- Business Formation
- LLC, Limited Partnerships, Corporations, Partnerships
- Business Contracts, Business Transactions
- Purchase and Sale of Business
- Business Litigation, Business Collections
Entrepreneurs and business executives regularly retain me to assist them with all aspects of their business whether they are just beginning their new venture or already established and needing a business attorney to further their growth. My established business clients contact me at all stages of their business for legal assistance with business formation, business transactions, purchase of business, sale of business, business contracts, contract review, business litigation, business collections, and a variety of other legal matters and professional referrals. I have been an active member of the Dallas business and legal community for over 21 years and have developed a close working relationship with many of my business clients that have chosen to retain me as their business attorney throughout the years of growth of their business.
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Business owners often look to form a LLC, form a corporation, or form a partnership for their existing business or new business. I regularly assist new and existing business owners with legal matters related to Business Formation, whether they desire to operate as a closely held business, limited liability company (LLC), partnership, limited partnership (LP, Ltd.), or corporation (subchapter C or subchapter S). I also assist clients in the formation of Family Limited Partnerships (FLP). Dallas Business Attorney Thomas Finley works closely with business owners in the formation of their business entity to determine the best solution to meet the goals and objectives of the new business. Below are in order of the most commonly requested Texas business entities I am requested to form in my law office.
Basic Texas Business Entities
New business owners make many important decisions and one of the first is selecting the type of entity for the new business. Although this decision can be changed later, it is more cost efficient to make the right decision the first time. The business owner should become familiar with the types of entities and then coordinate with his or her attorney and accountant regarding the best entity choice considering the planning and the long term goals of the business owner. The following are the most common basic types of business entities available in Texas.
Limited Liability Company or LLC
The Limited Liability Company (LLC) is formally created in Texas by filing a Certificate of Formation with the State of Texas to obtain the benefit of limited liability company status. In some ways, the limited liability company resembles a corporation and in others it resembles a general or limited partnership. The LLC combines the benefits of limited liability of the corporation for all of the owners of the LLC while retaining the tax advantages of a partnership. The operational aspects of LLC’s are very flexible under Texas law and require less formality in than a corporation. The LLC is a very popular business entity for entrepreneurs that desire a low maintenance option to the more rigid corporation structure. In some ways, the limited liability company resembles a corporation and in others it resembles a general or limited partnership. The power to run the day to day operation of the LLC can be by the members themselves or they can provide for managers to run LLC similar to the Board of Directors of a corporation. With the assistance and advice of an accountant, the owners can elect different options for tax treatment of their LLC. The LLC is a single entity in which all of its owners, called members, have liability protection from the operations of the LLC. Dallas Business Lawyer Thomas Finley works together with business clients and their accountant in the formation of Limited Liability Corporations LLC in Texas.
Limited Partnership or LP or Ltd.
A limited partnership is an entity formally created under Texas law where the limited partners can receive liability protection. The limited partners can only receive liability protection by filing a Certificate of Formation of Limited Partnership with the State of Texas. A limited partnership is made up of one or more general partners and one or more limited partners. The general partner or general partners will have control of the day to day operational aspects of the partnership and any other matters allowed the general partner as set forth in the Limited Partnership Agreement. All limited partnerships should have a limited partnership agreement. Limited partnership agreements will clearly set out the rights and responsibilities of the general partner and the matters upon which the limited partners will have control or a vote regarding the operations of the limited partnership. Limited partners should not participate in active management of the partnership as a limited partner but can be employed by the partnership. The general partner accepts liability and responsibility for the partnership in exchange for the non-participatory financial backing of limited partners. In most cases, the general partner is a corporation, limited liability company (LLC), or another limited partnership because the general partner is ultimately liable for all the debts and obligations of the limited partnership. Limited partners invest in the limited partnership without risk of liability beyond their initial contribution as set forth in the limited partnership agreement. Dallas Business Attorney Thomas Finley can assist clients in the entity formation for the General Partner, the formation of the Limited Partnership, and drafting the Limited Partnership Agreement.
S Corporation or Sub S Corp.
The S Corporation is a regular corporation for state law purposes except the S Corporation is a device used commonly by close corporations in which the shareholders have elected, under Subchapter S of the Internal Revenue Code, to be an S corporation and therefore treated as a partnership for income tax purposes. It is advisable this election be made by the shareholder’s accountant. Unless the corporation and its shareholders make the election to be a S Corporation, the corporation itself is subject to taxation on its income. S corporations are subject to very technical rules of federal income tax law regarding the qualification and maintenance of S corporation status. Shareholders of S Corporations are generally not liable for debts or claims against the corporation unless they have otherwise agreed to be obligated for such debts by personal guarantees. Dallas Business Lawyer Thomas Finley works together with business clients and their accountant in the formation of S corporations in Texas.
C Corporation
A Texas corporation is created by filing the required formation documents with the Texas Secretary of State. It is an artificial person or legal entity, created by statute and existing separate and apart from its owners or shareholders, so that it may own property, make contracts, and sue and be sued in its own name. By incorporating a business, the separation shields the shareholders from any liability for debts and other obligations of the corporation. A corporation typically has a board of directors, elected by the shareholders, which oversees the strategy and dealings of the business. The board selects officers to oversee day-to-day management of the corporation. Corporations vary widely in complexity and number of shareholders. Texas corporations vary in types and can include: (1) the individual owner corporation, in which all stock is owned by one person. (2) the close corporation, in which the stock is held by a few owners and is not publicly traded; and (3) the public issue corporation, in which shares of stock are sold to the public and held in many hands. Unlike a sole proprietorship or partnership, a corporation can have continuous existence. As a general rule, the death of a shareholder or the sale of stock by one owner to another will not affect the continuity of the business operation. As a general rule, corporate shareholders are not liable for claims against the corporation beyond the amount of their individual investment. Dallas Business Attorney Thomas Finley regularly assists small business owners in forming corporations in Texas.
General Partnership - GP
A general partnership occurs whenever two or more persons or legal entities associate to operate a business together as co-owners of the business for profit. The general partners may or may not have taken the time to have a written partnership agreement that spells out the rights and duties of the partners relative to the partnership assets, liabilities, income and losses of the business, and control of the business operations. To the extent these matters are not addressed by a written partnership agreement, Texas has enacted statutory laws to provide an overall structure for the management and operation of the general partnership. Each partner has the implied authority to bind the partnership as to outsiders by any act within the scope of the usual and ordinary activities of the particular business. Each partner individually, and the partnership as a separate entity, is jointly and severally liable for all debts and obligations of the partnership and for wrongful acts or breaches of trust by other individual partners. Dallas Business Lawyer Thomas Finley drafts Partnership Agreements for partners who choose this type of partnership.
Sole Proprietorship
Sole proprietorship is the least complex business structure in which the individual owner carries on his or her own business even though the business may be operating under an assumed name. Under Texas law, a sole proprietorship has no separate legal existence apart from the sole proprietor. The sole proprietor has all the control of and responsibility for the business operation and business decisions. The sole proprietor owns all the business property as an individual but also assumes unlimited personal liability for all debts and other claims against the business. Sole proprietorships are the simplest forms of business structure with the most risk in terms of liability from its operations. Dallas Business Lawyer Thomas Finley is often contacted by sole proprietors for formation of a new business entity such as a LLC, limited partnership, or corporation for their existing sole proprietorship business to allow for future growth and to offer additional liability protection. |
I am a Dallas business litigation lawyer and represent business clients in a variety of litigation matters. Business clients retain me on Dallas litigation matters such as collection of accounts receivables, breach of contract, business disputes, commercial debt collection, commercial real estate, unfair business practices, and insurance.
I also represent business clients who are or might become involved in a lawsuit as a result of a business dispute, including the prevention, settlement, and or attending alternative dispute resolution proceedings such as mediation.
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