TEXAS INCORPORATION/BUSINESS START-UP
Whether you are thinking about starting a business or are already the owner of a growing firm, we can help you decide the best way to structure your business. Suppose that you are the sole proprietor of a retail firm, and a customer falls and gets hurt in your store. Your personal assets, such as your home, could be used to satisfy business litigation awards. When you have a general partnership (two or more people conduct a business), partners are not only liable for themselves but also for the actions of other partners. Insurance policies can protect you up to a certain point, but you might still be open to risks. Below are a few different routes you could take to protect yourself against personal liability. Joseph Hawthorne CPA PC will work with you to choose the best option for your business.
- Limited Liability Parternership (LP/LLP)
- Corporation or S-Corp
- Limited Liability Company (LLC)
| LP/LLP | Corp and S- Corp | LLC | |
| Liability Protection | To limited partners only | Yes | Yes |
| Created at state level | Yes | Yes with S-Corp requiring IRS approval | Yes |
| Tax status, IRS | Partnership | Corporation taxes, except for S-Corp | Flexible. Could be taxed as corporation or sole proprietor or partnership. |
| Advantages | Can complement an existing general partnership | Recognized way to conduct business Possibility of endless life to the firm. | Simple to setup and maintain Flexible options on taxation No annual meetings or keeping minutes |
| Disadvantages | Unlimited liability of general partners Death of partners dissolves the LLP | Complex to set up and maintain Except for S-Corp, double taxation | Relatively new form of business that may not be fully understood by banks and investors Possibility of being dissolved upon death of member |
