires filing entities to appoint an agent for service of process, which can be an individual (if they reside in Texas) or a corporation (domestic or foreign, and authorized to do business in Texas) that accepts legal, tax, and government documents on the corporation’s behalf if lawsuits are filed against it. A registered agent must be named in a corporation’s Certificate of Formation.
4. Create governing documents. While not required by law, governing documents outline the rules and operations of your company. For LLCs, this means drafting an Operating Agreement; for corporations, you'll need bylaws and initial meeting minutes; and for partnerships, you should prepare a comprehensive Partnership Agreement that details the rights and responsibilities of all partners. 

Hendershot Cowart P.C. can assist with the entity filing and draft bylaws or other agreements. We can also serve as the registered agent as we do for many of our corporate clients – helping ensure they do not miss or overlook important communications, including notice of lawsuits.

Texas Medical Practice Formation

Because the healthcare industry is governed by a range of state and federal regulations – including Stark Law, the Anti-Kickback Statute, Texas’ Prohibition against the Corporate Practice of Medicine, HIPAA, and more – ensuring compliance requires a comprehensive view of a practice’s structure, business and employment relationships.

If you are ready to start or expand a medical practice, talk to us about:

• Incorporation: PA, PLLC, Limited Liability Partnerships, etc.
• Licensing agreements
• HIPAA, Stark, Anti-Kickback Statute, fraud and abuse, and regulatory compliance
• The Corporate Practice of Medicine doctrine
• Employment issues and non-compete agreements
• Collections and third-party payer agreements
• Whether contracting with a management service organization is right for your practice

For over 35+ years, we have earned a reputation as one of Texas' preeminent law firms handling setups, mergers, and acquisitions of medical practices for healthcare professionals.

Ready to Get Started? Call Our Business Formation Law Firm in Houston

Which structure is right for your business? Which operating agreements of contracts do you need in place to govern business relationships or protect trade secrets? Our attorneys can give you straight answers to these questions and more.

Our law firm focuses on business entity formation, organization, and planning, including:

• Choosing the best type of business entity for your needs
• Drafting governance documents and compliance plans
• Structuring equity compensation and stock option plans
• Drafting or reviewing buy-sell agreements
• Work-for-hire agreements
• Trademarks and copyright protection
• Licensing or technology development agreements
• Acquisition of key assets, equipment, or real estate
• Corporate mergers
• Corporate restructuring
• Protecting intellectual property and trade secrets with confidentiality agreements, nondisclosure agreements, and non-compete agreements
• Drafting and enforcing shareholder, partnership, and employment agreements

Ready to start your business on a sound legal foundation? Call our Houston business formation attorneys at (713) 561-5288 or reach out to us online, 24/7.