Setting Up Your New Texas Business
You have decided that now is the time to start up your new business. Where do you start? This can be a very scary proposition for many people! Starting up a new business or forming a new entity doesn’t have to be complicated but it needs to be done in a smart way. The key in structuring the entity in which you will do business is to “Effectively win your lawsuit before it is filed against you.” Whether starting a business by yourself or with partners, proper legal planning will enhance the enforceability and specifically define the terms of your business agreement.
Being a sole proprietor has been the American way for many decades and has made the United States a fertile ground for growth and abundant profit. Today, however, a sole proprietorship is not legally smart, creates unnecessary vulnerabilities to the owner, and may cause unwanted complications in the future. The smart choice is to enjoy the benefits and protection provided by a legal entity in the event of loss of management or financial control, for example, a six-year-long recession, cancer, death or divorce.
Many business failure issues and major legal expenses may be avoided if you are smart from the start.
Whether you choose to set up a Texas Corporation, Limited Liability Company (LLC), Limited Liability Partnership (LLP) or General Partnership, you create liability protection for you, your partners or investors by sheltering personally-owned assets and accounts. Should your company fail, you will enhance personal protection and avoid having to invade your children’s education funds and other personal funds, accounts and assets to pay debts of the properly-formed and managed business.
There are number of ways to maintain control of your business but this must be planned and implemented before the business commences.
1. Define the terms of the entity.
2. Make sure the major governing provisions and terms of the entity are clear and specific.
3. Protect the owners in the event of the death of fellow owners and claims of their estate or surviving spouse.
4. Protect yourself against a lazy or incompetent partner.
5. Protect the business in case of a divorce, either yours or other key people.
By choosing any of the statutorily-provided entities in Texas, you have the right to decide the terms of who runs the company and how and when the profits will be distributed. If there are problems with one of the fellow owners, buy-sell agreements are crucial and very effective for promoting agreed resolution or buy- outs, or dealing with death or divorce.
Planning for unpredictable, but common, major life events make legal and financial sense. Getting good legal advice now saves time, money and hassle in the future.