As we noted in our last post, there are four main business structures to choose from when starting a business in Texas. How do you decide which one is best for your business? According to the IRS, no structure is any better than the other, however, there are significant benefits and disadvantages to each one which will vary based on your needs. Working with an experienced Austin business attorney will ultimately help you to determine how to establish the correct structure. Here are some things to consider to help you begin to narrow down the process.
- How many owners are there? Determining the number of owners helps you narrow down the available structures. For example, if you are starting a business by yourself, you have the option to begin as a sole proprietorship. If there is more than one owner you may consider a general or limited partnership.
- What are the tax benefits to each structure? Sole proprietorships must include business income on their personal taxes, but that also means they can claim losses there as well. It is important to evaluate the tax benefits and drawbacks to each structure.
- What are the liability issues with your business? If you are considering a business that has a high liability, you will want to consider a structure that will separate the business’ assets from your own such as a corporation or LLC.
- What record keeping will be required? The IRS will require that corporations keep business records that are separate from personal records. Other structures may not have these strict requirements, it is important to note the record keeping requirements for your business structure before forming your business.
The best way to answer these questions and to determine the best structure for your business in Texas is to speak to an experienced business attorney who is knowledgeable about the laws in your state. Alexander Law Firm has experienced business lawyers who have worked with a variety of business structures. Contact us today and let us help you choose the best organizational structure for your business.