Business Formation Attorney in Houston

Houston Business Formation Lawyers for Your Texas LLC, Corporation, or Partnership

If you're forming a business in Texas, your choice of entity shapes your taxes, your personal liability, and how you bring in partners or investors. The structure you choose on day one carries forward. Get it right at the start, and your business is better prepared when a partner leaves, an investor arrives, or a dispute starts.

Hendershot Cowart P.C. forms Texas businesses and medical practices, and we defend them when partners, regulators, or other third parties come calling. We've practiced Texas business law since 1987 – nearly 40 years. Our Houston business formation attorneys help you choose a structure that fits your goals today and grows with your business. We also draft the agreements and ownership terms that help it hold up when things change.

On This Page

• Selecting the Right Entity for Your Texas Business
• Sole Proprietorship
• Corporations
• Texas Limited Liability Company (LLC)
• Partnerships
• Making It Official – How to Create Your Business Entity in Texas
• Texas Medical Practice Formation
• Why Hendershot Cowart P.C.?
• Ready to Get Started? Call Our Business Formation Law Firm in Houston

Starting a business in Texas? Call (713) 783-3110 or contact us online to talk with a Houston business formation attorney.

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

• Sole Proprietorship
• Corporation
• Limited Liability Company (LLC)
• Partnership (GP, LP, LLP, or LLLP)

Each business structure – sole proprietorship, partnership, LLC, or corporation – offers different advantages and trade-offs. The right choice depends on your goals and circumstances.

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.

A sole proprietorship is the simplest business structure: one person running a business for profit. If you operate under any name other than your own, Texas law requires you to file an assumed name certificate (often called a DBA, for "doing business as") with the county clerk in each county where you do business.

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

Texas law treats corporations as an entity separate from the owners. This means that when you organize a corporation, you create a legal “person” that can own property, sue and be sued, and pay taxes.

Under most circumstances, a board of directors, chosen by the shareholders, governs the corporation's major operations, including appointing executive officers who conduct day-to-day business.

You can elect to have your corporation taxed as a C-Corp or an S-Corp:

• C-Corps pay taxes on their profits before they distribute dividends to shareholders. Shareholders then pay income taxes on those dividends. This double taxation is one of the biggest drawbacks of a corporation.
• 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. 

A limited liability company (LLC) puts a legal wall between your personal assets and the business's debts. Owners are called members. You can run it yourselves (member-managed) or appoint managers to run it for you (manager-managed), and your operating agreement sets the rules for profits, decisions, and ownership changes. Because an LLC can continue as owners come and go, you can add partners, buy someone out, or hand off the business without starting over.

Licensed professionals, such as physicians, must form a professional LLC (PLLC) rather than a standard LLC.

Learn more about forming your Texas LLC, including a series LLC and PLLC.

There are generally two types of partnerships in Texas:

• General partnership (GP) – 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. A key risk with GPs is personal liability: Each general partner can be held personally responsible for the partnership's debts, including obligations another partner takes on for the business, so creditors may reach your personal assets if the partnership can't pay. A GP can protect its partners from personal liability for the partnership's obligations by registering with the Texas Secretary of State as a limited liability partnership (LLP).
• Limited partnership (LP) – An LP has two types of partners: general partners and limited partners. General partners run the business and, as in a general partnership, are personally responsible for its debts and obligations. Limited partners have liability protection under Texas law, but they typically stay out of management, which is why they are sometimes called silent partners. A limited partner who takes an active management role may put that protection at risk. An LP can also register as a limited liability limited partnership (LLLP) to protect its general partners from personal liability.

Learn more about forming partnerships in Texas.

Not sure which entity fits your business? Call (713) 783-3110 or contact us online.

Every business is different, but forming a Texas entity follows the same basic steps. We guide you through each one and handle the filings and paperwork for you. Here's how the process works:

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, such as sole proprietorships and general partnerships, don't need to file paperwork with the State of Texas. These are non-filing entities. Filing entities (LLCs, corporations, limited partnerships, LLPs, LLLPs, and nonprofits) must register with the Texas Secretary of State. Your entity legally exists in Texas once you file a certificate of formation. The certificate names the entity, states its purpose, and describes its management structure. It also lists the names and addresses of key people, the principal place of business, and the organizer.
3. Registered agent. Texas requires every filing entity to name a registered agent, also called an agent for service of process. This person or company receives legal papers, including notice of a lawsuit, along with tax and government documents on your entity's behalf. Your agent can be an individual who lives in Texas or a company authorized to do business in Texas. You name your agent in the 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. 

We handle these steps for you. Hendershot Cowart P.C. handles your entity filing and drafts your bylaws, operating agreement, or partnership agreement.

We can also serve as your registered agent, as we do for many of our clients. That helps keep important communications, including notice of a lawsuit, from slipping through the cracks.

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 services organization is right for your practice

Since 1987, we've helped physicians set up, sell, and restructure their practices. In the past five years alone, we've set up more than 250 medical practices – and we make sure each one works on the business side and on the regulatory side.

Starting or expanding a practice? See how we handle medical practice formation and set-up, from entity structure to licensing and compliance.

Most firms either form businesses or litigate disputes. We do both. When we draft your bylaws, operating agreement, or partnership agreement, we know how it will hold up if a partner, payor, or regulator challenges it.

• We build it, and we defend it. We form Texas businesses and medical practices, and we defend them when partners, regulators, or other third parties come calling. Our practice covers the whole arc: formation, partner agreements, growth, ownership disputes, and the sale or succession plan.
• Nearly 40 years of Texas experience. We've practiced Texas business law since 1987, and helped launch hundreds of new Texas businesses and medical practices over the past five years alone.
• Business and healthcare law under one roof. Nearly four in 10 of our matters are healthcare. When a physician forms or restructures a practice, we make sure the structure works on the business side and the regulatory side.
• Plain English, with a price you can see. We explain every step and lay out our fee arrangement up front, before you sign anything. Learn more about how we charge.

Which structure is right for your business? Which operating agreements or 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 (713) 783-3110 or contact us online to talk with a Houston business formation attorney.