Help in Choosing the Form of the Legal Entity

Two Important Decisions: Your Choice of a Business Lawyer, and Your Choice of a Certified Public Accountant.

One of the first issues which entrepreneurs must address when considering the formation of a new Texas-based business will be carefully selecting the business law attorney and the certified public accountant to guide them through the complicated process of business formation.  The importance of these two professionals cannot be overstated.  They must work together with their mutual client to clearly present the business alternatives, point out the differences between the possible choices, then ultimately permit their client to make the many start-up decisions relating to forming a new business (or changing and converting the type of existing legal entity).

How can a Business Lawyer assist entrepreneurs?

The business lawyer will carefully listen to the entrepreneurs business plan and goals, and then address issues such as (a) limiting the personal liability of the owners and investors; (b) management and control of the entity; (c) minimization of federal taxes and state taxes; (d) flexibility in allocating among the investors and owners distributions of profits, losses, and capital; (e) start-up costs and administrative costs associated with a particular type of legal entity; (f) flexibility in making partial liquidations and complete liquidations to the owners and investors; (g) transferability of ownership interests; (h) continuity of existence; (i) methods for getting money out of the entity; and (j) asset protection.

What are the Primary Business entities?

These are the primary forms of business entities organized by Houston business lawyers for their clients: (a) sole proprietorships owned by an individual (no limitation of liability, no entity formed); (b) general partnerships (two or more general partners, no limitation of liability); (c) C corporations; (d) S corporations; (e) limited partnerships; (f) limited liability companies; and (g) limited liability partnerships.

Each form of entity presents its own advantages and its own disadvantages.  One of the many roles of the business law attorney and the certified public accountant will be to have a good working understanding of their clients proposed business, and with that knowledge guide the entrepreneur in making start-up decisions which will impact the new company for many future fiscal years.

In closing.

In summary, organizing a new business venture involves much more than incorporation or purchasing a preprinted record book, software, or Internet forms.  The nuances of face to face conversations and the information gained from interaction with a seasoned lawyer who regularly practices in the Texas business law arena are invaluable.  I hope to hear from you soon!